Things I've Tagged ‘Bailout’

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#Bailout, #Founding Fathers, #Wisdom

All human situations have their inconveniences. We feel those of the present but neither see nor feel those of the future; and hence we often make troublesome changes without amendment, and frequently for the worse.

Benjamin Franklin

#Automotive, #Bailout, #Detroit, #Stimulus

Bailing Out Detroit

I hear an awful lot about the potential bailout of the automakers in Detroit–an awful lot that is increasingly negative. People are tired of bailing out investment banks and credit card companies, and that is something that I can understand. I despise government intervention. Too much central planning, not enough personal liberty and freedom…

Bailing out Detroit, it seems, is a different matter then bailing out an investment bank. A lot of jobs depend on the success of the domestic auto industry, from manufacturers of parts(which are largely produced by many different companies, and is by far one of the biggest aspects of this), distributors of parts specifically related to the Big 3 in Detroit, and the car manufacturers themselves. Losing these companies means losing millions of jobs without the prospect of much replacing them. Losing investment banks means losses on the market and perhaps less liquidity, as well as job losses in the same industries I’m referring to, but less fear for me of losing the entire sector.

Can anyone honestly argue that losing domestic auto manufacturers would be good for the country? Perhaps in the long run, it might pan out, but in the short run, not so much. Even then, would it really be good in the long run?

How can we lend to them without fearing that they’ll use it unwisely? Attach these conditions (among others):

  1. Find a way to bring the company into near profitability (as near as you can get at least) without the bailout funds first. For example: reduce the labor force, cut lines, shore up this, that and the other, etc.
  2. Guarantee a negotiation of substantially lower pay and benefits for employees. Not non-livable levels, but rational levels, based on job type and experience. Work towards elimination of the union in the workplace in order to bring wages and benefits to a rational workable level in the future.
  3. Car manufacturers must get to the root of another problem beyond employee compensation: vehicle quality, which seems to diminish year after year. Quality control is paramount; increase quality without increasing cost.
  4. Find a way to increase fuel efficiency; get vehicle fleets to an average of [arbitrarily] 65mpg in the next 10 years. Any way you do it, go for something big, you’ll sell more vehicles domestically. And don’t do it by going small. Small cars are no good. Let’s keep making SUV’s and large trucks, but let’s find a way to make them burn less fuel.
  5. Let’s find an alternative to fossil fuels to power our vehicles. Innovate, do something that is good for your business in the long haul and find a way to survive that doesn’t include oil or necessarily even a plug-in, electricity driven vehicle.
  6. And most importantly reiterated, keep costs down by getting rid of unions. The union has ruined domestic autos because of demands that are unreasonable and irrational. Janitors should not earn $80,000 a year.
  7. Pay the loan back in a specified reasonable amount of time.
  8. Do not use the loan to compensate executives in an excessive manner whatsoever. Compensate them when your business is successful and you’ve paid back the loan. In the meantime, give them a realistic and rational wage. Stop with the bonuses, until said conditions are met.

Another important thing we must do, if we are to bailout automakers: take advantage of nuclear energy and get away from coal power plants; and we must get back to harvesting our own resources, environmentalists be damned.

Who knows, the plan is very antithetically libertarian of me, but man, my job depends on Detroit, and so I wonder if one little loan would be such a bad thing. Honestly, though, if Detroit can survive without the bailout it needs to do what I mentioned in my requirements to return to profitability in the long-run, so what’s the point…?

Need more Jeffersonians, less Hamilton(?)…ians.