“The American people will never knowingly adopt Socialism. But under the name of ‘liberalism’ they will adopt every fragment of the Socialist program, until one day America will be a Socialist nation, without knowing how it happened.”

Socialist Party presidential candidate Norman Thomas

Sunday, November 09, 2008

It's time for Obama to pay the piper with another bailout

I'm sensing a disturbing trend here....

With the Big Three US automakers teetering on the edge of insolvency, it appears Washington may finally be ready to come to Detroit's rescue.

Detroit's situation has certainly worsened in the face of the current economic crisis that combines what many describe as a "perfect storm" of factors, such as high fuel costs, tight credit, job losses and rising commodity prices.

But the seeds of the current crisis date back to the last big oil shock, of 1979, which helped the Japanese gain a foothold for small, fuel-efficient products.

As gas lines faded from memory, the Asian automakers continued to gain ground by focusing on quality, something GM, Ford and Chrysler have only recently come to grips with -- and with varying degrees of success.

Further compounding the situation, Detroit has been consciously slow to embrace changes in the American automotive marketplace, especially the shift from big trucks to small, fuel-efficient passenger cars.

And even where it has, lamented Consumer Reports' auto analyst David Champion, it has needed "more models that were exciting for people to buy."

"Automakers need immediate funding to stay on track during this difficult time," said National Association of Manufacturers president John Engler.

"We're talking about close to a million jobs in America -- we're talking about a lasting impact on our industrial production in the United States. We simply cannot afford to let the auto industry fail."

I'm sorry but, it's not a proper role of government to prevent the failure of businesses who've made bad decision after bad decision for 30 years. Obama's insistence on saving the American auto industry stems not from genuine concern for this traditional symbol of American ingenuity and innovation(Bush's reasons), but from his political promise to pay back the union thugs who spent millions to help elect him.

By most measures, unionization can increase operating costs by as much as 30%. If you want to read the laundry list of ways labor unions increase costs to consumers, go here.

I guess it's the nature of modern politics that you have paybacks after each election, regardless of how wrong the form of that payback may be.


Kirsten said...

Think if I over extend my credit cards for Christmas I can cry for the gov. to bail me out of my bad decision?

When does the line for bailouts stop? Shame on our car makers for not keeping up and shame on the consumer for not demanding more fuel efficient cars a lot earlier on. Everyone wanted a huge SUV, even the couples with no kids. No one wanted to give them up until filling them up cost the same as college tuition.

Ed said...

Right you are kirsten. People are free to buy whatever car or SUV they like, but when the price of gas goes up, they'll have to struggle to pay the bills. Then, they'll demand more fuel efficient cars. That's how the market works. The big three were startlingly slow to react to changing demands, partly due to union pressure to keep as many absurdly, high-paying jobs as possible. So Detroit kept paying unions wages that far exceeded what the labor market would have otherwise borne, to build cars that nobody wanted. It's their own fault and I say "NO" to this bailout the same as I said "NO" to the $800billion bailout. Let the free market the determine success or failure of private industry.