In the on-again, off-again discussions about bailing out three auto manufacturers who are in large part responsible for their own problems (which they admit), the major reason given for not letting them go the way of any other company in financial trouble is to create work and jobs for the people they employ. Surely better things can be found for these employees to do than to create products that nobody wants to buy? Creating manufactured products consumes precious resources ranging from metals and minerals dug out of the earth to power generated to run the factories. Then the resulting products will be stockpiled somewhere, since nobody wants to buy them, left to rust and disintegrate until they’re shredded to “recycle” the valuables left in them while the rest of the product is dumped in a landfill. As make-work schemes go, this is, to my mind, not one of the better ones.
Dec 132008
Perhaps that is the dumbest thing ever written concerning the bailout. These products you say are worthless. because no one is buying them, are value added commodities which are unsold due to buyers unable to properly secure credit or cash
to complete a transaction. They would be sold pennies on the dollars before the scenario you suggest would occur.
William Slade: you sir, are a troll. Attacking a person in a personal manner rather than intelligent discourse wastes valuable intellectual bandwidth. Begone.
These ‘products’ are worthless because they are being recognized as valueless. They do not solve a problem for the conscientious citizen of our planet. Those who wish to live in harmony with themselves and their environment.
I need food, water, etc.
I do not need to spend money on gas to get to work because I walk.
I certainly don’t need to secure credit and, I suspect, with some care and thought about your place in this world you will realize you do not need to either. Investing in the knowledge economy is a smart thing to do and the smartest companies, people, organizations will (continue) to do this. Its up to all of us to educate people about this too so we do not continue to invest in the destruction of our environment and economy. We’re all in this together like it or lump it.
Keep in mind that many “foreign” cars are made in the US these days. You don’t see Subaru asking for a bailout.
The “big 3” were losing money long before the economy went south. The majority of their revenues comes from outside the US were they actually sell cars that have good gas mileage that people want to buy. For some reason they don’t want to make/sell the same value cars in the US.
All of the automakers in the world have the support of their national governments. Sweden is keeping Volvo and Saab afloat even though they’re subsidiaries of US companies now.
Any bailout should be conditioned on these companies transitioning to making products that are better suited to the modern, conscientious consumer, but letting these companies fail and these jobs go away when the employees have no skills that will gain them similar employment anywhere else seems like a bad formula given current conditions. It’s tough for people who have salable skills to find jobs right now, suddenly putting a million people with similar skill sets on the street would be very bad for those workers and bad for the economy as a whole.
I’d rather see a good bailout that creates appropriate incentives for the auto industry, but failing that I’d prefer a bad bailout to no bailout at all.
FWIW, I’m in favour of supporting the employees in struggling industries (not just the big three auto companies), whether that means assistance with relocation expenses, retraining, or reasonable, temporary make-work schemes that produce useful results.
“Any bailout should be conditioned on these companies transitioning to making products that are better suited to the modern, conscientious consumer, ”
There should be no bailout at all. It is the responsibility of any company to produce products their consumers want at a competitive price. I think the issue with these companies is profitability more than product. They need to go into bankruptcy protection, renegotiate with their suppliers of parts and labour, bondholders, and stockholders, and see if they can be reorganized into a profitable business, or their parts sold off to other companies who can run a profitable business. The failure of unviable companies is markets working. Creative destruction is the process that allows us as a society to have an improving standard of living.
Keeping unviable businesses alive with bailout money simply diverts resources from productive areas of our economy to unproductive ones.