United Liberty
Lessons from the Auto Bailout Controversy
Mon, 12/15/2008 - 6:50am | posted by Dr. John Killian
This past week, the US Senate failed to concur with the House of Representatives in passing a bailout package for the nation’s large domestic automakers. This bailout had the support of the Democratic leadership in Congress as well as the Bush White House. Already, doomsayers are bemoaning this lack of financial infusion from an already depleted federal budget. However, I applaud this decision as a victory for principle over pragmatism. Hoping that conservatives will learn from this effort to continue enlarging government, consider some lessons from the bailout controversy.
- Vox Populi! The people have spoken. Calls and emails bombarded Capitol Hill in opposition to using taxpayer funds to underwrite the failure of the big three automakers to operate productively. Newt Gingrich reported that a poll of supporters of his political organization voted 91% against the bailout. My own Congressman Spencer Bachus, voted and lobbied for the outrageous bailout of the housing industry.However, Bachus saw the light and voted against the automakers bailout.
- Ideological arguments make sense! As an Alabamian, I was proud to see Senator Richard Shelby sounding like a born-again free marketer in his arguments against big government and increased federal control over private enterprise. Ron Paul and Mike Pence carried the debate in the House. The debate slipped away from the temporary advantages to the long-term disadvantages and the morality of taxing citizens to bail out a protected industry. Thomas Jefferson would have been proud.
- Republicans still have a lot to learn! In the final negotiations, many Senate Republicans were offering to switch sides, but only if restrictions were placed on the hourly wages of the workers in the auto plants. Protect the corporations, but forget the working individual. While I agree that auto wages may be too high, that decision should be made by the market and in negotiations with industry. Again, the Republicans allow themselves to be painted as the protector of the rich and less than sympathetic with labor. Mind you, I am not defending the $70 per hour wages for the auto workers, but I don’t want government making the decisions on wages. These Republicans, involved in the dispute over Union wages, lose the high ground of defending the free market when they want government interjection in wage disputes.
- The Auto Industry does have my sympathy. A spokesman for the United Auto Workers made the argument that most automakers, based in foreign countries, but with plants in the US, located in the various states due to millions or billions in incentives from these various states. The State of Alabama has offered huge amounts to Honda and Mercedes, hoping to sweeten the pot and persuade these plants to locate here. States find themselves in bidding wars, asking taxpayers to fund the locating of these corporations in their respective state. As a result of the granting of taxpayer funds, no private initiative operates on a level playing field.
The taxpayer is bled to fund government initiatives to, supposedly, help the public. Take away this corporate welfare, the free market will decide the real value of automobiles and every other good and service.
Obviously, automakers, and other industries are not finding the US market profitable. May God grant us a new generation of statesmen who will work to remove the shackles of big government from commerce and entrepreneurship.
Further reading on the auto and TARP bailouts-
The Craziness of the Auto Bailout
Earth to Congress: No Bailouts!
Shelby Stands Tall Against Automakers Bailout
I can’t take credit for this one other than finding it. But I watched this lie get perpetuated and quashed by the UAW in a live press feed and again from a reprint of the Times Herald Q&A:
http://my2bucks.wordpress.com/2008/12/09/the-73-an-hour-lie-that-will-no…
The $73 an hour figure is outdated and inaccurate. It includes not only the costs of health care, pensions, and other compensation for current workers, but also the costs of the pensions and health care benefits of retired employees spread out over the active workers. Active workers never receive any of this compensation in any form, so it is not accurate to describe it as part of their “earnings.”
Labor costs are about 10 percent of the costs of producing a vehicle. The other 90 percent includes research and development, parts, advertising, marketing and management overhead.
Contract concessions in 2005 and 2007 have actually decreased labor costs at the domestic automakers.
Now I could cut and paste the whole article. Read it for yourself and think about why Chrysler and Ford CEO’s don’t mind $1 a year salary. Google the names! $20 million can do alot! Nardelli didn’t owe up to his package after getting $200 million plus for running Homers into the dirt.
I think it’s bass ackwards. Lets cut management cost starting at the top with their perks and bonus’ Get rid of the overcompensated CEO’s and cap their income. Marketing and advertising should be cut by 3/4. Word of mouth sells the best and I want to see different commercials other than the same car or truck brand during the Superbowl. It’s worse than hearing a dozen McDonalds songs on the radio in a day. It drives me to Burger King! Get more money into R&D from the top and make a better car than the one that GM wouldn’t let into the market knowing that residual income would be cut to Tire, brake, shocks and such. No internal combustion=no oil change, gas, less parts to go wrong.
John Killian, check your sources and look at both sides. Are you a defense attorney for the automakers or a prosecution attorney representing them as well? Nope! As a reporter you have the responsibility to have all the facts. And cause you are more a part of the normal media than Rush Limbaugh, you are likely to be believed. It’s a good artical except for the $73 lie which you quoted from the foxes in the henhouse.
Me, I’m not affiliated with anybody here and don’t even own a car! I just spend too much time on the internet to miss a mistake like this.
There’s a lot of controversies against the auto bailout and the only thing that we can consider is the fact that they could possibly make it. We’re hoping that automakers could make any positive results for having the financial assistance from the government. We wish for luck.