12 December 2008

An impassioned reaction to the failure of the Auto Industry rescue plan

In the wake of the failure of the Auto industry bridge loan, I sure hope the foolhardy Republicans in the Senate who blocked its passage are happy. They have probably ensured that the recession will indeed be longer, deeper, and more permanently destructive to the U.S. economy than any since the Great Depression.

The breathtaking stupidity of their rationale is so egregious that it makes me wonder about their patriotism. They and their ilk love to question the patriotism of people who civilly disagree with a particular foreign policy analysis justifying supposedly preventive wars, but when they act in ways that are directly, materially destructive to a strategically vital sector of the U.S. manufacturing economy, we're all supposed to say, oh, well, it's just a difference of opinion. But the fact is, actions matter, and votes matter.

Even the Bush administration came to understand how vital it is to keep the auto industry in business during a transition to a whole new management approach, product range, and set of long term goals.

Sure, the auto companies have been badly managed. Very badly. And I certainly support forcing them to revamp completely, towards efficient vehicles, away from fossil fuels; including ousting the current management, especially at GM, where they have been incredibly stupid for the past ten years especially.

Having said that, it's utterly beyond me how Senate Republicans can justify $150 billion in taxpayer funds to make high flying speculators whole in the AIG bailout; (people whose actions would be criminal if they had not been foolishly and destructively legalized); but they can't see their way clear to guarantee a tenth that amount for a historic and strategic manufacturing industry. I truly hope that the public comes to see just how destructive this is, and votes every single one of these fools out of office.

Of course, even moreso, I hope that we are able to avoid the worst of the likely destructive effects of this vote. There is, at least, hope that the administration will allow use of the TARP bailout funds to at least ensure that GM and Chrysler don't fold before January, when we can try again.

Chapter 11 is no solution. The effect on the confidence in the companies and the ripple effect on jobs in the region would create a downward spiral that I think it's unlikely either GM or Chrysler would survive at all. Get with it folks, this is an unacceptable outcome, which must be avoided.

Bail out finance but not industry. Disgusting. I fear we're likely to find out just how foolish this was, when its cascading destructiveness ricochets throughout our economy in the coming months and years. Maybe, somehow, this can be avoided. I sure hope so.

Update: The NYT is
reporting that the Bush administration may be open to using the TARP bailout money to help bridge the gap for the Auto industry. Credit where credit is due, if this proves true.

Update 2:
Hale Stewart in HuffPo agrees with me: "The Republicans want a Depression."

Update 3: It is particularly vexing to encounter the right wing argument, invariably placed first in the agenda, that the primary problem with the auto makers is their supposed failure to "negotiate" better contracts with (i.e., use the leverage of globalization to force huge givebacks from) their union workers and retirees. I reject this argument completely. The problem with the U.S. economy isn't overpaid workers. It's public policies that have intentionally hollowed out our manufacturing sectors, and made our industries uncompetitive.

Countries, like Sweden, that have ensured high wage rates, have not found this causes their industries to become uncompetitive. Quite the contrary. High wage workers produce high value products. This used to be the paradigm in the U.S., until Trickle Down economics became public policy and the heart and soul of our national prosperity began to be hollowed out from the inside, in favor of short term financial speculation. (Also, if the celebrated foreign manufacturers' plants in the U.S. weren't privileged with a legal structure that virtually outlaws unionization, the playing field would be a good deal more level: this is no accident). Read James K. Galbraith's The Predator State for more on just how all this has worked and continues to work, to our detriment as a nation.

Update 4: It starts. Already, news reports say GM is "temporarily" shutting 21 plants, and laying off all those workers. Let that slide into permanence, and we're well on our way to big-D depression. Thank you, Republican Senators, for screwing the entire country.


  1. hmmm. just posted a comment a few minutes ago which has not appeared. thought I'd test the system.

  2. I can't decide where the line is between heroic stupidity and garden variety evil. Are these republicans really so committed to the principle of destroying the remnants of organized labor that they'll go down with the whole economic ship? 'Cause that's what they're gonna get.

  3. Try again, anonymous, the comments should be working.

  4. It isn't stupidity--it's greed and a lack of respect for the human rights of the "common folk." The rich would like to see all of the unions in this country destroyed and the American worker reduced to the slave status enjoyed by sweatshop workers in China.

  5. Tony, have you considered that greed is stupidity? It leads to apparent short term gain, but in the end it harms its practitioner at least as much as it harms others. It's just cause and effect.


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