Posted on 11/15/2008 11:45:07 PM PST by fightinJAG
[snip]
One reason for this is that a rescue is unlikely to work. The Big Three face an enormous array of challenges. Recent economic conditions have battered all automakers, but in both good and bad times Detroit has more or less constantly ceded market share to rival firms (many of which employ thousands of Americans and will operate through the recession with no government assistance). Its plants and equipment are old. Its management is unproductive and rigid. Its products are of low quality. Absent major restructuring, it is fantasy to expect a change.
Detroit has found itself in these straits in the past. Nearly 30 years ago, as the American automakers flailed amid high oil prices and foreign competition, Chrysler went to the government hat in hand, seeking help to avoid bankruptcy. . . . The bail-out kept a company alive, yes. But it failed to save the Rust Belt or produce the necessary top-to-bottom restructuring. We have little reason to expect a different outcome this time around.
More important still is the opportunity cost of saving the automakers. It is suggested that millions of jobs might be lost if the firms folded. That may well be true, but those workers wouldn't remain unemployed forever. At present, the Big Three suck up labour and human, physical and financial capital that might instead be employed at more productive firms in healthier industries. Allowing the automakers to fail creates an opportunity for a much-needed reallocation of resources. From their ashes, anything, including an automaker free of the institutional burdens of the Big Three, might emerge. Standing in the way of this process will damage the long-term outlook of the entire region.
(Excerpt) Read more at guardian.co.uk ...
Very good article.
I think re-badging has been a particularly dumb way to do business over the years.
I’m still waiting for some pol to explain to why the U.S. Big 3 automakers matter if they consistently flop at either gaining market share or capitalizing (um, note that word!) on their measurable successes.
If the “jobs” the Rats are trying to save are not presently producing anything anyone wants to buy in sufficient quantities-—and, based on history and other market forces-—it is rather remote that that will change any time soon, what is the ECONOMIC POINT of “saving” those “jobs”?
If Pelosi just wants taxpayers to pay UAW’s benefits bill, let her say so.
Yep.
It’s not like if the Big 3 go bust, we won’t be making cars in this country. Those companies that have figured out how to make cars Americans want to buy will expand and-—hmmmm-—hire more workers.
Of course, that is not acceptable to the Rats because they owe the union bosses for their political existence. If the Big 3 go bankrupt, the UAW contracts are voided. END OF UAW.
It is not the Big 3 automakers the Rats want to bail out, but the UAW.
The companies that come in a buy up the pieces will not be saddled with labor contracts that pay 52% higher than non-union auto workers.
But the Rats cannot allow UAW to fail because that is a huge part of their political machine. If UAW goes away and manufacturing disperses from traditional Rat strongholds under the purview of union/Rat political machines, well, they can’t allow that, no matter how much it costs the country.
You’re right.
The Big 3 are even dancing around the fact that they are also asking the Canadian government for a bail out.
They are only being coy about it now while they are trying to get the first bail out from the U.S. government. Then they will go back to Ottawa and ask for more dough from them.
“American” auto industry? Nope.
“If Pelosi just wants taxpayers to pay UAW’s benefits bill, let her say so.”
Exactly, but she will never say the truth.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.