Sunday, November 09, 2008

Off into the SUV's Sunset

As I said earlier in comments at Eschaton, time for GM to ride off in the SUV it stove in on. In a world threatened for decades with pollution provably caused by inefficient engines, a company that dedicated a large part of its resources to producing mammoth polluting vehicles regardless of the environment and diminishing supplies of gasoline doesn't call for government support. It's record shows that overpaid executives cannot be trusted with the public interest. In the case of Ford, GMAC and Chrysler, the market has corrected.

I hate to think about the generations of workers who will suffer if the automakers are allowed to go belly up as they deserve. It is that prospect that has insulated those automakers from firm action by officials of the left, while corporate welfare orientation has kept the right from doing anything to curb self-destruction rampant in the automakers' executive ranks.

Here’s a chicken-and-egg problem staring at Barack Obama: How do you both save the auto industry in its existing form and make it part of the clean-energy revolution at the same time?

The president elect today voiced even stronger support than House speaker Nancy Pelosi for a second Detroit bailout. In his first post-election press conference, Sen. Obama said:

The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil. I would like to see the Administration do everything they can to accelerate the retooling assistance that Congress has already enacted. In addition, I have made it a high priority for my transition team to work on additional policy options to help the auto industry adjust, weather the financial crisis, and succeed in producing fuel-efficient cars here in the United States. I have asked my team to explore what we can do under current law and whether additional legislation will be needed for this purpose.

Sen. Obama’s hopes for the U.S. auto industry are two-fold. He wants Detroit’s Big Three, with its hundreds of thousands of jobs and retirees, to make it through the crisis without any bankruptcies. That looks increasingly tough given the massive cash burn and mounting losses announced today by General Motors and Ford Motor Co. today. Those dire balance sheets make plain Detroit needs at least the $25 billion Washington has already pledged.

But at the same time, Sen. Obama wants to increase the pressure on Detroit to jettison decades of business trends and make more fuel-efficient cars more quickly. Washington already passed a more rigorous fuel-economy standard in last year’s energy bill; Sen. Obama wants to go even further. That’s part of his plan to both wean the U.S. off foreign oil dependence and also to limit greenhouse-gas emissions.

The fundamental problem, as Detroit keeps pointing out, is that new rules mandating more efficient cars cost money that the Big Three don’t have. Many analysts are worried that U.S. automakers are already stretched to the limit trying to meet existing standards, let alone Sen. Obama’s proposals.

Their record in self-destruction suggests that a responsible assumption of the automakers' debts must include concomitant assumption of the direction of the resources they will have. The difficulties involved in doing this are awesome. I am confident the right wing is sure that the incoming administration will fall off the cliff managing this crisis they've handed off to it. It will not be an easy task, but with an onslaught of public support, hopefully a satisfactory solution can be achieved. I am glad that we are not facing these next storms with the corporate trough still the executive branch's consuming passion.

The automakers deserve to fail, as did the banks. What can be done to keep them afloat should be directed toward keeping the public, and autoworkers, from the disaster they are threatened with because of malfeasance by auto executives.

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Anonymous Anonymous said...

You make a key distinction which is fundamental in addressing the problem. The obsolete and failing industries require a separate set of responses than do the workers in those businesses and industries.

It seems to me that the most pragmatic use of funds and support resources should be aimed at getting the best return on investment for taxpayers.

To my mind this would include education and retraining for workers to new and developing industries and businesses.

My priority list would include education/training for:

Registered nurses
, both of whom have critical and worsening shortages. The automakers already are sending some workers to nursing programs leading to eligibility to take the state licensure examinations and to enter clinical practice.

Green technology
Renewable energy

Both need engineers, scientists, technicians and skilled workers.

The third would be for rebuilding neglected transportation, education and healthcare infrastructure.

We need repaired and replaced bridges, roads, interurban light rail, passenger rail, improved and additional runways, repaired and replaced school buildings, playgrounds, walking tracks and paths, sidewalk improvements, greenways, and repaired and replaced hospitals and other inpatient care facilities, including assisted and supervised group living facilities on a greatly expanded scale.

These could be the pillars for a "newer" New Deal, and as we invest in ourselves and our citizens' futures, we get to reap the dividends.

The key difference is that these would be regulated and administered as not-for-profit entities and projects, instead of a predator take all free market profiteering program.

1:59 PM  
Blogger Ruth said...

You have a good command of the whole picture. Having recently been on a Habitat for Humanity build, I would add basic electrical and construction training, to give our workers more of the skills they need in maintaining their lifestyle. In addition, we need to give working people some of the CCC concepts of self-sufficiency, in growing some of their own vegetables and basic nutritional knowledge.

Green technology is very important, and solar panels seem to be something that would be not at all difficult to learn to install in our own homes, as well.

Avedon featured a wonderful column form this a.m., that gave the lie to some of the right wing palaver lately that ignored CCC camps, that gave jobs and training to workers who otherwise would have wandered about the streets of the cities. 'Relocation' was an important part of the CCC, and it worked very well.

2:33 PM  
Anonymous Anonymous said...

Wow, go annie - great points.

I think we also have to look to the idiots in and supporting the union. The industry leaders were engaged in short-sighted stock-price-based plans with no view beyond the approaching quarter, sure, but the unions have been demanding higher than college educated wages for decades, and their membership will take nothing less than another $80/hr job with insane benefits. The whole lot of them deserves the consequences of their short-sighted selfish behavior - and the US taxpayer should not be shouldered with that burden.

Free market? Isn't failure part of the plan? When did free market become unlimited upside and taxpayer-insured prenting any possible downside?

5:32 AM  

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