December 14, 2008
Opposing Auto Bailouts == Slavery
A very good friend of this blog trolls the fever swamps of the mad Internet left so you and I don't have to. He feeds me a good stream but I must agree that this one is top drawer. Ron Dzwonkowski of the Detroit Free Press editorial page sees the last battle of the War Between the States -- in the US Senate:
It just grinds you, doesn't it?
Dzwonkowski closes by quoting of the Senate's leading economic and intellectual lights (cough, cough!) Sen. Debbie Stabenow. She compares the financial rescue to the auto bailout and decides: "They always focus on the supply side. We're on the demand side. They say help the people at the top, and it will trickle down. But it never does."
And I didn't even excerpt how it is "sort of, you know, un-American" to decide "wages paid by the imports ought to be the industry standard." And how the UAW wages are just the last issue they can cling to after Congress has worked everything else out.
UPDATE: Megan McArdle, whom, out of deference to Perry, I will present with no adjectives, has a better take. If the UAW thinks they have fixed the problems by agreeing to reductions in 2011 "Fine, let them have the money in 2011."
This seems so elementary to me that I cannot even believe we are arguing about it: the reason Gettlefinger needs to take a haircut along with everyone else, is that if he doesn't take a haircut, GM will be back in 6 months asking for more money. There is absolutely no way whatsoever that GM has any hope of profitably making a car with labor costs higher than their competitors. Their labor costs should be lower than their competitors, because they have to sell their cars at a steep discount. Even if we somehow magically revolutionize the management tomorrow and get them steep discounts on their debt, it is going to take them years to rebuild their brand to the point where they can charge comparable prices to Japanese cars. GM cannot afford to pay its workers more than the competition in that situation.
UPDATE II: The Everyday Economist finds -- and refutes -- another overwrought column, this time from Mitch Album.Economics and Markets Posted by John Kranz at December 14, 2008 12:49 PM