December 19, 2008
Destroying the Village in Order to Save It
I'd suggest changing his name to FDR, Jr, but I'm saving that insult (and yes, it is an insult) for the next guy.
So thanks for nothing, President Bailout:
The White House announced a $17.4 billion rescue package for the troubled Detroit auto makers that allows them to avoid bankruptcy and leaves many of the big decisions for the incoming Obama administration.Speaking from the White House, President George W. Bush said the administration decided against forcing a bankruptcy to compel cost-cutting, in order to avoid the risk that consumers would desert one or more of the companies and touch off an industry collapse, deepening the current economic downturn.
"In the midst of a financial crisis...allowing the U.S. auto industry to collapse is not a responsible course of action," Mr. Bush said.
"Under ordinary economic circumstances, I would say 'this is the price that failed companies must pay' and I would not favor intervening to prevent the auto makers from going out of business," the president said. "But these are not ordinary circumstances."
And so the government is going to steal $17.4 billion more from taxpayers to prolong the inevitable death of unions companies that don't deserve to live.
For that matter, much of the manufacturing in this country doesn't deserve to live, particularly that created with non-competitive union labor so prevalent in the Northeast and upper Midwest.
The simple fact of the matter is that the U.S. auto industry is not just Ford, Chrysler, and GM, but Honda, Toyota, and other "foreign" manufacturers that build cars here on the mainland United States. What separates the successful companies that aren't asking for a bailout from the leaches grubbing for tax dollars from your already empty wallet? Greedy, bloated, self-serving and uncompetitive union labor, particularly the United Auto Workers (UAW).
Non-union car factories are cranking out the smaller, higher-quality, more fuel efficient fleets that America wants to buy, while the unionized Big Three are cranking out bloated beasts that carry and estimated $2,000 of overhead per vehicle because of concessions the automakers have made the unions over the years in noncompetitive benefits and pensions.
As a result of this bloat, to make their cars competitive on the price point, unionized companies have to remove $2,000 from some other part of that vehicle, affecting the overall quality, durability, fit, finish, and reliability. Detroit is in trouble because they're cranking out cars that are worth less than their competitors, and buyers know it.
President Bailout's latest concession to the damned (and I'll let you choose who the damned are; the companies that are still doomed to failure, or the rest of us who are doomed to ante up for their pointless life support) is just the latest bit of government interference that will make this recession last longer and perhaps dive steeper than simply letting the business cycle naturally remove the weak from the marketplace.
So why are Bush and Congress willing to frantically continue trying to pump water from a dry well? It's all about demographics.
Michigan, New York, California... look at a the map of the areas most affected during our current economic crisis, and you'll see areas of large populations in the Northeast, West Coast, and upper Midwest (historical big government Democratic enclaves) and a handful of swing states.
Democrats in Congress (and soon to be in the White House) are unwilling to address the fact that the big government economic politics of FDR and LBJ are the politics of long-term economic failure. They are continuing to sap the ability of businesses to do business, while pandering to the unions that are dragging their constituencies into ruin. Don't worry about this being a partisan attack. There are plenty of "go along, get along" RINO Republicans that voted for the same legislation on both the state and federal levels to get us to where we are today.
If you look at the areas of the country hardest hit during our current economic crisis, the bulk are those that long ago embraced big government solutions. New York. New Jersey. California. Michigan. Ohio.
Look at those areas that have weathered the financial storm better. The Deep South. The lower Midwest. The Western states.
Those states that have taken the hardest hits are those that have embraced big government intrusion and union meddling. Those that have survived are those areas with far more business-friendly markets.
You're no fool, and I'm sure you've noticed that businesses and talented individuals with a drive to succeed have been migrating away from the bloated big government states to the free market states in droves within the past decade.
The "best and brightest" are fleeing cramped Northeastern apartments for McMansions on the outskirts of Atlanta; the tech companies are peeling away from Silicon Valley and Silicon Alley to relocate to climates where they have cheaper land and more educated labor pools, like North Carolina's Research Triangle Park.
For example, on Monday I'm joining a brand new marketing department of a major international high technology company.
They needed more staff, and determined that they could add more people and get more bang for their buck by building a new marketing unit from the ground up in North Carolina, for far less than they could add staff to an existing marketing unit in their California operations. Once they started interviewing, they were further impressed that the quality of resumes here was also significantly higher than they were used to in their California headquarters. That's ten well-paying white collar jobs that California lost and North Carolina gained, and when the time comes to add more people to the marketing unit, which location do you think will have a natural advantage? Obviously, the site with lower operating and salary costs and a higher-quality recruiting pool has a distinct advantage.
What I'll be amused to discover on Monday is how many of the nine other members of my new team are from North Carolina. Many of the people I've worked with in RTP aren't North Carolina natives, but instead intelligent, highly-motivated individuals that fled big government states and urban areas after graduating college for a climate with more opportunity.
This "brain drain" of the skilled and intelligent fleeing big- government areas means that these growing southern and western states aren't just seeing distinct business advantages as a result of their policies; they're also gaining an influx of intellectual capital that northern states cannot easily replace.
For those of you proud folks in the northeast and upper midwest who doubt this claim and have a Facebook account, see if you can replicate this little experiment.
Look at your list of friends from high school and college. Who remained behind in your hometown, and who moved away? For those who moved, where did they move— and are they, as best as you can tell, more successful than those who remained behind?
My wife, for example, grew up in upstate New York, and went to a large high school, with several thousand in her graduating class. She still has a handful of her close friends that still live in her hometown and the surrounding area. Some are doing okay, and some are thriving, but they have to work far harder to get what we have because of prohibitive real estate prices and taxation that leaves them poor for the same amount of work.
Many of her friends, however—and those who seem to have gone on the find the most success and/or have the most education—have moved south, to Tennessee, Georgia, North Carolina, and Florida. Among this circle of friends, those that have done the best and who have the most opportunities for their families are those that left for more favorable business environments with far cheaper costs of living.
And so I find it particularly amusing that "intellectuals" that remain in their fading big government enclaves are now panicking that those slow and stupid hicks are doing so much better than they are, and feel the solution is to penalize those areas that are doing well by forcing them to accept their failing ideologies. This guy in particular is amusing with his blatant regional bigotry and assumed superiority. He won't admit it and perhaps can't even see it with his nose stuck so high in the air, but his attitude of entitlement, shared with minimally-skilled, over-compensated union sops, that has wrecked his region's economy and led them to such desperate thoughts as attempting to force a laughable "Reconstruction" on successful southern states to make them more like failing big government northern trainwrecks.
Sadly, many Democrats (and far too many RINOs) in Congress also feel that the same big government/big labor interference that caused this economic situation is also the cure, but then, addicts often feel that more of poison flowing through their veins will somehow make them better.
Yup, they just stole another $85 from each of our wallets... (based on 200 million taxpaying Americans - probably a lower number in reality, meaning even more stolen from your wallet).
The thing that everyone in these discussions seems to avoid mentioning is the incentives and tax breaks that foreigners are given when they propose placing a new manufacturing facility in the US. The "breaks" are just the tip of the iceberg. Tooling, replacement machines, etc, that may even have been orriginally built in the US and sold overseas run out their tax advantage in that country and sold to the "new" plant in the US as a "new" machine and gets it's value amortized down again...which is a tax scam in reality but works great on the paperwork. Our companies can't get away with that stuff, or get tax breaks and incentives for building. The US gov't always demands top dollar from our companies. And matching those numbers with the proposed LOANS asked by our companies, it's a wash. At least with our companies the money stays home....it doesn't go to Japan.
Posted by: Tonto at December 19, 2008 07:50 PMActually, to be technical, it isn't $17.4 billion MORE, it's just another part of the $700 billion they already agreed to steal from us.
(Thought that would make you feel better.)
Posted by: notropis at December 19, 2008 09:01 PMThe Government, with it's tax schemes, really does advantage foreign companies in the US. A guy was telling me that the reason foreigners own so many of our gas station is all the tax breaks they get from the Government as foreigners coming to America. Great. Thanks a lot. He says that they transfer the ownership to different family members to keep the gravy train going of foreign tax breaks. See, why are we doing these crazy things?? Politicians. I'm not justifying the auto bailout at all. I'm just saying that every time we have "tax breaks" and "favors" ANYWHERE in the system - it's NOT FAIR!!! And it's especially WRONG when US citizens are disadvantaged for foreign interests or immigrants to our country,etc. We are getting so taken advantage of as US citizens in so many ways... by Government bureaucrats writing taxes and tax breaks and creating an unfair business climate that favors certain groups and classes over others and doesn't create truly free enterprise.
I'm not for the bailout. But I'm also not for all the other tax incentives and breaks that are deals cut that overtax some businesses to give benefits to others at their expense. I"M SICK OF OUR FEDERAL GOVERNMENT!! Especially when it's USA citizens that are constantly getting ripped off for foreigners. (That stuff is going on all the time from what I hear.)
Posted by: l at December 19, 2008 09:12 PMLabor unions have out lived their usefulness. The benefits they once provided are now either mandated by the government or provided by employers to attract and retain a quality, high tech work force. Unions protect workers who under-perform while successful businesses reward workers who over-perform. As a result, products from union shops are less competitive or their companies, less profitable. Remember, businesses do not exist to provide jobs. They exist to provide marketable products and services at a profit.
If the rust belt is such a wonderful economic model, why are 12% of Flint's workers unemployed? And, why should we in Birmingham, where the jobless rate is 4.8%, listen to these pseudo-intellectual Yankees?
Posted by: arch at December 20, 2008 09:24 AM"The thing that everyone in these discussions seems to avoid mentioning is the incentives and tax breaks that foreigners are given when they propose placing a new manufacturing facility in the US. The "breaks" are just the tip of the iceberg. Tooling, replacement machines, etc, that may even have been orriginally built in the US and sold overseas run out their tax advantage in that country and sold to the "new" plant in the US as a "new" machine and gets it's value amortized down again...which is a tax scam in reality but works great on the paperwork. Our companies can't get away with that stuff, or get tax breaks and incentives for building. The US gov't always demands top dollar from our companies. And matching those numbers with the proposed LOANS asked by our companies, it's a wash. At least with our companies the money stays home....it doesn't go to Japan."
Hey, Tonto, how come those states giving those enormous tax breaks are still solvent? How come your favorites are broke/bankrupt? Maybe those tax breaks aren't so damn large after all. And maybe socialism NEVER F'N WORKS!!!!!!!!!!!
Not even in New York.
Wanna bet the next census shocks the hell outta you blue states? Hint - it won't be from the increase in population there...
Hey, Fluffy, I ain't spam!!!
Posted by: Bill Johnson at December 20, 2008 07:44 PMI can haz job! From Bob Owens:
For example, on Monday I'm joining a brand new marketing department of a major international high technology company.They needed more staff, and determined that they could add more people and get more bang for their buck by building a new marketing unit from the ground up in North Carolina, for far less than they could add staff to an existing marketing unit in their California operations. Once they started interviewing, they were further impressed that the quality of resumes here was also significantly higher than they were used to in their California headquarters. That's ten well-paying white collar jobs that California lost and North Carolina gained, and when the time comes to add more people to the marketing unit, which location do you think will have a natural advantage?
And yet, this little nugget of information from the Charlotte (that would be North Carolina) Observer the day after your inane silliness ran:
North Carolina lost jobs at a record pace last month, pushing unemployment to a 25-year high as the outlook for the state darkened amid a deepening recession.Employers slashed 46,000 jobs in November, more than in any state except Florida, according to data released Friday by the U.S. Bureau of Labor Statistics.
By your math, with California losing 10 jobs that North Carolina gained, you would only need about 4599 (presumably blue) states to suffer similar losses, assuming North Carolina were to gain those jobs.
Oh, but the Observer article isn't quite done:
Charlotte-area unemployment rose to 7.1 percent in October, up from 6.9 percent the previous month and from 4.6 percent a year earlier, according to the most recent local data.The figures contrast with the general view that North Carolina was weathering the downturn better than many other states. The housing market, which led the nation into recession, has held up better here than in states such as Florida, Arizona and Nevada.
And while the unemployment rate has been above the nation's all year – the U.S. rate was 6.7 percent in November – the reason was somewhat positive. North Carolina has continued to attract business expansion, fueling hope among workers elsewhere that they could find opportunity here. That perception sparked population growth and pushed the labor force up faster than employers could create jobs.
But in November, the labor force declined, a sign that some workers grew frustrated and gave up on the job search altogether.
Tell me, Bob: Are there unicorns in your world, and are they Baptist as well?
Posted by: Sir Craig at December 22, 2008 10:47 AMWhat Arch doesn't tell you about the utopia of Birmingham, AL is that its unemployment rate was 3% a year ago. So, 4.8% and climbing doesn't look like Birmingham is headed in the right direction.
It should also be noted that 25% of Birmingham's residents live below the poverty line. Thus, the Confederate lifestyle is not necessarily all hushpuppies and mint juleps.
Tonto brings up and excellent point (alluded to by Lind) that isn't discussed enough. All of these Southern states have attracted foreign automakers by offering massive tax breaks and incentives. So, residents of those states get to pay for the training of employees as well as infrastructure costs.
Posted by: OD at December 22, 2008 01:31 PMTo update the Birmingham jobless rates, let's take a look at this:
Alabama jobless rate jumps again
The unemployment rate for the Birmingham-Hoover Metropolitan Area rose to 5.2 percent in November, up from 3.1 percent last November and 4.7 percent in October.
And I wonder if this has anything to do with Bob's race to the bottom:
Birmingham in bottom 100 for men's, women's health
Keep diggin', brother, you'll find China soon enough.
Posted by: petereugene at December 22, 2008 02:12 PMWow, reading ol' Bob wax about economics is almost as entertaining as listening to Bush wax, well about anything. You know the stupid is deep, the cluelessness almost genetic, but you still have to stop and stare, and wonder, how do people this thickheaded manage to go to the bathroom without assistance?
Maybe the next time you get all professor-like on us Bob, you could actually use a fact or two to support your arguments, such as they are. But I hold out little hope for that, you seem to be a keeper of facts the way your face is a keeper of a chin.
Posted by: TooStupidToBlog at December 22, 2008 02:42 PM"A guy was telling me..."
"From what I hear..."
That guy was me. It's hilarious the way I can get your nerves shaken all to hell (heh heh) with just a few well placed lies.
Also, those states aren't exactly "solvent." They're all welfare states sucking on the federal teat. The southern states have been running that scam for a long time now.
Posted by: Satan's Dirty Underwear at December 22, 2008 03:30 PMBill J brings up a good point - and the answer is that the states that can afford to give huge incentives to foreign companies to build non-union manufacturing plants get that money from Californians and New Yorkers in the form of federal funds.
Lind argues that we should mandate a higher minimum wage, and increase federal spending in these state so as to keep them from racing us to the bottom. I say screw that, cut 'em off from all federal assistance above their tax base. If they want to compete with India for lowest wage, let 'em.
Posted by: Chasm at December 22, 2008 04:15 PMI felt that the bail on the financials was necessary. But the bail on the autos stinks. They likely will need money but not without significant concessions from the unions. I don't think that some of you who oppose bailouts understand how close we are to a financial meltdown. The result could be worse that the depression if we don't allow government to do something.
Posted by: David Caskey at December 22, 2008 05:00 PMWow... that was really remarkable, Bob. Most people as ignorant and mendacious as you at least TRY to keep their ignorance and mendacity well-hidden... but you put it out there for everyone to see... and see it they did. Sadly, No!'s refutation of your every single point is brilliant.
For future reference, Bob: the plural of "anecdote" is NOT "data." While I'm glad you found a job (enabling you to purchase your OWN outdoor cooking equipment,) you are now aware that your neighbors are losing their jobs at an alarming rate... and that North Carolina is one of those Wingnut Welfare states that receives 8% more federal dollars than it contributes... pretty much the OPPOSITE of everything you posted.
Posted by: Amy Alkon's Testicles at December 22, 2008 10:34 PMGee, Bob, what happened to my insightful comments, you old lover of free speech, you?
Posted by: Malignant Bouffant at December 22, 2008 11:49 PMhuh...all this union bashing...were the financial companies that went down unionized? No.
I think the original article's placing blame on FDR is obviously false. He spins a good yarn, but it is far too simplistic.
Maybe there was something else going on here? The Big Three are making better vehicles, but like many Americans, I remember the years of "planned obsolescence" and decades of unreliable cars and simply refuse to buy an inferior and gas guzzling car.
First, the housing crisis saw many people lose 40% of their house values. Then, a run up in commodities and the weak dollar policy combined to make gas very expensive--and, at the same time, 40% of people's stock-market based 401(k) retirement funds disappeared in two months. So, after taking two 40% hits, many of us are realizing how bad it is to be in large amounts of credit card debt with no savings...so, buying a new car is out of the question, especially a gas guzzling one. Hey, 10 mpg is still more than twice as expensive as 25 mpg, even if gas is back down under $2!
Of course the union agreements cost the big three more money. But to say "oh the poor big 3, they have teh unionz" is just patently false.
Don't treat your readers like idiots, Yankee.
Posted by: fred at December 23, 2008 07:49 AMIf the average GM car takes 22.15 person-hours to build, and even if by some accounting unknown to art or science each GM worker were actually, in real life and not in some conservative crack dream, making $73 per hour (totaling $1,616.95 in labor costs per car), then how full of crap does the $2,000 figure appear to be?
Posted by: toyboat at December 23, 2008 11:48 AMboat, you're as ignorant as the day is long.
The $2,000/car figure doesn't come from salary of the workers alone, but from the salary plus the benefits GM has to pay UAW pensioners, widows, survivors, and other dependents.
As GM pays more than twice as many non-working UAW dependents as current workers, the $2,000/car figure isn't surprising at all.
Arrogant and ignorant is no way to go through life, son.
Posted by: Confederate Yankee at December 23, 2008 07:17 PM
