Monday, November 24, 2008

I Feel Better About Helping Automakers Than Banks

Call me crazy on this, but I do not feel the same anxiety about helping the Big Three that I did about the banks.

I supported the bank bailout because, well, we kind of had to. Banks are the engine of the economy and we all have a vested interest in seeing them survive. Without solid banking in the US, the world hits depression quickly. I believed it had to be done, but I did not have to like it.

The automakers are kind of a different story. Basically they followed the rules. The market wanted larger vehicles and that's what the Big Three gave them. The unions wanted strong salary and benefit deals and for the most part harmony has been maintained with them. You have to give credit to an industry that keeps good labor relations, satisfies the market, and turns a slim profit every once in awhile. Sure they do make some bad decisions, but they work on a much more slim profit margin than almost anyone else.

Fact is that this is a national security issue as well as an economic one. We need to remember that during wartime, we will need these factories to churn out tanks rather than automobiles. Of course we have seen jobs being sent to Mexico over the past decade, but perhaps we can reverse that.

Instead of a bailout, let us increase the number and call it something else. Call it a reinvestment. Instead of giving them enough to help them get by, let's set them up for the future. To stay in the United States, auto plants must completely modernize in the same fashion as the coal industry. How much will it take to get these operations into the twenty-first century while giving the UAW enough to make sure that these workers have a soft place to land, or can retrain? This would not only help automakers, but also invigorate our technology sector.

In return, for the next ten years, each American who can prove they paid taxes in 2009 should get a $200 rebate when they purchase a new vehicle from the Big Three. This would be a one time rebate. The federal government should also be able to count on very good deals from automakers providing vehicles in that same time span.

I just don't think that we can allow automakers to just go down the tubes. It doesn't make sense on a number of levels.


  1. I don't see why so many "conservatives" support either bailout. As conservatives we have to stop being dupped by these left wing thoughts. I've got a little more ranting about this post on my site. I look forward to hearing your thoughts on this important issue of our day.

    You say that "without solid banking in the US, the world hits depression quickly."

    If the free market demands a depression why do you want to delay it? How can a conservative be against the free market and for big government spending? Why did it have to be done?

    The one conclussion that I come to that is any good is out of fear. There is no good reason to throw trillions away (I think they are up to 1.7 trillion so far).

    If your having trouble making your house payment and car payment the solution isn't to start putting your clothes, food, etc on credit cards. The solution is to sell your house and car and get something cheaper. This is what the bankruptcy court will do for the automakers. (It's also what the banks and financial markets should have been allowed to do with their "toxic debt").

    Automaking isn't a slim profit margin business, Scion, Kia, they wouldn't enter a market for slim profits. Nobody says, hey this is a slim profit market lets enter it. The Big U.S. 3 have fallen to 7 billion while the Big Japanese three have risen to over 100 billion. This is NOT a slim profit margin business. It is cyclical but that's vastly different. Their are care companies making money.

    The real reason for an auto bailout is fear again. We don't want to hurt or hurt anybody else. That's the problem with pain - today everybodies afraid of it. It's why we're an obese society, over debt (corporate, government, personal), and with a failing educational system. The list could go on of course.

    We're afraid of a little pain. Pain teaches us a lesson the longer we avoid the pain the worse the problem will get.

    As for it being a national security issue. Walmart is the second largest purchaser from China next to the US as a whole. The WV DMV carries Lenova computers (made in and from China)? The boxes that carry are goods, Maquiladoras (spelling might be off there), and the list goes on, here in West Virginia our government mutual fund companies for like teachers retirements were all ran by Canadian companies (it's probably changed since 2002-2003 though). Anyways, There is no way out of manufacturing our goods from else where. It's just simple economics.

    As for the rebate, $200 isn't going to influence a $12,000 dollar decision. What I'd do if this was available is get a Kia or Honda or whatever to throw this in as extra at the end of the price negotiation to close the sell and keep me from pricing another U.S. car. Foreign manufactures would for sure advertise this, I know I would. A $200 rebate would be great for the Japanese automakers.

    Sorry to be rough on you. I'm just afraid our society is becoming way to liberal and to see such a liberal post on a "conservative" blog is very confusing and frustrating. Especially in light of this election and this Bush/Obama/McCain/Pelosi bailout bill.

  2. Another thing. As a conservative do you support them raising the $700 billion bailout to end up pledging $7.4+ trillion instead?

    This is the estimate of how much our liberal AND conservative representatives have pledge so far according to the Congressional Budget Office. This is $24,000 per every US citizen. You may have this kind of money to fork over but I don't. Just think about what your supporting here...