Auto Makers Are Back for MORE Bailout Money To Save the Unions

This is beyond the realm of even fantasy - this is absolutely absurd - what we are doing is making sure the unions don't see the end of their strangle hold on the automakers. Management is just a responsible for the problems they have but the unions refuse to make major changes in their organization to save their own necks.

Sink or swim - fish or cut bait - what ever works but no more hand outs. Stop this nonsense.

Its imperative that we do not allow this to happen - I agree with the author and I have stated this in the past, let the US automakers find a level where they can compete. If they can't do this then let them go under. Let the market take care of itself.

I drive a Ford 150 and I love it - it's a great truck, but I would rather see Ford go under, reorganize, and come back a totally revitalized company. Probably much smaller then it is now, but non the less, better able to compete in our world wide market of today.

Keep the faith.

Yet Another GM Bailout*
Daily Article*
by Briggs Armstrong
Posted on 11/10/2008

General Motors has once again approached the federal government with its hand out. It should not be forgotten that in September of 2008, Congress gave the "big three" automakers a loan totaling $25 billion. Now they are back. This time they say that with a mere $50 billion they can turn things around and become profitable in the future.

The management of GM and Ford as well as the UAW have been meeting with Nancy Pelosi to arrange a deal. GM claims that if the government does not give them the money they demand it will spell doom for the company and thus the entire US economy.

Let's consider the impact of GM /ceasing/ to exist — highly unlikely even if they declare bankruptcy. Hypothetically, GM would close its doors and all 266,000 workers would be unemployed, never to find work again, or so GM would have the public believe. GM maintains that it is really in the best interest of the country and economy to continue to support their failing business model. After all, in what kind of a world would the government allow a company that employs 266,000 workers to fail?

Descending into an abstract economics lesson about shifting resources to marginally more productive activities may be ineffective; therefore, I will approach this issue from a more philosophical angle.

The basis of GM's claim is essentially that they are too big or too important to fail due to their massive labor force. But how massive is their labor force relative to other American companies? It may be surprising that the following companies employ a /larger/ number of workers than GM: Target, AT&T, GE, IBM, McDonalds, Citigroup, Kroger, Sears, and Wal-Mart.

It is also worth noting that Home Depot, United Technologies, and Verizon all employ nearly as many workers as GM.The question must be posed: Should the government bail out all 12 of these companies and, if so, at what cost? I doubt that if Wal-Mart, with their 2.1 /million/ employees, went to the government or the American people and demanded a bailout that they would receive much sympathy, let alone money.

But if we are going to base worthiness of bailout on number of employees alone, then Wal-Mart is almost 7 times more worthy than GM.(I have largely neglected Ford, whose executives are also demanding a bailout. I believe that it is enough to simply state that Abercrombie & Fitch employs almost 7,000 /more/ workers than does Ford. Would the failure of Abercrombie & Fitch's threaten the economy? I think not.)It is unethical to force taxpayers to pay billions of dollars in order to bail out a company with a failing business model.

After all, they cannot even claim, as banks did, that it is an industry-wide problem. Because if it were industry-wide, Toyota, Hyundai, Honda, Volkswagen, etc. would all be joining their American counterparts on Capitol Hill with their collective hands out.

http://www.mises.org/store/Wild-Wheel-The-P419.aspx

For years GM and Ford have produced a product that consumers do not value as much as the product provided by their competitors. Rather than changing their products or business model, they instead spent small fortunes on lobbyists. If the government does bail out GM, rest assured that this will not be the last time. But even if the government gives GM a check every week, there will come a time when no amount of government money will be enough to save them.

What is the best solution? In a word, /bankruptcy/. By filing for bankruptcy protection, GM can escape the death grip the UAW has on the business. Bankruptcy would allow for restructuring on an unprecedented scale. There is a good chance that a highly competitive company could rise from the ashes of what we today call GM. Even if GM itself was unable to survive bankruptcy, the resources freed from its grasp could be hugely beneficial to other automotive companies that make products that American consumers value more. As taxpayers, we have a /right/ to object to this misuse of our money.

[VIEW THIS ARTICLE ONLINE] Briggs Armstrong is a student at Auburn University majoring in accounting and minoring in finance.