Cui bono?

Written By: - Date published: 11:32 am, December 15th, 2008 - 15 comments
Categories: economy, International - Tags:

I’m no lover of the car industry but it’s interesting to see why the effort to put together a bailout for US carmakers has failed.

Seems the Repubicans couldn’t face the horror of a 14 billion dollar payout, which is chump change compared to the welfare Wall St has gorged itself on, with far less oversight than what Detroit would’ve had, because the nasty unions wouldn’t agree to large enough pay cuts. So, there’s plenty of money for rich finance companies (whose bosses are still creaming it) but none to save the jobs of a million workers.

No-one mention class warfare though, cause that’s a myth or, worse, the politics of envy.

15 comments on “Cui bono?”

  1. coge 1

    These classic American manufacturers have sadly seen better days. I’m not sure they will ever come back without being permanently propped up. Don’t think a bail out will be an effectual long term solution.
    That’s not to say other solutions don’t exist.

  2. randal 2

    dont think Americas car makers only make cars. that would be a very bad mistake for the kiwi schadenfreudenists ignorati to assume.

  3. infused 3

    Wow do some research. These companies deserve to die. They have had years to fix this problem.

  4. infused – so does half of wall street…

  5. Zorr 5

    These companies may deserve to die. However, there are a lot of reasons why they can’t afford to die. Firstly, the amount of workers employed in car manufacturing alone by the big three is totalled somewhere around the 3 million mark. Then take all the businesses that are reliant on their continuing to exist. All the car dealerships, steel factories etc. etc. (I have only just woken up so brain is fuzzy). It is once again a case of too big to fall because the ramifactions of their failure is too big for the American economy to handle, in EXACTLY the same reason why the banks got the $850 billion bailout with zero oversight.

    Republicans are blocking this for one reason, and one reason only. They hate organized labour. Confidential emails leaked by staffers to the press in the US actually say this prior to the debate in the Senate and were used to organize the opposition to the bailout.

  6. Pascal's bookie 6

    Which particular problem infused? The problem that because the US has shit social services from their government unions negotiate retirement benefits?

    Perhaps you think it’s a coincidence that the senators that stalled this deal come from states that house the big 3’s competitors?

    I’m sure you are just as scathing of the hundreds of billions spent saving the financial sector from total meltdown? There’s a business model that really failed and yet I see AIG is still paying million dollar rentention bonuses to the geniuses that were at the helm.

  7. Lew 7

    I find myself in the strange position of agreeing with both infused and Robinsod. These industries (US automotive and investment sharkery) deserve to die. So does the US agricultural `industry’ with its system of subsidies which makes it more profitable to destroy a crop than to sell it.

    However the question of whether they should be allowed to die is a different one, and the answer depends on who you ask. These sorts of bailouts stifle progress by preventing the market from correcting and allowing more efficient or more viable production to take over; in that regard they’re a very bad thing. However so many other markets rest on these rotten foundations that to allow them to fail naturally may not be the less-bad option in the long term – both for the capitalists and the workers. Cui bono indeed.

    L

  8. like I say, I’m not defending the car industry, I’m pointing out that different standards apply when you’re talking financiers and when you’re talking ordinary workers.

  9. Lew 9

    SP: The point is that it’s bigger than that. Both the automotive and the finance industries support a raft of other industries, but I think it’s clear to anyone which supports the larger. The failure of domestic credit markets in the US would send orders of magnitude more workers to the wall than the collapse of the automotive industry. Yes, it predominantly benefits the owners of capital – but every employee of every business who can maintain operating cashflow as a result of the bailout benefits too.

    L

  10. Actually, the MSM is being a bit misleading here. There were sufficient republicans voting for the measure to put the bill through (10), but not all democrats voted for it.

    http://patterico.com/2008/12/13/la-times-falsely-tells-readers-that-democrats-didnt-have-the-10-republican-votes-necessary-to-pass-the-auto-industry-bailout/

  11. Pascal's bookie 11

    Lew, how are things?

    the auto deal failed, we’re told, because the the GOP demanded that pay and benefits be reduced next year rather than in a couple of years. That was the alleged sticking point, which doesn’t sound like a deal breaker to me, which makes me question whether the GOP had different motives here…

  12. Bill 12

    A 50% reduction in worker’s wages to ‘bring them in line’ with non-union factories. So, from $50 – $60 000 down to $25 or $30 000. (http://www.ourfuture.org/blog-entry/2008125012/hoover-time)

    Hmm. Hello mortgage default; bye-bye home.

    Not that we’d want to portray this as a symptom of class war. Course not. Perish the thought that a capitalist would attempt to pit one worker against another in order to achieve the lowest common denominator. Globalisation was about ‘rising boats’ after all, wannit? No downward pressure there either.

    I sometimes despair at the jaundiced view expressed by some on these issues. Daddy Capitalist wants what’s best for all. Be grateful.

  13. infused 13

    I’m not against the workers rights and the union power there. Good on them. My problem is with the actual companies. Even if they are bailed out, they are going to be in the same shit in a years time. The companies are changing nothing. Their products are huge gas guzzlers. They still haven’t learnt. Toyota is building plants in USA and is a lot more profitable.

    That’s my reason. It’s a waste of money.

    I see the bigger picture, but in the long run I really don’t think it’s worth it. The car companies were asked to come back with a solid plan. They haven’t.

  14. Lew 14

    PB: Never better, thank you!

    Yes, that’s an important point; but I guess I’m saying that the two cases aren’t directly comparable in the terms Steve has compared them.

    L

  15. Pascal's bookie 15

    hmmmmm

    http://www.washingtonmonthly.com/archives/individual/2008_12/016066.php

    One other thing to note is that Senate Republicans had been in talks with the whitehouse, who we are told begged them not to block any bailout.

    The decision they faced was not, “bail them out with this deal or let them fail” but “bail them out with this deal or have the whitehouse reluctantly bail them out with the TARP money”

    Which of those options would have been better for the industry and the taxpayer.

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