I can't help but wonder: Would Congress this week have approved assistance for the auto industry had the CEOs of the Big 3 carpooled to Washington for the hearing in a hybrid vehicle instead of flying to DC in separate private jets?
Try to imagine the positive publicity of the trip as they drove through the towns and cities between Detroit and Washington. Instead of the anything-but-friendly welcome they received by the committees, by the time they arrived in D.C., how many senators and representatives might have been waiting for them in a ceremony on the Capitol steps?
If Honda can make better cars than GM, they can pay same wages 2
Guarantee that GM can repay its loans by guaranteeing that GM will survive foreign brand competition -- the way other modern OECD countries (German, France) guarantee their high paying auto companies survive inside their own borders: sector-wide labor agreements.
Mandate that Honda, Toyota, BMW, etc., pay the same wages as Detroit within our borders. They would have to pay more than they pay the un-unionized American south (our East Germany?) to their workers within their own borders -- and then they would have to ship them here. Cheaper to pay Detroit wages here than to pay them there and then have to ship heavy cars and trucks here. If you happen to believe they build better cars and trucks, then, you can be perfectly sure they will prosper paying the same labor costs stateside.
Japan of course goes to much more brazen extremes to bar even mild competition from within her borders. Japan makes a deal to allow American cell phone service in -- Japan splits in two and American service is confined to hill country with no population while Japanese service takes the urban. Japan agrees to buy more American beef -- Japan buys American ranches to sell beef to itself. As a cab driver my Japanese riders from the airports without exception went to Japanese chain hotels. Japan even carries on the charade of being unable to expand Tokyo airport for decades now because of the crazy carrying on opposition of a few local farmers -- conveniently limiting foreign travel of domestic Yen.
Can't imagine Japan or German or Italy allowing American auto manufacturing to undercut and put their whole industry out of business the way Wal-Mart undercuts the opposition: by paying employees much less (Wal-Mart closed 88 big boxes in the German land of same pay and benefits for same job descriptions -- as are the majority of first world lands). Why is the American intelligentsia the only people in the world who blithely acquiesce in the loss of their flagship industries -- to sever wage undercutting yet -- is this their version of American exceptionalism (I know they wouldn't like to think that).
Sector-wide labor agreements are the way business is done in the most of the first, even some of the second and third world -- it is the modern and only answer to the race to the bottom, the underpricing of labor by the underpricing of labor.
Racing to the bottom
Ah but we aren't racing to the bottom. I'm not sure what your next to last paragraph means, but it doesn't have much to do with how trade policy works. The Japanese companies aren't doing anything wrong by locating plants in the South, where the locals were never smart enough to see the advantages of unions. My guess is that they won't take kindly to unionism dressed up as sectoral labor agreements. Can we blame Honda or Toyota for that?
"race to the bottom"
I am not sure what you mean by we are not racing to the bottom. As of last year a quarter of the work force was earning less than LBJ's 1968 minimum wage ($10/hr adjusted), double the average income later! Since the income shift went from the bottom 90 percentile to the top 3 percentile it is not a matter of a higher tech economy -- the top 3 percentile always were highly educated.
What it is is a matter of bargaining power neglected. The nation that worships the free market doesn't seem to have a clue how it works. Since industrialization the default position has been a labor market that prices labor on power not utility -- last lot seller v. fire sale seller -- as long as labor is not unionized properly to force ownership to bargain with you and not just anybody who comes along.
PS. Doubling the fed min wage would add 3% direct inflation -- about what we grow every couple of years -- if we got our inflation raises and gave up some of our growth raises for a few years we might not notice (don't use heavy min use restaurants to argue the workers would mind -- did anybody ask workers what play they want us to make for them in the labor market -- go up a dollar every six months and keep your eye out for what THEY consider trouble).
Well, I'm from the South,
Well, I'm from the South, have a college degree and a good paying job in high tech. As a southerner, I know I don't need the greedy and corrupt union bosses to negotiate for me. I'm quite capable of taking the personal responsibility to do it myself.
bail'em
If the morons at AIG deserve $150B, I think Ford should get $8B. (and I'll take just $1B) How is this even debatable?
Auto Crisis -- "The 15% Solution"
Auto Crisis -- "The 15% Solution"
I am not an economist. So,I expect my practical approach put forth below is either too pragmatic or too slow moving in that the car makers do not get a huge infusion of cash instantly.
The 15% Solution
One possible approach to dealing with the auto crisis -- The federal government would give any one who buys a fuel efficient car from the Big 3 US automakers a 15% instant rebate back on the selling price. This program could have an 18 month time limit. The total of the rebate dollars might then constitute a loan the auto makers would have to pay back.
If effective, this solution would immediately jump start US auto makers by giving them a huge advantage over the competition while they work on the remaining legacy issues. Auto makers would stay employed and no money would go directly to the car makers (I realize there may be issues in that the auto makers don't get a needed big $$$ infusion instantly, and that they may not be able to produce enough fuel efficient car because of the need to retool).
The feds might also think about underwriting an extended car warranty program for this period. Again, the total dollars to do so, could constitute a loan to the auto makers. (by the way, this could be done in a bankruptcy scenario as well as a way to off set the arguement no one will buy a US maker car if we let them go into bankruptcy).
More.....
A quick direct "15%" instant government rebate (say averaging around $3,000) from the Dept of Treasury paid to consumer with purchase of a US auto maker lower mileage car might make these cars especially attractive.
The problem with the fed using IRS tax return deductions is you only get indirect value (a lower tax payment) and but once a year (April 15)....and higher wage earners get more real dollar benefit.
If you could buy a Camry priced today at $20,000 for $20,000 versus a Malibu priced today for $20,000 for $17,000 (plus get a100K mileage warranty), which would you buy?
Giving a bailout just keeps them from going bankrupt while they try to get a higher % of americans to buy their cars. They have not suceeded in doing that over the last 20 years. Assuming Americans were motivated to buy fuel efficient Gm-Ford-Chrysler cars, the biggest stumbling blocks might be that the auto makers could not retool fast enough to produce enough low mpg cars to get profitable, that they could not get rid of their gas guzzlers, and that they can not work out union entitlements.
I am about to buy another Toyota, but as a US citizen if I was presented with a good alternative to going American I would. GM and Ford are building some good cars now.
Joseph Hare
JoeHareJr@Aol.com
617 755 0898
Are you working for SNL, Stan?
Saturday Night Live's opening skit this weekend was on the auto execs' testimony before Congress, "parallel universe" version. It started with the execs arriving late because they had decided to drive all the way from Detroit but had a series of malfunctions with their GM, Chrysler, and Ford cars along the way. It was both very funny and very sad. I'm partly glad I can't find the clip online so that I don't have to rub it in with my friends and family who work for the Big 3 in Detroit.
I found the video online....on crooksandliars
http://videocafe.crooksandliars.com/media/play/wmv/6836/24222