LJWorld.com weblogs Loyal Opposition
A deep pit
A topic of note lately is the notion of “bailing out” the auto industry. The numbers vary but might be as much as 100 billon dollars. Just what does that get us?Much has been made this past week of the insensitivity of the management of the big three when they flew to Congressional Hearings in corporate jets. Management is portrayed as incompetent at best. How could they possibly have bet on the SUV as the future of their companies?There is another picture. There are legacy costs for labor contracts that provide a medical program better than most. There are retirement programs that are generous by any standard. SUVs were what the public wanted and I though that is what corporations were supposed to provide, even if some of us hated that product for ideological reasons.One can honestly ask if any management team can overcome the financial drag from those legacy costs no matter how innovative when competitors can rely on their governments to provide for the benefits covered by those costsIf we bail out the auto industries as they stand now we lock in these legacy costs. They will continue to make it difficult for the industry to compete. It will be highly likely that the current circumstance will be repeated in a relatively short time. Will we then “bail out” the industry again? Perhaps there is an alternative to dumping cash into a losing proposition. Maybe we should pick up the legacy costs of the medical and retirement programs and allow the industry to sink or swim in a more equitable competitive environment. There is, however, a matter of equity if the government commits to sustaining those programs. How about all the other industries on the wrong side of foreign competition because of costs that their competitors do not have. Should we not address their challenge?Then there are large numbers of Americans who do not enjoy medical or retirement programs anywhere near as attractive as those available to the employees of the big three. Can we commit to underwriting those costs without making similar benefits available to all?Maybe we just need to slow down a bit and think this through. Is this industry really too big to fail? Does failure really mean a disaster or will the industry survive as a leaner more competitive nucleus? Should autoworkers be protected from loss of employment when so many other Americans are experiencing it? Is this all really about payback to the auto unions by the Democratic Party – using our money?