The Real Face of the Big Three Bailout
Over the past few weeks, the heads of the so-called "Big Three" American automakers have repeatedly gone to Congress to plead for a bailout. At first media coverage focused on the (legitimate) outrage over the CEOs using separate private jets to come to DC. Then, this week, we've had the circus of watching the same, now supposedly contrite, men arrive after driving 500 miles in hybrid cars. Throughout, we've had the skepticism (and posturing) of Members of Congress, who are holding the country's largest remaining industry (which, by one account I've seen, is responsible for generating jobs for 1 out of every 10 Americans) to a much higher standard than they did the crooks, con-men, and charlatans on Wall Street.
I hold no brief for the Big Three. For decades now they've put short-term profits over long-term thinking. They've sacrificed American strategic interests (and their long-term prosperity) in order to sell big, ugly, gas-guzzling SUVs and trucks. They have decimated entire communities by outsourcing jobs either overseas or to other parts of the United States -- mainly the South -- where unions aren't nearly as powerful. They've proven themselves incapable of streamlining, restructuring, or retooling in a way to make themselves more competitive. They have brought their problems on themselves, and on one level they deserve to die.
But this is crazy. We've just dumped at least $500 billion into a series of ratholes -- AIG, Citi, Bear Stearns, etc. -- that contribute no real value to the economy other than to move money around. But now, we are told, we should not spend significantly less to save hundreds of thousands of people from joblessness.
Does anyone seriously believe that the collapse of the auto industry won't have a cascade effect? The first to go will be the auto parts infrastructure that feeds these behemoths. Then other businesses (large and small) no longer will have the customer base to sustain themselves. (Does anyone seriously think that, say, Wal-Mart will keep stores open if nobody is buying anything?) Finally, local and state governments will no longer have the tax base necessary to sustain a range of public services.
If there is an equation for a second Great Depression, it has to involve destroying the economy of an entire region in the name of teaching some fat cats a lesson.
As I've watched this spectacle, I've wondered why Congress isn't asking the people most affected -- the workers -- to testify. This new ad by UAW isn't a replacement, but it's an important step toward moving beyond the CEOs to see the real face of the bailout:
I'm a Michigander by birth (though I was raised in Florida). When I was a kid, there were two iron laws in our family: go to church and buy American cars. To this day, when Molly and I return to visit family (she's also from Michigan), the overwhelming majority of cars on the road are either American-built or American-owned. Michiganders -- even those who don't work (directly or indirectly) for the automakers -- are fiercely loyal to and protective of what they recognize is the foundation of their economy.
We're not merely talking about the death of an industry here. We're talking about the end of a dream and a way of life. It is the autoworker, after all, that exemplified the potential of mid-20th Century America -- a place where you could work a blue collar job, earn a nice middle-class living, and put your kids through college. It is the Midwest, after all, that was, until the 1970s, the economic engine that drove prosperity throughout the United States.
Much of that already is gone. Here's what I wrote a few months ago while visiting Michigan:
When I was a kid, my dad was the editor of The Saginaw News. When we moved there (the summer of 1966), Saginaw was still a fairly prosperous city, with two major plants -- Saginaw Steering Gear and Gray Iron Foundry (later Central Foundry) -- providing a large number of people the chance to live a middle-class existence. It was a tradition that everybody worked in one or the other at some point. My brother spent several summers working at one, and my then-brother-in-law started on the line and eventually ended up as an executive after GM helped put him through college.
But the automakers weren't the only source of prosperity: Wickes Lumber, a legacy of the years when Saginaw was one of the great lumber processing towns, remained a major employer, and several other large companies contributed as well. The downtown was in fairly good shape, with several large department stores, including Morley Brothers and Heavenrich's, as well as the Saginaw Hotel and the newspaper, serving as anchors.By the time we moved to Ann Arbor (August 1973), the rot already was evident There were multiple causes: the 1967 Detroit riots (and 1968 riots elsewhere) caused many whites in the city to flee to the surrounding township; the first mall (Fashion Square) opened outside the city, leading many businesses to move out of downtown and leading those that tried to stay to fail; Wickes consolidated its offices elsewhere; and, of course, the energy crisis, which, combined with competition from Japan, began the Big Three's long, slow decline (Central Foundry relocated in 1977).
Today, downtown is almost completely empty, most industries are gone, and only the continued presence of Saginaw Steering Gear keeps the city going. That's only one story. Despite its occasional exaggerations, Michael Moore's Roger and Me is a fairly accurate picture of Flint's decline. And there are far too many others.
To let the auto industry die would be to witness the epic failure of Saginaw -- and all the other cities and towns that are only barely hanging on as it is. These workers (and the cities they live in) will face the economic equivalent of Katrina. If anyone thinks this month's job loss figures are bad, just wait until the automakers go under.
There are plenty of ways to structure a bailout so as to ensure that it accomplishes not merely the existence of the Big Three, but their reinvention. These include mandates on changing leadership, a significant paring of lines and models, a cutback on gas-guzzlers, subsidization of alternative technologies, the retooling of plants for other projects (such as high-speed rail), and even some sort of leveraged support that would allow the companies to restructure without actually calling it bankruptcy.
So enough already. Congress needs to stop moaning about the people running these companies and start thinking about the hundreds of thousands who will suffer if we don't do the right thing. Bush needs to do the right thing by signing whatever Congress puts in front of him. And President-elect Obama needs to speak out more forcefully in favor of a solution.
We can't afford the consequences of inaction.
Photo: Derek Farr via Flickr, used under a CC 3.0 license
Follow Charles J. Brown on Twitter: www.twitter.com/undiplomatic
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This is what appears to be the final gust of an ‘economic Katrina’ that is poised to demolish southeast Michigan as we know it. Failure of what we know as “Detroit’s Auto-Industry” WILL result in an economic catastrophe in Michigan that will dwarf this severe one-state recession we’ve already been living in for 8 years now, and will likely wipe out middle class families in this state.
Period.
There is no more “give” in the safety nets of anyone in the region. People have already been tapping their savings, 401ks, etc. just to pay the bills… when those finally dry up, there is nothing left.
Despite all its problems, Detroit–the city, the community–has been working diligently over the past few years to bring itself back, to diversify and attract new businesses downtown, revitalizing historic buildings and plazas, expanding public transit with a Woodward Ave. light-rail system, etc. For simplicity’s sake, picture us as a fighter who’s been knocked down a bit, but is starting to get back up on his/her feet.
Failure to extend a bridge loan that effectively aids the automakers in surviving this enormous credit crisis with even a sliver of the money that was thrown at wall-street (without any questions being asked) will amount to no less than taking a two-by-four to the back of every hard-working Michigander just as they struggle to get up from the mat and back on their feet.
I have never owned a foriegn car... I also have never owned a new car... and I have had in the neighborhood of fifty or so cars in my long lifetime. Buy american has always been my mantra about everything. But it's impossible to do that now because stuff is not made here any longer... even half of our american cars are made in other countries.
STOP FREE TRADE... it has killed us.
We have read enough about the big 3, the financial bailout, lack of lending to mainstream, i.e. homeowners. What about the mamny small businesses, unrelated to these institutions and autos, but trying to survive in a resessionary economy? What will happen to them. As a business owner, I want to survive this for my business and employees? When will we see these discussions. In my town, I am already seeing business closures.
I really cannot believe how ignorant people can be. It seems as if the whole country is betting on green jobs to save the day. Within six months we will have solar panels and windmills coming in from China. It's that simple.
AND I might add GM Ford headquarterd in Canada becaus America has kicked them out to have imports only ,this is what America is screeming for byhumilation of the EXOs my Guess only in AMERICA
Are you loathing all of reality or just the part that's not nice to you all the time?
The people who want green jobs can't believe how ignorant you have been for the past 30 years not to want them, either.
The solar panels may be coming from China, but the people to install them in your roof will come from your home town.
:-)
Yes, another service sector job. Great. Pretty soon, we'll all be selling each other imported crap on eBay to keep the lights on, is that how you would have it?
Why would anyone in their right mind buy an American car when the Japanese have won the game hands down with better fuel efficiency, styling, stronger and longer lasting bodies and motors. They've beat us at our own game and it's time to throw in the towel. American cars are junk and should go the way of the typewriter. Let the Japanese and Koreans take over and let the Americans do what they do best. Hmmmm. Does anyone know what that is other than manufacture weapons of mass destruction invade other countries?
Help me out here Send them to Canada and all the cars could be winners hands down,and you could import tanks too.
We have to look at "the big picture." The days of tunnel vision need to cease. Our nation better wake up and smell the coffee. With all our bail outs along with the 168 billion economic stimulus package, that btw did nothing for our economy it is hard to understand why our government can't see the need to bail us out of our dependence on foreign oil. The high cost of fuel this past year did serious damage to our economy and society. While we are doing the "happy dance" around the lower prices at the pumps they are planning to cut production to jack prices back up. Instead of spending billions on stimulus pkgs that don't work and millions to bail out everyone and his brother why don't we invest a few on renewable energy projects. WE could provide cheap clean energy, create millions of badly needed green collar jobs and reduce our dependency on foreign oil. This would be a win-win situation all the way around. Jeff Wilson has a great new book out called The Manhattan Project of 2009 Energy Independence NOW, these guys all need to read this book.
Getting your arms around nothing is still nothing .until someone buys a car it can't be built at this time only will you understand the money is for payrole not for the car companies there is nothing coming in and nothing for them to build .The 6 cars destend for the people of AMERICA will be stopped untill GM Ford and chrysler to pay payrole.YOUR ALL THINKING bail out not payrole.
HuffPost's Pick
ChristopherSt.John,
There is no automaker spin. If anything, I think that they've failed to explain how everyday people will be financially devastated by a collapse of this industry. The entire midwest will be abandoned. Industry is the only thing we can do here, the weather is not good enough to invest in much else. So until the new Green Industry is formulated, white collar and blue collar Americans in this region of the country depend upon manufactoring, and the auto industry in particular. Without this industry, there is no stable workforce, and therefore, no consumers. The viability of the Midwest and the auto industry are linked in ways that you cannot imagine. Come to Michigan. I'll show you around. Then you can decide whether or not we can survive without these companies. But until you talk to those of us who will lose our jobs, our health insurance, or homes, you cannot make an informed decision.
See Charles J. Brown's Profile
Kstuff,
Thanks so much for your comment. Even as a native-born Michigander and a regular return visitor with family in Flint and Lapeer, I can't imagine the challenges you are facing. Let's hope that Congress does the right thing. -- Charlie
Sorry That most of Americans feel that most workers get 35 bucks an hour and sat on our buts to make it ,I myself worked for GM 32 years and to see how the three CEOs were made to beg for their companies to reach payrole and be laughed and ridiculed for their fast track to make meetings and it called a bail out by the media is in my opinion degrading. I do hope America gets its act to gether and life returns as we knew it without the inflated price of gas now the inflated price of food because food went up because of gas prices . Think now government will look at food prices befor that starves us too.
Nice proof that on Huffpo you can be picked no matter how much nonsense you talk.
At the very best, you put Michigan ahead of the country.
Not just Michigan. Virtually every state has automotive ties.
http://freep.com/article/20081202/BUSINESS01/81126099
I know it seems like this is all about helping people have jobs, but it’s not. That’s the automaker PR spin. There’s no reason to tie together the fate of these terminally-mismanaged companies and the responsibility that the United States government has to look after its citizens.
Instead of having the federal government distribute the money through these companies, why not do it directly?
The $25 billion could be used for:
* Training workers for different roles, or entirely new jobs
* Research and development into refining our current technologies and applying them to products that meet the new set of challenges that are on the horizon now
* Launching new companies that will leverage new technologies to make the green products that are increasingly in demand
* Transitional programs to help workers make the move from where they are now to the next opportunity
* Extended unemployment benefits for workers who are in particular need
* And much more
In short, we could create any industry we want. And we could do it right there in Detroit.
The central question is this: If the American car industry as it stands right now didn’t exist, would you choose to build it? Or would you choose to build something else?
Let’s seize this moment when we could do something different. We can take care of our citizens, walk way from a dying corporate structure, and build something new, fresh, powerful, and strong. That’s the American way.
Christopher St. John
www.christopherstjohnblog.com
Spinn this The car companies like GM have 6 cars in pilot and not for sale until the 6 of them are MVSS motor veihical Safety Standards this takes a few years to get to pilot from drawing board engineered for presses and design .all 6 are in plants that might calaps because of ignorance of the general public for not knowing anything that auto suppliers have to do so you have a safe and required ride. Now not being able to reach payrole for layed off workers and retirees in America GM has no sales to meet this payrole after the billions bet on the 6 cars coming to market because of the Government treating the CEOs like pig swill trying to speed up the proses by using their air craft government wants them to ride a bike given time wasof the essance and the proof is manifested in the amount required. NOW Please have them move to Canada and all your imports would be just that ,your wishes would all be granted ,send your UAW workers here too health care is good and we would require a bigger staff than we have . Please respond before the end of December
So? Toyota and Honda have a dozen cars in pilot. What are you trying to say? That the US car makers have to be allowed to play by different rules because they can't win otherwise? Where are we? The Kindergarten softball field? $100 billion for a "do over" is a bit much, don't you think?
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