More Craziness in Bailout Land
Now that the big three auto makers are looking for bailouts, things are really getting out of hand.
I just wanted to put together a short list of things that are problematic about the bailout, most of them are general about the bailout as a whole, but a few are related to the proposition of bailing out the auto industry.
- The government isn’t just giving theses companies loans, or grants, they are actually buying stock in the companies, therefore, every bank, and other entity that the government “bails out” is actually being partially bought out by the government. Government having an ownership stake in private companies in the free market is a huge problem, and is not a good path to go down.
- The people didn’t want this. The American public cried out against the bailout, and congress told us they knew better and passed it anyways.
- Companies not originally included in the bailout are now trying to get in on the action. (American Express, GM, Ford, Chrysler) Next thing we’ll find home builders doing the same thing. One of the beauties of the free enterprise system is that if businesses don’t make sound decisions, they will die, and business that do make sound decisions survive. Through this process we end up with strong business that make good decisions being the ones that ultimately provide products to the public. This bailout is interfering with the natural course of free enterprise.
- The big three’s contracts with UAW have them paying the people that build the cars more than most of the people that buy the cars get paid. ($25-$75/hr. plus health care now, plus retirement, plus health care when you retire). Right now, GM, because of it paying the health care of its workers and retired workers is the largest purchaser of Viagra in the country. Now I’m all about old dude’s still being able to do their business, but I don’t want to pay for that when I buy a car. (Thus, I don’t buy American.)
- If we are going to bailout the big three – which I don’t want us to do, but I think is likely – part of that bailout should include the nullification of all union contracts with the automakers. These companies have to become profitable again, one of the reasons they haven’t been profitable is poor quality and value in their products. The other reason, which I think in some ways contributed to the first, is expensive union contracts. As far as I’m concerned they need to do some major restructuring, Toyota operates at a 1:3 employee ratio versus GM, Toyota does with one person what GM takes three to do, not to mention they are non-union. If the American automakers would take some cues from Toyota, who are now one of, if not the, leading automakers in the world in terms of profitability, they would be a lot better off.
Please people, contact your representatives and let them know that you’re fed up with the garbage and the bailouts, and that if they are going to bailout the big three, there need to be certain pre-conditions to promote profitability.