Every economy is kind of a house of cards - a series of independent businesses, people, and relationships that combine to create the output of a nation. The "fundamentals" are really just the skills of the populace, the natural resources, our socioeconomic structure, and the governmental ruleset scaffolding on which the economy can be constructed. In America, this scaffolding has been rotting for decades.
General Motors' imminent failure and bailout underscores one of the many traditional, systemic problems in the American economy. Our auto industry is one of the worst examples of inefficient policy, structure, and resource utilization available. Consider: The profits of the industry were built on larger, more expensive vehicles that consumed more fuel, rely on a crumbling, expansive, incredibly costly infrastructure of roads, and were purchased almost completely with credit. We knew this in the 1970's, and instead of allowing our automotive industry to fail it got bailed out.
The results of that bailout were incredible. It propped up something doomed to fail: an industry solely devoted to selling behemoth vehicles that consumed foreign-produced petroleum resources at incredible rates to people that could not afford them. And it pipelined a dying breed of unskilled workers into the system, creating a cesspool of back-room Union dealings that thrived on the scraps of the profits this industry produced. All of it lead to what we have now: unfunded pension plans, massive payrolls of useless workers, and a health care/foreclosure/default disaster waiting to happen. We have something Too Big to Fail.
3 million or so workers would be unemployed - and, for the most part, unemployable - if GM were allowed to run out of cash in Q1. The results would be unconscionable. Michigan would turn into Somalia North even more than it has already.
The Keynesian argument for the bailouts previously all said that this was temporary, and when skilled workers take the hit I agree. But autoworkers have few skills, generally. Operating car-building machinery has little to no value in the global economy, and the low-level workers in the automotive industry are predominately uneducated. Almost none of the people positioned to lose these jobs can DO anything else. That's what makes it fundamentally different than the bank bailout; bankers are predominately educated and don't require a massive investment on the backside to find them another industry to participate in. There's a real expectation that the losses in banking will simply create movement to other jobs and other industries - for example, my "if it happens" strategy is to go teach. But autoworkers?
Stop this madness. We're perpetuating an America that treats Union jobs as a college alternative, that creates immense destructive waste via a car industry that punishes the environment and creates reliance on deadly personal transportation as opposed to fostering sustainable, public alternatives. Let it fail - painful as it would be - and give these 3 million workers free college educations. Subsidize the individuals, get them in industries where they're needed, because what America doesn't need is more cars.
2 comments:
But what America does need is 3 million additional people who have no interest in education clogging the already overburdened university system?
I mean...isn't that the sort of thinking that got us into the "unemployable" mess we're in now? The idea that you need 17 years of formal education to enter the mainstream workforce is part of the problem, not the solution.
The problem with not bailing out the auto industry is that you now have 3+ million people filing for unemployment which is going to increase government spending (but not in the good way). For the people "downline," the people who have jobs/businesses that are auto industry-related, are going to tighten their spending or fail, which overall brings down consumer confidence, which in turns makes investors hesitant to move their money...
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