The Auto Bailout

This is an issue that I feel I don't really know to much about the particulars.

But it appears to me like an inflexible industry operating in a field which clearly needs pioneers got bailed out only to continue producing at business as usual. Whilst the who's international stocks traded hands and made money and the city that built the company along with the people who live there got left in the dust to go bankrupt - strikes me as being both incompetent and unethical.

I am curious to hear others perspectives coming from prospective grounded people care and Earth care

I think the bailout was also illegal . Who gave the feds the legal right to do this ? They are not a bank or lending institution . This bailout resembles eminent domain more than a loan . There has been much criticism of capitalism , but when in our history have capitalists been forced to stand on their own subject to free market forces ? Like socialism without dictatorship , capitalism without government partnership is an untried experiment .

Interesting thought Wayne,

Until recently the Waynes I've know have for the most part been more in line with the 'If the government does it that makes it legal' sort of line of reasoning. I myself don't follow the ins and outs of politics closely enough to know what the feds response actually even was. Procedurally I mean. I just am not satisfied with the results the far. My vote will go to the person I most feel will get results which would best represent my voice.

Making the question a bit more personally since no-one seems to be biting. Has anyone bought a new vehicle since 2009?

I think it is very important for every American to at least read the Bill of Rights if not the rest of the Constitution . You may come to different conclusions than myself but why depend on an army of illusionists and lawyers to explain to you what it means ?

Yeah. It's not a very long read; All other powers shall be entrusted to the states and the people. Lets not toss out most of the non bill of rights amendments though. Slavery is bullshit.

I also support the UN Universal Declaration of Human Rights. It is a treaty we as a nation lawfully entered into and I wish we as a country would cease violating - since any government party to the treaty that does so is committing an act internationally recognized as criminal. I would argue that any 'voluntary association of individuals' which are subject to a nation's laws which have lawfully entered into this treaty should also be subject to international law (*cough* international corporations *cough*)

It's short too.

http://www.un.org/en/documents/udhr/



I still am wondering if someone around here bought a really solid diesel pickup or a an e-85 ethanol fiberglass lightweight speedster that their really satisfied with and why they chose to buy and whether they paid cash out of pocket or credit? Also speaking of - How do people feel about the bank bailout? Other than it perhaps having been illegal as some here would likely suggest. Who's satisfied with it's results? Would not have bailing out the banks have been worse?

Landon Sunrich wrote:

I still am wondering if someone around here bought a really solid diesel pickup or a an e-85 ethanol fiberglass lightweight speedster that their really satisfied with and why they chose to buy and whether they paid cash out of pocket or credit? Also speaking of - How do people feel about the bank bailout? Other than it perhaps having been illegal as some here would likely suggest. Who's satisfied with it's results? Would not have bailing out the banks have been worse?

i feel like the answer to this is so obvious, the people shouldve been bailed out so they could pay the banks.
a large debt forgiveness/grant/home refinancing bailout to the people, earmarked for the banks that way. it wouldve gone to the banks, but through the people getting their loans forgiven or paid off.

it seems like most people think this was total BS not just the "choir" of alternative type people.

The Fifth Amendment of the US Constitution :

"No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

This mandates that private property {as in "your cash"} can only be taken by the government for public use and after they compensate you fairly for it . No where does it give them the right to confiscate your cash {taxes} and give it to a business for private use . We were not compensated for that removal of our personal wealth . Did you recieve a tax rebate giving you that money back ?

I was in the restaurant business years ago and failed after one year . I ended up personally almost $30,000 in the hole . My yearly income at that point in my life was around $20,000 . My partners lost more than me . No one bailed us out . I got that much smarter . I read recently that 42,000 restaurants open in the US yearly . 70% will fail before they become liquid . So , do the math with me . It will be fuzzy math to be sure . If each restaurant had only 10 employees each we are talking 420,000 jobs created each year . 294,000 jobs lost yearly . Almost 3 million jobs lost every ten years . That is what they said was at stake if we did not bail out the auto companies . 3 million jobs . We lose at least that many every decade in the restaurant {my choice of 10 employees per restaurant is a low estimate I am sure} . No bailouts for these foodies . Yet the restaurant world is innovative , thriving , and compelling enough to entice that many people to risk their asses attempting it . If you want to succeed in that business you have to be smart and very willing to work hard right from day one . It truly is survival of the fittest . Not so in the auto business . You can reap huge rewards for being mediocre and intellectually lazy . With the help of your cronies in D.C.

Wayne, I think your reasoning in the restaurant example is faulty. 42000 restaurants open in the US each year, and 70% of them fail in short order. In my experience new restaurants usually end up opening in the same property as previous restaurants - ones that close end up opening under new management and a new name. The net employment by the premises still ends up being the same.

Usually businesses fail because there is insufficient demand for their product (with a whole host of other reasons too). Protecting restaurants will lead to an oversupply of eateries without an increasing demand for their product supplied, so all the other businesses are sharing the same number of customers and everyone is worse off... Net result is you end up subsidising all restaurants in an area, without creating more overall employment.

This is quite a different situation from a large single employer who won't be replaced in a region. If a car manufacturer closes another one isn't likely to walk into the premises a few months later and employ people from the local area again.

If you compare businesses to an ecosystem you expect a churn of small enterprises opening and closing over short time frames (comparable to fast breeding animals being predated on/limited by food supply) but the approximate numbers of these businesses stay fairly stable over long periods of time. Wiping out something large like a whole industry, and the cascade of consequences that result can have massive impacts on the whole ecosystem - think about removing a top predator and suffering resultant population explosion of deer which fubars the landscape.

I don't really know enough of the specifics of the American economy to comments on the rights and wrongs of the case, but there is a definite argument to be made that by protecting these industries the government has salvaged your economic ecosystem for a serious catastrophe. Is that compensation for spending your taxes on it? Perhaps. Would your standard of living be different if they hadn't done so - probably.

Michael , my numbers were surely an estimate but the way we calculate jobs lost and gained in our public discourse is congruent with my analogy . The jobs dilemna is ripe for political spin in all directions and is spun daily in the news and from the bully pulpit. The losses garnered by the resaurant investors are very real and so is the investment money that will move a new bistro into the same building as the outgoing one. People are still willing to take risks even in light of past examples sending up red flags . Hopefully they learn a lesson or two from the previous tenants demise . The auto companies were prevented from filing bankruptcy which would have forced them to restructure or fail further. If they were such viable enterprises they could have easily found private investment capital . They simply saw an opportunity to tap into a bailout fund that was created initially to cushion the housing crisis . No , I do not think it helped to preserve my standard of living at all . I do not view GMC, Ford , Chysler , or Toyota for that matter as public services . I drive a 1998 model and cannot afford a new car payment , even for a used vehicle . I certainly could use a portion of what was removed from my paycheck last year though .

I am hard pressed to find many things the government has done in the last hundred years that are legal or ethical, and only a handful that were both.

The restaurant and cafe business are often referred to as "me too" businesses. Many people assume that they will be good at it and that a good location will lead to success. Because of this, the whole sector is in a constant state of oversupply. Players come and go. Failures are tragic for those involved, but there are always other places. Consumer choice is not limited and delivery of hot food is not outsourced to Korea. Domestic producers share 100% of the market. Because of this, the huge failure rate has no effect on the balance of trade.

The auto industry isn't something that can just start up like a new burger joint. There's a huge supply chain of other companies that also go broke if cars are not made domestically. The supply chain isn't affected when Bob's Burgers is replaced by Mike's Meatballs. If North America lost it's top three restaurant chains, mom and pop operations would see more business for a time and everybody would eat a little better. A few wealthy people would go broke and thousands of minimum wage workers would flock to the surviving restaurants. Life would move on and few would be affected for very long. People might learn how to cook.

Dale says : "If North America lost it's top three restaurant chains, mom and pop operations would see more business for a time and everybody would eat a little better."

The same would hold true for the auto industry . Look back at the profit statistics for the Big Three Auto makers and then compare the profits of Toyota . Toyota was making huge profits selling less cars while the American companies were floundering in their own inefficiencies . Then there is Chrysler . They have the honor of being the creators of the worst cars ever . The Gremlin , the Grenada . The K Car ! They deserve to go belly up . If these companies failed , other companies would have stepped in to replace them with more efficient and profitable operations . Or , these Big Three would have been forced to compete more effectively with Toyota . There is nothing that unusual about a Toyota motor .
The end result of this bailout was not the salvation of an American work force but just a stronger linking of Big Business and Big Government . Not much help for the small independent innovators who could turn this industry around.