Friday, December 12, 2008

RIP Detroit

Although I'm on the other side of the world, I still pay attention to the economic news of America. In fact, the Chinese news is filled with economic news from that capitalist society I call home. And I get to hear all about how ridiculous the auto industry in Detroit can be. Even the executives' decision to fly private jets to DC the first time around to plead poverty made its way into the Chinese broadcast.

Now, after I've read the reasons why the bailout plan failed in the Senate, I can say this: Let the "Big 3" fail. They've had thirty years to reinvent themselves and fix their problems and they have failed miserably. I'm sure some companies in other countries will buy up some parts of their operations and turn a profit in the future.

As for the United Auto Workers, I think they're a bunch of idiots. The companies they work for are going bankrupt and they don't help them gain public funding by refusing to take a pay cut so that they would make the same amount of money that other auto workers make at Japanese companies that operate in the US. If I was given the choice between a pay cut and losing my job, I'd probably take the pay cut. The UAW is just as stupid as the executives that run the auto industry. You people deserve to fail.

Yes, I realize this is going to have a tremendously negative effect on the economy as a whole, but it's worth the lesson in basic business sense. The government does not have the responsibility to help every private company that took too many risks or made too many poor decisions. The American auto industry dug its own grave a long time ago.

1 comment:

CountLubinstein said...

Do you think that spending $700B on banks is a worthwhile investment? The CEO of Merril Lynch recieving his $10M bonus this year is ok? AIG execs spending $500K on weekend retreats is ok? BTW, how do you think bank execs move around the country these days? I guarantee they don't fly coach. You realize that some of Detroits problems stem from the banks problems, many people want to buy a car but can't get a loan. My $700B disappeared into a black hole of beauracracy and cronyism. $700B is not enough to purchase a new Chevy Malibu for $20K.

But somehow our govt spending $14B on an industry that largly employs middle class workers is a bad thing? This is nothing but pure politics at work. The banks donate to both parties, the auto industry and especially the UAW donate to Democrats and is a reliable source of votes for them as well. Yes they build some crap products, but many of their commercial products are very good. Also, if they go out of business so will many of their suppliers and much of their dealer networks. That's a lot of unemployed workers and empty real estate.

BTW, I saw somewhere that UAW workers, including all benefits, legacy costs, pensions, health care, etc, only cost GM about $10/hr more than their non union counterparts. That's not a significant cost in the grand scheme of things. A bigger issue is workplace flexiblity with unionized workers, and the UAW has offered to work with GM on that.