Who has the correct approach given the US has just decided to bail-out its automotive industry:

Candice Miller:

"Republican Representative Candice Miller of Michigan said, 'I cannot believe that this Congress will allow the backbone of our manufacturing and industrial sector to be swept away."

From international press:

Jeff Flank:

"Republican Representative Jeff Flake of Arizona said, 'Some of us simply believe that the best way to ensure long-term viability of the auto industry is to allow them to go into bankruptcy'."

I posit that Flank is correct and that the lean towards Corporate Socialism is undesirable. If GM fails, then the fitter competitor should receive its trophy. There might be a rough patch but the auto workers would end being employed by Toyoto or similar. When the US Banks failed (remember CHAMP and the Bank of America) failed in Oz, our retail banks simply acquired the pieces.

Investors have the right to score big on the stock exchange and also to loose everything. In this instance, it is they, who voted for incompetent directors.

Could it happen here? Well, Agriarian Socialism already exists in Australia (and elsewhere in the West). So, perhaps, unfetted Corporate Socialism is not too far away.

Fear, hard financial times, corporate socialism and an external threat, when combined, represent the underpinnings Fascism. Examples, WWII Germany and WWII Italy.

Relatedly, historian, Caroll Quigley, posits societies are must at risk when the powerful act sustain the wealth status quo.

Oly....

the problems with the US Auto industry are 2 fold.

1/ They have kinda clung to the 'big is good' idea of a car..... unlike their Jap/Korean competitors.

2/ The Unions have sought to retain relevance by pushing for ever increasing and UNcompetitive conditions (health care being the most notable to my knowledge)

So... I'd suggest giving the Auto Industry INCLUDING the unions an ultimatum.

a) Executives must RID themselves of the idea that the company owes them a corporate Jet and many other expensive perks.

b) The Unions must RID themselves of the idea that you can endlessly suck more and more out of a company in the interests of workers.

c) The company culture must focus on those ACTUAL realities of the market.. what it wants.. etc.. compact, economical cars.

I think they are part way there with some electric/hybrid units coming out soon. but that only addresses the middle area.. the market.
Now.. deal with the top and bottom end of management/workers.

I agree.. LET EM GO BUST if they cling to unreal aspirations. But then...there comes a trade off which includes national security and local skilling. You can't just sacrifice your whole economy on the grounds of philosophical 'correct'ness.

Ultimately.. if the machinery of production is as efficient as the overseas competitors... that leaves just ONE unpalatable area.. "workers conditions"...does it not?

The free market was only ever intended to apply to small businesses.

For the American congress, the large car manufacturers, mining conglomerates, arms dealers and finance houses are institutions on par with the courts and senate (except the Republicans would never try to undermine business the way it does the courts).

Of course we should let the big players fail and see just how robust the deregulated market really is.

You need to get serious and start to think about who really is
being baled out here. Its not the share holders, for companies
like GM are worth a mere pittance on the stock exchange.

(around 2 billion$ IIRC) So they hardly matter in the discussion.

Its the effect on the total US economy, that it seems they are
worried about. Suppliers, workers, suppliers workers etc. etc.
GM alone seems to owe around 60 billion.

American pride is at stake too here. Having their auto industry
owned by the Japanese, would be more then many patriotic Americans
could tolerate.

So politics is the issue here. The shareholders lost their money
some time ago and hardly matter.

Oliver “I posit that Flank is correct and that the lean towards Corporate Socialism is undesirable.”

I whole heartedly agree.

“Corporate Socialism” brings up the specter of rapacious monopolies hell bent of defending the “Status-Quo” by denying the natural processes of industrial renewal through innovation, ultimately, to the disadvantage of the consumer.


Polycarp “You can't just sacrifice your whole economy on the grounds of philosophical 'correct'ness.”

I see nothing ”correct” in spending ones resources on keeping a dinosaur on life support, long after it would have otherwise died and its place in the food chain been replaced by new species.

Sancho “The free market was only ever intended to apply to small businesses.”

Really?

It was the free market which developed the small businesses from which big businesses grew… a for instance “Microsoft”

I figure your depressing take on things is unfortunately right, Yabby.

And feel saddened that it should be so.

Dear Oly,

I thought that the bail-out by the Government for the US
auto industry although passed in the House of Reps.
was rejected by the Senate.

It does look like the end is near for the American
car industry ...