Ralph Nader has plenty of good reasons for opposing the $50b taxpayer bailout, sorry, “low interest federal loans” for Detroit. Namely, “decades of poor decision-making” and Detroit’s total inability to drum-up capital on Wall Street. Unfortunately, Nader’s name, reputation and government intervention fetish discredit his cause. GM wasted no time rising to the bait, brushing off Ralphie-Boy’s criticism with a suitably put-down. “There are many more relevant voices in this discussion that see the existing provision for what it is,” spinmesiter Greg Martin told The Detroit News. “A sound, smart policy to inject capital into the industry to get advanced technology vehicles on the road quickly.” For once, a GM toady gets it right. About Nader. The consumer advocate argues for government intervention on a socialist scale: a “public takeover of the corporations.” Though a thorough managerial reshuffling should be a condition for any government bailout, Nader’s proposal of a government-run U.S. auto industry is ridiculous. Any such move would lead to a British Leyland-type public ownership debacle. Opponents of the bailout plans would do well to keep their distance from his wild schemes.
Find Reviews by Make:
Read all comments
Ed, Katie beat you to #29…
Ed, how ’bout an article on what you think would work? Or does it consist of “just let them die”? I don’t actually have a strong opinion, but I’m curious about yours.
The Chrysler bailout actually did work, so I’m not sure why emulating it would be a problem. If Iaccoca had spent the profits from the early eighties wisely (R&D), Chrysler might still be viable. Direct public ownership of the companies (American Leyland!) need not result in disaster; depends on who’s in charge. I doubt it could happen in the US, though. We don’t nationalize companies here. Oops, as of this week, we only nationalize service-based companies (mortgages), not product-based companies. Whee.
Meanwhile, the Free Market Republicans are in fact taking over Fannie Mae and Freddie Mac after having recently engineered the forced sale of Bear Stearns to a competitor. Hmmm.
faster_than_rabbit:
In the news blog format, I’m gonna tend to comment on the specifics of the story in question. I’m currently working on another editorial which will hopefully help clarify my personal preferences (for what they’re worth) on the bailout plans.
In the meantime…
1. “Don’t help” isn’t the same as “let them die.” Chapter 11 would force Ford & GM and the UAW to reinvent themselves and become competitive. Rewarding poor management with cheap loans won’t.
2. If the government is going to give loans, it should ask for concessions. Major, but one-time changes that improve the chances for this massive taxpayer investment. This does not mean ongoing government involvement in management like Ralph wants.
3. Instead of giving loans, make it easier for the industry to make competitive products. Relax safety standards (sorry Ralph and various concerned mothers!). Offer more consumer-end stimulus for energy-efficient (not necessarily just hybrid/electric) products.
4. Continue to attract any and all automotive operations to the US. Our currency situation (and the East Asian commodity crunch) make circumstances here fairly favorable. American jobs are American jobs, no matter who signs the paychecks.
5. Ultimately this is up to the managers and directors. There’s no great scenario lurking anywhere in this mess, but they’ve got to find the best one out there. Until they find a recipe for success, Uncle Sam will only be keeping a corpse warm.
That’s about where I’d start.
First, I don’t agree at all that Nader is a discredited advocate of whatever he espouses. Nader knows he isn’t going to be president; his ‘runs’ are merely a means of calling attention to what he sees as a major, if not the biggest, threat to democracy here which is the increasing clout of corporations. This article is an example of using character assassination when you don’t have a compelling factual case. And what is the basis for saying Nader wants the govt to become more deeply involved in the car companies? Maybe there’s a press release I missed, but I see nothing on Nader’s web site on this.
To my knowledge there has never been even a hint of dishonesty regarding Nader. He’s taken no money, has no harem, nor shown any of the character flaws of those seeking power for its own sake.
I agree that Nader receives a lot of unwarranted flack, but such is the media. That aside the point still has merit, these “loans” will only seemingly prolong the inevitable.
The guys running the Detroit auto should not be rewarded. And if the corporations are to receive assistance those managers should be sacked.
mel23: From the Det News article…
Nader, 74, who made a campaign stop in East Lansing earlier Sunday, said a public takeover of the corporations or an approach similar to the one taken by Chrysler in the 1970s, were the only options for Washington.
As badly as Detroit’s management has done, I just don’t see “public takeover” fixing anything. I guess Nader doesn’t mind corporations as long as the government controls them.
Edward Niedermeyer , thanks for addressing faster_than_rabbit.
For every one successful government bailout, I would think it easy to find many more successful examples of live and let die capitalism stories as well.
This is not the point.
You do not know what would have happened IF Chrysler was not bailed out.
Perhaps we (I) wouldn’t have a brother in law now getting 60 percent of his salary from an early corporate employee buyout.
The guy is in his late 40s, damn it!
(Yes, I am jealous!!!)
He should at least come and mow my lawn!!!
Perhaps we would now have solid car companies that saw what happens when you are fat and lazy, and become lean and mean.
You fail.
You die and your lifeless body gets trampled past.
Perhaps we would today have the top car companies in the world IF we had not bailed out Chrysler.
Who the hell knows.
But its the philosophy that’s wrong.
The moment you start doing the bailout dance, then EVERBODY deserves a turn on the floor.
Once you give money, you immediately put all other competitors at a disadvantage.
Where do you stop, or rather, where do you begin drawing the line?
Or is it ONLY the big, important companies that deserve this right and special insurance in the markets?
“Nader’s proposal of a government takeover is disasterous”
“It’ll be disasterous….” is how they described Nader’s book back in the day. The media response was so hostile that Ralph was unable to get studio time with American television on release of his controversial book.
He crossed the bridge to Ontario and got himself on to Canadian TV, being well aware that Michigan residents could pick up canadian signals.
As it turned out, Rome did not fall and Detroit continued business as usual the next day but now facing an informed public.
So much for “disasterous ! “.
Bear in mind that GeneralWatch website has been banging its head against the wall for three years with the sole objective of getting rid of the entrenched inept management. And to no avail.
So someone doesn’t like Nader’s intentions for close government involvement. That’s not to say
that a company taking $50B cash from the public purse is obviously prepared to put itself in pretty damn close goverment involvement anyway, wouldn’t you think ?
Sounds like someone here is warm to the thought of a money handout to Detroit, but not the oversight that Nader would send with it.
T2
What Nader wants is irrelevant.
No one will take his assessment into account if the feds put a plan together. He’s only doing this so that he can get press coverage, not because anyone who matters is actually going to listen to him.
Even hardcore socialists agree that manufacturing should be a private sector endeavor (although possibly it would be easier to keep it that way if health insurance wasn’t).
The one real issue with chapter 11 is that automobiles, because of their cost and long term warranties, might not sell from a bankrupt company.
However, from what I’ve heard many of the auto manufacturers insure themselves against warranty claims with third parties.
If the third party was directly warranting the car (and the BK court was protecting the payments from the automakers to the third party from preference claims) consumers might feel more assured. If a well capitalized third party was carrying the warranty (with all the benefits of the manufacturer’s warranty) I might buy a Solstice Turbo Targa from a GM going through Chapter 11 reorganization.
Regardless, Nader should have enough of a sense of history to know that the most famous government created/owned automobile company’s most famous product had the engine in the back with basic swing axles. That sounds unsafe at any speed.
no_slushbox
Ouch!
Awesome end.
Even if you disagree with the man, you can’t really fault the fact that he is principled and that, especially in America, he presents a viewpoint that otherwise gets ignored by the Right (the Democrats and their backers, by the way) and the Ultra-Right.
Yes, in some ways he’s an anacronism and yes, government ownership probably would go badly, but really, how much worse of a job could the government have done than GM’s own BoD? The fault of crown corporations is usually a lack of accountability in management and an inability to change direction or innovate, and GM already has that despite being a publicly-held company. At least direct government oversight would have stopped the profiteering that torpedoed any strategic thought.
The opposition isn’t dead yet; the candidates may not oppose the bailout now, but I wonder if they may change their tune once they start hearing the ever-loudening screams of impassioned Americans who bought Exploders, Pintos and Montanas. Hell, they might even use common sense if we’re lucky.
He came to the local university last Friday and spoke. He complained that he wasn’t being allowed in the debates, and pretty much pushed for government everything, including health care.
I’m sorry but health care isn’t a right, and I have no desire to turn my hospital into the DMV.
” … GM already has that despite being a publicly-held company”
An excellent point there! The problem with the theoretical accountability of publicly held companies is that said accountability is a charade. A handful of people at the top do as they please and pay themselves well for it.
Study how corporate governance really works, particularly how board members are actually chosen and how executive pay is really set and you will see that it is by an large an old boys (plus a few gals) club which does at it pleases.
“but health care isn’t a right”
When you get right down to it, the only “rights” people have are the ones the majority of us agree we have for a long enough time to get those “rights” written into laws. Freedom of speech in the US is only a “right” (and a limited one, at that!) because of a few lines written on paper. Is breathable air and the availability of safe drinking water a “right” or is it something each people needs to compete with one another for?
Perhaps if you get laid off some day, loose your health insurance and at then find yourself or your family suffering from disease through no fault of your own then you might have a slightly less hardened view of the plights of your fellow human beings.
Edward Niedermeyer:
Thanks for clearing up where the Nader=Govt takeover came from. I really like Nader, but I’m against a govt takeover at this point. Nothing against civil servants, many of whom are first class, but they’re not magicians which I’m afraid is what’s needed at this point.
I guess we’re wired to find solutions that fix all problems and avoid future unpleasantness. Too bad all this isn’t possible in many cases, so we have to settle for what we can get which might not be much. One thing I like about the Fannie/Freddie takeover is that it appears the stockholders are getting what’s coming to them as enablers of this shit, which is to say, screwed. As in losing almost everything they had in it. If I did that sort of thing, I’d be praying the same fate awaits the GM owners.
Surely there are parts of, and many people within, the 2.5 that are worth saving, and I’d like to see that happen. Maybe we’d end up with one company or two taken from pieces of 2.5, but it’d be a better product of our public ‘investment’ than just dumping billions on Wagoner and letting him continue his smug lying bullshit as he enriches himself further. At some point, after some number of years, whatever is left is going to be supported by the market or starve. Maybe instead of dividing $50B by 3 or whatever scheme they’re thing of, we could parcel it out slowly to keep alive the most nearly viable now until their newly formed wings were proven. What do we do when they go through the $50B or whatever their share of that is? At recent burn rates, we’re not talking long term here. Wagoner will be back with his hand out with Lutz one step behind crying for just a little more time for the gotta have stuff to take hold and that newer new technology to come in. Maybe we’ll get lucky and that time will be sufficiently far from an election that some tough love can be used.
Perhaps if you get laid off some day, loose your health insurance and at then find yourself or your family suffering from disease through no fault of your own then you might have a slightly less hardened view of the plights of your fellow human beings.
No, I wouldn’t. That’s the thing though. I’m a rational person, not an emotional one. So your play to my supposed insecurities isn’t working. Health care isn’t a right, it’s a paid service. I don’t want my tax dollars spent on government-run health care for someone else. Period. It may not be your fault, but it sure as hell isn’t mine, either.
Like our government knows anything about running a company let alone the car business! Name one thing the government runs that is NOT bankrupt!!
Nobody gets a disease thru no fault of there own! We don’t get diseases we create them thru our lifestyle and errors in judgement and not taking total responsibility for ourselves. There is NO money in health so they won’t tell you how to be well, the money is in the disease and tell us there is no cure and it’s not your fault! What a lie!
The anti-bailout brigade should embrace the government ownership idea: what faster way to get Detroit executives to stop asking than by giving them a highly distasteful alternative?
“Sure GM you want $25 billion? We’ll take all $6 billion of your stock as a small start.”
Having a few GS-15s in the executive suite would be a refreshing change.
Nobody gets a disease thru no fault of there own!
Get hit by a car, go to a hospital, have your second-rate insurer dick around fighting about who should pay for diagnostics and treatment, get gangrene while waiting for them to resolve their pissing match and then get your arm amputated.
That happened to a friend, by the way.
You could, alternatively, touch the wrong pole on the subway and get tuberculosis. Or have a genetic predisposition to skin cancer, diabetes and/or heart disease, or get injured at work, get bitten by a West Nile infected mosquito, etc. There are a lot of ways to compromise your health, don’t kid yourself.
Of course, this is America. If you get sick it’s ultimately the result of your choices (including the choice to be born, which was probably a bad idea). You should have worked harder and built yourself a hermetically-sealed, Howard Hughes-ish lifestyle. Obvious, you don’t have what it takes and aren’t working hard enough if you don’t have your own exoskeleton and bubble yet.
Or, you could live somewhere like Canada or Western Europe, where you may need to wait longer if your rich, but you won’t suffer or die if you’re poor.
Or, you could live somewhere like Canada or Western Europe, where you may need to wait longer if your rich, but you won’t suffer or die if you’re poor.
That does seem to be another reason why so many like socialized medicine: sticking it to the rich. They’ll have to pay more, because essentially they’re paying for everyone else’s care, and they get less benefit, because they’ll have to wait longer for a lower quality of care. Months for a CATscan, patient stacking, and eventual government intrusion into your life choices (after all, they’re paying for it). Just another step in the slow decline into a socialist fascist society.
That does seem to be another reason why so many like socialized medicine: sticking it to the rich. They’ll have to pay more, because essentially they’re paying for everyone else’s care, and they get less benefit…
No care for your fellow man (or woman!)? As a rational person (per your previous post), I’m pretty sure you could figure out the need to keep most of the population healthy, no?
In terms of quality of care, having been to private clinics in the US, the quality of care in the US doesn’t seem to be any better from a medical perspective; yes, the buildings, furniture, general amenities appear more expensive, and the doctors/nurses may spend more time chatting with you, but the actual net result of care seems about the same. I won’t argue that there are occasionally timely procedures that occur more frequently in the US (for those that can pay), but I wouldn’t say this is the norm. And the US actually pays significantly more per capita (I can link in a report if you like) then Canada for medicine – how this occurs when the population base in the US is so much larger, and many actually do without treatment (at least compared to Canada) is rather mind boggling! Remember, Canadian tax rates support socialized medicine but the majority of the money go to other [frivolous – IMO] social programs…
Take another example – if your “illness” is caused by a corporation in the US and you don’t have enough insurance, you could quite literally die before your lawsuit forces the corporation to admit responsibility… In a worst case, save being a multi-millionaire, you could wind up dead!
Just my $.02
BredonfromCanada: n terms of quality of care, having been to private clinics in the US, the quality of care in the US doesn’t seem to be any better from a medical perspective; yes, the buildings, furniture, general amenities appear more expensive, and the doctors/nurses may spend more time chatting with you, but the actual net result of care seems about the same.
Actually, it’s not for the more complicated conditions and procedures.
For BASIC care, the level of care seems to be about the same in the U.S. and other countries. It doesn’t take much to set a broken arm, remove a mole or treat the flu.
For more serious diseases and conditions, the U.S. comes out at or near the top when actual outcomes are measured, except for diabetes (which may reflect the greater incidence of obesity in the U.S., which can make diabetes worse).
psharjinian: The fault of crown corporations is usually a lack of accountability in management and an inability to change direction or innovate, and GM already has that despite being a publicly-held company.
GM HAS changed in many ways. Quality has improved, and the new vehicles are much better. The problem is that the changes have not been part of a more coordinated plan, and the changes haven’t gone far enough (rationalizing the number of brands, for example). And the company put too many eggs in the light-truck basket.
If GM shifts to smaller cars, it will have to charge much more for them (and overcome the American resistance to paying more for a smaller vehicle) and stop subsidizing the sale of small cars with the sale of high-profit trucks and SUVs. This will require a wholesale shift in cost structure, which means that costly benefit packages for both blue- and white-collar workers will be a thing of the past.
White-collar workers don’t have a union to protect them, so changing their benefits will be easier (which is why GM has already taken steps in that direction).
Blue-collar workers are protected by the UAW. It is already a powerful lobbying force. Will a Democratic Congress really tell UAW members that they need to accept a reduction in health-care and retirement benefits? I highly doubt it.
Regarding unnecessary brands, state franchise laws that protect dealers prevent brands from being eliminated. Having seen the lobbying process firsthand, I seriously doubt that federal representatives will be inclined to take an action that will anger businesses located within their borders.
Remember that in 1980, it was the lobbying by dealers that played a critical role in getting Congress to approve the Chrysler loan guarantees.
As bad as GM is now, I’n not seeing how direct federal intervention will improve things. If anything, a government takeover will result in lots MORE fuzzy accounting, and injections of tax dollars, to keep the sinking ship afloat, as the federal government listens to key constituencies (i.e, voters) and therefore doesn’t take the necessary, but painful, steps to make GM competitive again.
Healthcare, like the auto business, needs to be consumer choice driven. Companies that serve the needs of consumers at the best price win. Those that don’t wind up like GM.
Unlike the auto business, healthcare is non-transparent for costs. When you buy insurance or go to the hospital, you really don’t know how much it will really cost unless you read and understand everything in that neat book they send you in 6 point font and written by lawyers. Since healthcare providers have no ‘window sticker’, none of us really know what things cost. This is the problem with a simple (but not easy) solution. Tell consumers what things cost and let the market decide.
The solution to healthcare, like the solution to GM, is get government out of it and put the decision making in consumer hands. We know how to separate the wheat from the chaff.
Ya think there would be any discussion about saving Aetna or AIG or Blue Cross if they went bankrupt?
You would think that, given their history with Mr. Nader, GM would just avoid commenting on anything he said.
no_slushbox :
September 8th, 2008 at 7:56 pm
Even hardcore socialists agree that manufacturing should be a private sector endeavor (although possibly it would be easier to keep it that way if health insurance wasn’t).
That’s actually not true at all. Actual socialists are in favor of the state taking over heavy industry. Hugo Chavez, to name a modern example, is a socialist, and is doing exactly that (having the state take over things like oil production and cement plants). Socialistic policies (of having the state own major industries) have also existed or currently exist in places as diverse as Saudi Arabia, Great Britain, France, and Mexico (Saudi Arabia and Mexico have state owned oil companies, France has the state own a lot of things, and Great Britain, prior to Thatcher, also had the state involved in a wide variety of busineses, such as auto manufacturing).
But there’s no tradition of such a thing in the US. The closest might be Amtrak, which only exists because it’s not profitable to run a railroad in the US. That’s why when a Republican calls a Democrat a socialist, they are completely full of it, because no Democrats are in favor of such a thing.
Geotpf :
France has the state own a lot of things,
Geotpf, could you be more specific? It was my understanding that EU rules prevented this in the name of fairness to all EU companies. Am I mistaken?
…a socialist fascist society…
That’s like saying “a wet desert” or “a dark shade of white”. There’s a certain incongruity that makes the statement impossible.
psarhjinian, ummm no.
From wikipedia:
Various scholars attribute different characteristics to fascism, but the following elements are usually seen as its integral parts: nationalism, militarism, totalitarianism, dictatorship, populism, collectivism, statism, social interventionism, and economic planning.
also, NAZI: Nationalist Socialist Workers Party of Germany.
Fascism may not be the same as socialism but they are both dry deserts.
Among left-wing ideologies, communism is the far left wing, socialism is the middle left wing, and facism is the right left wing.
The opposite of socialism is not facism…it is libertarianism.
Geotpf: The closest might be Amtrak, which only exists because it’s not profitable to run a railroad in the US.
Actually, it is profitable to run a railroad in the U.S.
It’s just not profitable to run it the way Amtrak is run, with many routes kept open because they are located within a certain federal legislator’s district, not because sufficient demand exists.
In what short sighted world does anyone consider the Chrysler bailout a success? They are back at the trough already for Pete’s sake. How many billion per decade must we guarantee them? How many jobs must my company provide before I am entitled to the same loans?
The only thing the Chrysler bailout acheived was putting off the inevitable while reducing the pressure on GM and Ford to succeed to avoid death. At the same time, we have three failing full size truck manufacturers. Who is to say that if we only had two, the market would not be better off?
The only thing the Chrysler bailout succeeded at was reinforcing failure and increasing the inevitable bite out of the tax payers.
On another subject – Wikipedia is NOT a valid source for definitions of politically weighted words. Period. The wiki format is NOT a good system for anything political.
Perhaps someone can make an estimate of how many tens (if not hundreds) of millions the Soviets spent in their propaganda campaign to ensure that western scholars repeated the lie that fascism was a right wing ideology, but the true amount is likely lost to history.
If we are to agree that because most fascist states have been traditionalist, it is a necessary characteristic of fascism, then we must also agree that wholesale slaughter of innocents is a necessary characteristic of communism. Also, by that standard, it would follow that socialism is characterised by the imprisonment of vocal, nonviolent dissidents.
I will proceed either way, but none of it will make modern Republicans into fascists, nor will it keep modern American liberals from being socialists.
On another subject – Wikipedia is NOT a valid source for definitions of politically weighted words. Period. The wiki format is NOT a good system for anything political.
Agreed. Actually, by their very usage there is never good source for the definition of politically-weighted words. They are meant to be protean.
Wikipedia; however, quickly lays to rest psarhjinian’s glib statements about fascism being somehow the opposite of socialism, a common canard that is repeated ad nasuem.
Wikipedia; however, quickly lays to rest psarhjinian’s glib statements about fascism being somehow the opposite of socialism, a common canard that is repeated ad nasuem.
Well, yes and no. In theory (and this is important: theory and real-world implementation are often very different) classical Fascism and Socialism are more or less diametrically opposed economic ideologies:
* Fascism is top-down statism, a sort of militarization or corporatization of “normal” aspects society that typically would be allowed to run independently. Property rights don’t usually come into it; organizational rights do.
* Socialism is bottom-up statism or collectivism. Compared to fascism, socialism’s fix is on controlling property rights, but not organizational ones. Fascism eschews democratic process; socialism does not.
Neither are inherently bad; in a perfect world where people aren’t involved, fascism allows unparalleled operational effectiveness, socialism ensures that no one is left behind.
In practice, pure versions of both are trainwrecks because the people involved suck.
The opposite of socialism is not facism…it is libertarianism.
Well, no. Well, yes. Well, sort of.
Libertarianism and anarchy operate on a different spectrum entirely. The trick with these two (one?) is enforcement. How do you prevent the natural accumulation of power?
Answer: you don’t. That’s why pure anarchism/libertarianism is fundamentally broken.
The least objectionable form of government, social democracy or social republicanism, is more or less your best bet. The system will vary by how it leans (left, right, etc) and will never satisfy ideologues, but it has the key advantage of, operationally, working better than anything else.
Churchill was right, by the way. Worst system, except for all the others.
Sorry if this is off-topic, but I really dislike it when people throw labels around (“liberal”, “neocon”, “fascist”, “nazi”, “communist”) and expect people to a) accept their dogmatic meanings as true and/or inherently morally superior and b) assume that people agree with them.
It’s also imprecise: I can agree with someone saying “I don’t support Ralph Nader because I don’t think government ownership is a good idea, and here’s why…”, but not “Ralph Nader’s ideas are bad because they’re socialist and/or fascist” when they don’t really explain what they mean by socialism or fascism (or are really unclear), other than that it’s something they don’t like. It’s dogmatic fervour, rather than rational discourse.
I can sense I’m about to be slammed for being a relativist.
@psarhjinian :
Thank you for your post. My head was starting to throb.
Psar,
You are much closer, now.
I would disagree with the diametrically opposed comment. That’s like saying the union libs and the green libs are diametrically opposed.
The top down, bottom up thing is somewhat correct, but I would argue that in fact, both are top down. Socialism is “ostensibly” bottom up, but the top in both systems uses all sorts of tricks to control majority opinion.
Both are inherently bad because of what happens in practice. Results matter much more than intentions. They may not be bad in theory, but we don’t live in theory.
I completely agree with you last paragraph, and it’s precisely because the labels have various meanings to different folks. If you can’t be specific, then just labeling something means very little. There is nothing wrong with saying that Nader’s idea is socialist unless you and your listener don’t really know what that means. Then, you better be able to explain it, or you should have kept your mouth shut in the first place.
@psarhjinian :
Thoughtful post. I underestimated your depth of understanding and I apologize.
Since this is a car blog I’ll let this topic rest (although we could go on for days!)