The New York Times really pisses me off. This is not the first Gray Lady story I’ve read based entirely on a report by a “think tank”—where the reporter somehow fails to mention the organization’s ties to labor unions. In this case, scribe Elisabeth Malcolm is happy to share the results of a study from the “Economic Policy Institute, a Washington think tank that studies economic issues that affect workers.” In this report (download pdf here) EPI economist Robert E. Scott “argues that saving American automakers may instead end up saving — and even creating — Mexican jobs.” And that means that the feds should use the Motown bailout as a lever with which to undermine The Big 2.8’s plans to build cars in non-unionized Mexico. “The conditions Mr. Scott proposes: G.M. and Chrysler (and Ford, if and when it asks for money) should face a limit on their investments in Mexico. The way to do that would be a cap on imports from Mexico as a share of sales. He also suggests a domestic content requirement for American-made cars that would halt the increase in parts imports from Mexico.”
Holy frijole! As Malcolm [eventually] points out, that’s not exactly a NAFTA-friendly position. But it is union-friendly. No surprise there (for those of us with a yen to Google). The EPI gets 29 percent of their money (by their own reckoning) from unspecified labor unions, with at least some of that funding coming from the union-dominated Democracy Alliance. A fact worth mentioning, yes? In fact, I reckon Malcolm should spend a summer in provenance. This summer, preferably.
Anyway, what are the odds the Presidential Task Force on Autos will use their power to force post-C11 “good” GM to build cars in the US of A, rather than Mexico? And what of Canada? Chaos theory need apply.
Mexican auto cap? Does this mean people will have to put sombreros on their Fiestas?
Canada has a very old agreement with the USA that says that Canada is cool with not having a domestic auto industry as long as a percentage of vehicles sold in Canada are manufactured here. Maybe we could consider some sort of Canada-USA-Mexico auto agreement?
I also would not be opposed to making some sort of rule that says that any Canadian/American company doing manufacturing in Mexico must pay 50% of what they would pay in Salary in Canada. (I know TTAC has covered how Ford got the Mexican workers manufacturing the Fiesta to give up 50% of their salary, going from a decadent $4.50/hr to a somewhat more manageable 2.50.)
Almost all new NA automotive manufacturing will shift to Mexico within next 2 decades. It is just too $$$ to build in US even with contract labor and no pensions/retirees…as Toyota is starting to find out.
Robert E. Scott “argues that saving American automakers may instead end up saving — and even creating — Mexican jobs.”
He’s right – and why are you telling me your problems? The unions priced themselves out of these jobs. No one to blame but themselves.
Organized labor loved to blame management about their decision making skills, well, moving production to Mexico was a smart decision.
I used to work as an engineer supporting the production line and the union guys just loved to bitch about how bad the management was. I finally had enough one day and I told the shop steward (and chief complainer) “If by magic all the old managers were replaced by competent ones tomorrow, the first thing that they would do would be to fire the lot of you.” The best part, no one got mad…they just did not understand what I was trying to tell them. True story.
If I had to chose between a U.S. flag manufactured in Mexico, or a Japaneese flag made in the U.S. to fly in my front yard, I’ll chose the U.S. flag everytime. In today’s global economy the only component of a vehicle that’s 100% American is perception. Even the import brand transplants utilize parts/designs/labor that aren’t made in the United States. That’s why I only purchase Detroit brands even if their products or components are manufactured elsewhere. I could care less how much better the imports are perceived to be. I can take pride in the fact that whatever I own will always be perceived as American.
Re Neb :
The problem with that proposal is that the Big 2.8 don’t compete so much with each other – they compete with each other and everyone else.
VW, Porsche, Audi, Mercedes Benz workers make pretty good money. Perhaps the German government should be telling the US that they need to raise their workers salaries to match them.
Don’t worry about the New York Times, Bob. It’s OK if I call you, Bob? Anyway, Bob, NYT are in even worse shape financially than GM or Chrysler — if you can believe that? NYT has liabilities of something like $1.3 billion, offset by a whopping $34 million cash in the bank. Pretty soon NYT will be bought at the bankruptcy sale by the Chinese, and the entire operation will be moved South of the boarder, and renamed the Nuevo Yorko Epocas. I’m gonna burn in the coming conflagration, just like everyone else, but I’m having a good time watching the pompous and arrogant get their comeuppance first.
>> The New York Times really pisses me off.
It pisses off many other people too, which is why the fact that the NYT has been on its last few breaths for a while now would not have been a tragedy for many people.
Unfortunately, some people do not believe so, mostly the people who depend on the NYT for their mouthpiece:
http://www.washingtontimes.com/news/2009/apr/22/kerry-aims-to-rescue-newspaper-industry/
http://www.nypost.com/seven/04222009/business/1_3b_debt_rattle_165559.htm
As far as keeping jobs here, I’m not sure that we need even more government interference than we’ve already had; however, we do need to fix what is wrong that makes us uncompetitive with other countries which make reasonably priced cars produced in their own country. Honestly, I think we all know a certain word that would free up the companies to run more effectively if its role were greatly reduced (sounds simliar to onion), but at any rate, who knows.
I just wish someone would have had the common sense to see that these companies were headed for C11 anyway, and not to throw away billions of dollars which will just be “forgiven” now, and never repaid. If the federal government wanted to get their dirty hands involved so desperately, they should’ve just helped organize the C11 MANY months ago. They would be so much better off now, as would the part of the economy that revolves around the 2.8.
But hey, there aren’t too many people who think logically anymore. Just all emotion.
Is that an Alpine in the picture?
So I just watched the John Rich video.. “Shutting Detroit Down”…
Scared the crap outta me…
Song written and sung by John Rich – Ultra Right Wing
The video stars Kris Kristofferson – Ultra Left Wing
Detroit might be the spark… Imagine two mobs..
Mob “A” has pitch forks and wants the government to make good on all the promised pensions and such…
Mob “B” has torches and is protesting government spending…
Pan to CNN…
“Now in the news, the Federal Government must print nearly all money it spends since tax revenues have dried up… Effectively the US Govt. is out of money”
Mob “A” and “B” sit there in silence for a few minutes… Change their signs, combine forces…
Now a single mob with pitchforks AND torches has signs that say “WORK! NOT WELFARE!”
Man we really screwed this up…
This isn’t just a union thing. Why exactly should the US taxpayer subsidize the transfer of jobs to Mexico?
“Why exactly should the US taxpayer subsidize the transfer of jobs to Mexico?”
Because when there are only very poor and very rich people left; the rich can pay others to die for them, and the poor can make a nice living.
I think that if the Unions had not been involved… GM, Ford and Chrysler could be turning out the world’s best cars, but only designed in the USA, and contract manufactured wherever it was cheapest and/or best to do so.
I work in the semiconductor industry where all of our talent is US-centric (with design offices all over the world, wherever we can get talent), but our manufacturing is farmed out to the best suited manufacturer (more than just price factors into the final choice).
America really ceased being a manufacturer years ago, but the Unions forced the Big-3 to ignore this fact, by both political manipulation and by the fact that Big-3 management couldn’t see the solution to their problem (or maybe they feared domestic backlash).
The interesting thing is, once the entire world is at a decent playing level, and labor wants equal pay across the globe, manufacturing will eventually return to the USA, it just may not happen in our lifetimes.
The only truly safe manufacturing jobs in the USA are contractors to the military who build sensitive systems/equipment for our military, intelligence agencies, and any other divisions that require super-secrecy. These won’t even be all that great, if Obama severely cuts defense spending down the road (right now, that does not appear to be a problem).
Or, perhaps, the cargo compartment of whatever you buy comes filled to capacity with free Coronas.
The unions are to blame for a lot of Detroit’s problems these days. Yes, there is plenty of blame to go around for the management that called for the craptastic vehicles of the not-so-distant past, the engineers who didn’t manage to find some way to make them more reliable, and the designers who just took the day off, but when it comes down to brass tacks, the cost of doing business lays in the hands of the UAW et al.
The transplants get to build factories in the USA and don’t have to hire union labor, while the D3, due to near-sighted deals made in the past, are stuck with having to pay union rates for any domestic production. No matter how well designed, engineered, and envisioned a car may be, it can’t be competitive in the market place if the manufacturer has to pay an exorbitantly inflated sum to produce it vs the costs of the competition.
In order for the US industry to survive, the unions need to go.
This Times story sparks a very interesting question; why has GM been asking (begging) for help in the way of cheap loans from many countries, except Mexico.
What’s with that???
Also, in the GM sales and production reports, Mexico is not included. Although in past years it was.
Mexico is a North-American Producer of GM products, why are they not asked to put up loans, like Canada is, to keep their share of jobs?
Could it be that Mexican jobs are bad things to include when the big threat is a loss of American and Canadian jobs, to say Mexico for example?
John Horner is absolutely right, “why should US taxpayers subsidize the transfer of jobs to Mexico?”
All I can say is that protectionism was the leading cause for the Great Depression, causing world trade to decline by 66% from 1929 to 1934, which led straight into WW2. Pearl Harbor was Japan’s answer to a trade embargo.
Mexico already is in a civil war with drug cartels, will blow up and boil over the southern border.
International trade fosters peace, because you don’t go to war with your customer (unless you are a Detroit car company, that is.) Trade wars lead to shooting wars.
Some people never learn.
Actually, I lay much of the reliability problem on the unions as well. It comes from the company having skimp everywhere else, to pay the unions off to keep the lines running.
I was told by a buddy who once contracted with GM through EDS (I think), and that they would stop the lines and reroute wires, pipes, whatever, if it would drop the cost of the car by a penny, and then send out updates to the manuals.
Even better under his contract, he and his team had constructed a test rig that was used in the truck assembly lines, which could immediately test the entire vehicle’s electrical system to precision. While the test rig worked perfectly, it was quickly dumped, as because it was going to displace a union person, the folks wiring the vehicles were purposely screwing up the wiring job, and the only way they would not do so, was to put the union man back on the line.
I know that unions were something back in the day when the companies were unlimited in how they could abuse a worker, but nowadays, the unions are far too powerful. When protection of the union is more important than the marque brands of the company to the company’s management, then you have a serious problem. Auto line workers should have to compete for jobs just like anybody else — and if your position is automated away, then too bad. That may sound cold, but people in my own industry have been replaced by cheaper and just-as-smart labor overseas. For the most part, we neither begged nor attempted to bring political pressure to bare on our respective companies.
Who knows, maybe most of our car production could be done here, if the plants had been aggressively automated, but that would have required the absence of the unions.
The really sad thing about this, is I grew up with Chevy, Ford, and Chrysler, and I have never been disappointed by the brands. I think it is sad to see Chevy and Chrysler be put under government control, and their lines spun down, and possible painful bankruptcy in the future. Call me a sentimentalist, but if something happens to these companies in the end that takes those brands out of production, it will be a really sad day for me. I have never been interested in the foreign designs (with the exception of Porsche). I guess I will be buying a Toyota Transportation Appliance like everyone else.
Maybe someone could get Pelosi and Reid to explain why Michiganders are more deserving of subsidized jobs than the folks in Mexico.
That would be a hoot.
this is just a white people vs. brown people thing
mexicans are 2nd class citizens in the americas
the stark reality is that developed world manufacture will never be cost effective to outsourcing to the ‘brown’ or the ‘yellow’ people
manufacturing industries in the western world are on the decline except at the high end because the cost of labour is less outside – that is it
in a perfect world i have no doubt that GM/Ford/Chrysler would all like to have their factories in Mexico or China and they can just import all their cars
at the end of the day, who cares? VW, BMW and Mercedes can manufacture their cars in China without any noticeable drop in quality
of course the big 2.8 needs to keep all their million dollar corporate staff in luxury in Detroit
the conclusion is that manufacturing is on the decline and will sooner or later be dead except for niches in western economies
The Mexican plants do much better in quality audits then the NE US plants, at least in GM world.
They not only work for less, they produce better quality and don’t have the UAW’s entitlement attitude.
I clicked on the article because of the Alpine, but could’t figure out the connection. Some Googling revealed: the Alpine was not only assembled in Europe, but also in Mexico. Aha! Now that’s news to me.
Bertel Schmitt :
April 23rd, 2009 at 10:47 pm
All I can say is that protectionism was the leading cause for the Great Depression, causing world trade to decline by 66% from 1929 to 1934, which led straight into WW2. Pearl Harbor was Japan’s answer to a trade embargo.
Mexico already is in a civil war with drug cartels, will blow up and boil over the southern border.
International trade fosters peace, because you don’t go to war with your customer (unless you are a Detroit car company, that is.) Trade wars lead to shooting wars.
Nonsense, top to bottom.
The Great Depression was caused by debts from WWI, and the way they were passed around. (France and the UK owed the United States huge amounts of money. They extracted reparations payments from Germany to service that debt. Germany had no money, so they had to borrow the cash to make those reparations payments…from the United States.)
Pearl Harbor was part of Japan’s answer to a trade embargo…and the trade embargo was the United States’s response to Japan’s invasion of China. Japan had a choice: Stop invading their neighbors, experience shortages of certain raw materials, or invade more of their neighbors. They chose to invade more of their neighbors.
China, by the way, was Japan’s largest export customer at the time.
“Why exactly should the US taxpayer subsidize the transfer of jobs to Mexico?”
Because, Mexicans need jobs. If they can’t find them in Mexico, they will come here and find them. Why make them leave home?
If we elminated the pull of jobs with serious fines and enforcement for hiring illegals they would not come here. Without 8-10M illegals in the US we would have higher wages and lower unemployment.
Mexico problems are mostly of its own making. Without the safety valve of immigrants remittances they would likely already have had a revolution. Having 25%+ unemployment is a sociological powder keg.
liquidation vs restructuring of a losing enterprise, something the US government must be aware of itself…. lets all hope for the best arrangement for the general, Uncle Sam, and our neighbors.
@orc4hire:
Smoot-Hawley ring a bell? Replace “farmers” with “UAW” and “Republicans” with “Democrats” and you have the same situation
redstapler:
If we elminated the pull of jobs with serious fines and enforcement for hiring illegals they would not come here. Without 8-10M illegals in the US we would have higher wages and lower unemployment.
Sure. Union workers would head for the farms to pick strawberries. Illegals in limbo (who work for near slave labor rates) keep your food prices down. Kick them out, and the agricultural sector would go the way of Detroit.
Mexico problems are mostly of its own making. Without the safety valve of immigrants remittances they would likely already have had a revolution. Having 25%+ unemployment is a sociological powder keg.
Exactly. You want that powder keg to explode next door, behind a porous border? Be careful what you wish for.
orc4hire: well, you say the things so I don’t have to. I should add that the idea that trade creates (or somehow will create) world peace has be disproven time and again. It’s not a new idea. In 1909, the book The Grand Illusion became an international bestseller when it argued that a war between the major powers in Europe would destroy far more wealth for those nations then it would create, thanks to cross-border investment and trade, and so war, rationally, was undesirable.
This was technically true, but that didn’t stop anyone, and it never will.
This isn’t just a union thing. Why exactly should the US taxpayer subsidize the transfer of jobs to Mexico?
+1
Why is it that nobody seems to have any problem with Canada, but Mexico is this awful foreign place? I understand the point behind losing jobs, but if GM were to build new plants in Canada and shut down a few here in the U.S., I doubt we’d be hearing the same amount of squawking. GM still has far more factories here than in any other country, despite the unions. Hell, the UAW should be happy they haven’t run all of GM’s plants to Mexico.
The reporters of The New York Times have become quite skilled at reporting press releases. We had a situation in my community where a NYTimes reporter wrote a story about a situation in our community that has occurred since the Eisenhower administration. She reported it as if it was “new,” which it wasn’t. After the situation blew over, there was no reporting that it blew over. Instead, they “promoted” her and put her in charge of a community blog.
By the way, it is a Mexican billionaire, Carlos Slim, who has invested a great deal of money in said cash-burning venture.
Last I read, Mexico is now losing manufacturing jobs to China and, to a lesser extent, India. Turns out there are people willing to work for even less.
Wishing it were not so will not make it go away. The days of US labor enjoying a total monopoly on manufacturing because all industrialized countries elsewhere in the world are using all their resources to rebuild from wartime destruction are over, and have been since the 1960s.
The best we can hope for is to keep the management, engineering and styling HQs here and contract out the manufacturing.
Study your math and science, kids.
superbadd75:
“Why is it that nobody seems to have any problem with Canada, but Mexico is this awful foreign place?”
I’ve been to Mexico, it’s hardly an awful place (although you do have to be careful about bringing blonds with you).
The focus on Mexico indicates that the “Economic Policy Institute” is more concerned with union jobs than US jobs.
From a US taxpayer standpoint much more of the money being blown on the auto bailouts is going to Canada than Mexico. But Canada has unions.
I personally have much more of a problem with Canada than Mexico.
Canada is a country that loves to club baby seals, is one of the worlds largest exporters of asbestos, pushing it on poor countries, and safe harbors anti-American terrorists that sneak across the border into the US.
No wonder Republicans threatened to move to Canada if Obama won, they could club baby seals, export asbestos to poor people, and there are plenty of terrorists to fight (ok, well, that’s the part that probably scared them from actually moving).
Mexico is a much better neighbor. It gives us cheap workers, which we must want because we refuse to harshly punish those who hire them, it has resorts, there is no snow, its unhealthy export is marijuana, not asbestos, and nobody speaks French; it is a country filled with real men that fight bulls, not baby seals.
Mexico gives us movies glorifying beautiful, promiscuous women, Canada gives us movies glorifying trailer parks (ok, I will admit they are funny).
Also, Mexico is a very modest neighbor. It doesn’t constantly bash the US despite being filled with uneducated people that couldn’t get real jobs if they lost their jobs mining asbestos, clubbing baby seals and contributing to the legendary quality of Chrysler products.
In short, do not put a cap on Mexico, put on a Mexican cap and have some cerveza.
aha, why should Alabama subsidize jobs in Michigan? Why should you subsidize a job for your neighbor against your will?
You see, it’s not really the location that’s the problem. It’s the basic concept of the subsidy that’s suspect.
“I work in the semiconductor industry where all of our talent is US-centric (with design offices all over the world, wherever we can get talent), but our manufacturing is farmed out to the best suited manufacturer (more than just price factors into the final choice).”
Which is why Silicon Valley has become ever more of a bifurcated society split between the haves and the have-nots, along with high unemployment and a rapidly shrinking middle class. But no worries, Asia appreciates the business. Also, the semiconductor industry isn’t US-centric anymore. Executives look down on everyone, marketers look down on engineers, engineers look down on production people. Everyone looks down on the janitor. Each level considers those “below it” disposable.
“at the end of the day, who cares? ”
Where are the jobs going to come from with which the middle class of the US is supposed to buy all of the stuff imported from other places? Health care? … we are already outspending the rest of the developed world 2:1 on health care. Financial services? … great, more mortgage brokers and investment advisers shuffling paper around. Retail? … already overbuilt, the US has four times the retail square footage per resident as do other developed nations. If not manufacturing, then what are 100-200 million working people in the US supposed to do in order to pay for the output of the over 3 billion people in Asia?
Re no_slushbox :
Those aren’t baby seals they’re Al Qaeda Seals! See I bet you didn’t know they had a Navy, but they do! And they’re here!
We tried water boarding them but as it turns out they liked it (they’re seals). So, we’re reduced to beating…..
Re: MikeInCanada:
Dammit, you can’t say things like that; some Americans will actually believe it. The Al Qaeda Navy Seals can’t get me in the secret FEMA camp where I’m locked up.
re:Landcrusher:
“aha, why should Alabama subsidize jobs in Michigan? Why should you subsidize a job for your neighbor against your will?”
I’m not fond of the bailouts, particularly as implemented, but your example is very far off.
As of the most recent data Michigan pays its own way and subsidizes other states, although not as much as states like New York, California and Illinois subsidize the rest of the country, particularly the federal tax money sucking deep south and western ranching states.
You want to see the real American welfare addicts, who just can’t pay their own way, living off government subsidies and protectionism, just find a farmer or rancher.
In term of living off of the federal government Alabama is a welfare queen with five illegitimate kids.
http://www.taxfoundation.org/taxdata/show/266.html
slushie,
Sorry, but I have to laugh. That little factoid is nothing but proof that the people of Michigan have gotten EXACTLY what they continously ask for. If the people of MI have a beef, let them take it out on Levin.
Really, it has nothing to do with the point though. The people getting welfare are not the ones being asked to subsidize work for others. If the folks in MI want to stop subsidizing Alabama, then they too can vote out the big government folks. Instead, they support the UAW, and the UAW supports big spending politicians, and THEY support Alabama poor who are outvoted by non guvernment Alabama workers.
BTW, Alabama does get a good amount of support because of lots of poor, but a lot of that spending is on large military and NASA sites in a small, poor, rural state. One kind of wealth transer that does make sense is locating federal jobs in low cost areas. Lastly, if you want to end farm and ranch subsidies, I will vote for that.
John Horner:
I am basically an engineer who was outsourced too: I live on the opposite coast of the valley, but I work for a valley company. My salary is much less than my valley peers (even though I am at the top end of the income range of my county, much like it happens to be in India, Germany, etc.).
Yes, there is no doubt engineers are considered disposable in the valley culture: if my management could replace us all with cheaper developing country labor, we would be at the drop of a hat. But while intelligence as a resource is not hard to find in those remote areas of the world, connecting to them efficiently and having them work with other US companies is expensive and more complex, so there will be a need for engineers here, at least until most valley company engineering resources are moved to developing countries, and its better for engineers to interact there.
My guess, however, is that the global landscape for educated people will be about flat at that point, and there won’t be much cost advantage to moving engineering to the cheapest spot on the globe. Sure between now and then, it may become more painful for engineering resources here in the US, but we are very bright people, we know how to survive in the world. I’d leave this country to cheaper vistas if required to remain employed, but there are always new things to do in electronics & software, so I doubt that problem will every occur. Ie., there will never be a point where a person, kicked out to the street, can’t come up with a new idea and make, at minimum, a living off of it.
Here in my locale, I know many people who have the UAW member mindset when it comes to manufacturing jobs. In my state we have steel, and the state north of us, a dying paper business. The people that work these jobs, had the ambition of getting hired on at these mills when they graduated high school. No interest in pursuing college or advanced trades. Now they are older, and more solidified in their limited skill set and most of all, comfortable. Now that these businesses are turning down, what will they do? It is doubtful they can afford their lifestyle toys, kids, stay at home wives (or even working wives), AND move to a university town and attend university.
I am not deriding this life style —- but there is massive risk with it. MASSIVE risk.
All I can say is that protectionism was the leading cause for the Great Depression, causing world trade to decline by 66% from 1929 to 1934, which led straight into WW2. Pearl Harbor was Japan’s answer to a trade embargo.
Protectionism was a result of the Depression and made things worse.
The cause was the same as now, a bursting of the easy credit bubble. Then the government made it worse by intervening in the markets and attempting to stop the necessary corrections in the markets. Same thing they are doing now. They have taken a painful downturn and turned it into a disaster in the making.
The cry in the ’30’s was that capitalism had failed and a new way was needed. That was the basis for the Fascists. The third way replacing capitalism, with government control of industry and the banks. Sound like today?
The German governments artificially increasing auto sales is short term gain for long term pain. It is like giving methadone to a sick patient. Doesn’t cure the patient, it just temporarilly stops the pain.
It is history repeating. To paraphrase Winston Churchill, the farther you look into the past the further you can see into the future. You are very right that this sort of economic downturn usually leads to war.
landie:
You make me laugh acting like Alabama’s military jobs have anything to do with necessary defense spending. Losing them would harm national security less than losing Chrysler. Putting military bases in Alabama is just a jobs program bought by the state’s political overrepresentation.
And Alabama’s “workers” are on Medicaid with part time Wal-Mart jobs.
As soon as we replace the Electoral College with a popular vote and get rid of the overrepresentation of rural states in the Senate we can get rid the absolutely huge farming and ranching subsidies and trade protections that exist in this country, often fought for by Republicans.
Until that the “little factoid” that deep southern and western ranching states contribute, on net, nothing to the country and live off the northern and coastal states will remain true.
http://www.taxfoundation.org/taxdata/show/266.html
It is those states’ political overrepresentation that gets them their govenment welfare and subsidies, not the UAW.
# Bertel Schmitt :
Smoot-Hawley ring a bell?
Sure does. I probably know more about it than you do. It’s the song people always parrot when they want to bleat in terror about trade barriers. “Smoot-HAWley, Smoot-HAWley!”
Why don’t you try singing about the Schleswig-Holstein Affair? It would be just as relevant, and at least fresh.
Or perhaps you could just tell us how the Smoot-Hawley tariff bill, passed in 1930, caused the Great Depression, which started in 1929?
You want to sing about the Great Depression? Here are some verses you haven’t heard before:
Extraordinary optimism sustained an orgy of speculation. Books were written to prove that economic crisis was a phase which expanding business organisation and science had at last mastered. [….] In October a sudden and violent tempest swept over Wall Street. The intervention of the most powerful agencies failed to stem the tide of panic sales. A group of lending banks constituted a milliard-dollar pool to maintain and stabilise the market. All was in vain.
The whole wealth so swiftly gathered in the paper values of previous years vanished. The prosperity of millions of American homes had grown on a gigantic structure of inflated credit, now suddenly proved phantom. Apart from the nationwide speculation in shares which even the most famous banks had encouraged by easy loans, a vast system of purchase by installment of houses, furniture, cars, and numberless other kinds of household conveniences and indulgences had grown up. All now fell together.
It should not, however, be supposed that the fair vision of far greater wealth and comfort ever more widely shared, which had entranced the people of the United States, had nothing behind it but delusion and market frenzy. Never before had such immense quantities of goods of all kinds been produced, shared, and exchanged in any society. There is in fact no limit to the benefits which human beings may bestow upon one another by the highest exertion of their diligence and skill. This splendid manifestation had been shattered and cast down by vain imaginative processes and greed of gain which far outstripped the great achievement itself. –Winston Churchill
Until that the “little factoid” that deep southern and western ranching states contribute, on net, nothing to the country and live off the northern and coastal states will remain true.
Michigan was a donor state for 50 years….maybe more. Time to get some of it back….Richard Shelby style. But really, deep down, this isn’t a battle between states. Of course, the media attempted to mae it that way in order to sell the story. The only thing I see as being a state vs state battle is by seeing which state can cough up enough taxpayer funded “incentives” to get that new Hyundai plant….incentives that would be better spent on schools, colleges and infrastructure.
Slushie,
Those states may be subsidized on net, it matters not a bit to the fact that subsidizing jobs is stupid in almost all cases, and morally questionable in all of them. I would be glad to see the money going into, then out of DC reduced, which is all you can do to reduce the net subsidy problem.
BTW, You apparently know diddly about what defense jobs are in Alabama, but that doesn’t matter one bit either. The truth is that a single platoon of infantry is more useful to our defense than Chrysler which is a drain on the country.
Massive numbers of internal combustion powered machines of steel are no longer the same key resource they were in WWII. If you want to use the defense defense to steal money and give it to a company just in case, then subsidize Cessna, Dell, Caterpillar, GE, shipbuilders, or someone else who uses manufacturing techniques that could actually be changed over to defense quickly. The auto industry no longer qualifies because their factories really can’t be switched all that easily anymore, and we simply could not effectively use that many trucks and tanks anymore.
John Horner,
You are precisely correct. There is HUGE risk in those choices of life plan, yet that is the opposite of what people think. They think people who go went that route should get the same sort of help that we give to tornado victims like their plight was just as unpredictable as the weather.
You have nailed the truth on that one.
derm81,
If you want to give MI their money back, just don’t give it to GM and Chrysler or the UAW.
Also, your logic is a bit off. If it’s NOT a state vs. state issue, then what point is there in bringing up the fact that they have been a “donor state” for 50 years. As soon as you bring up “donor state” it is you that made it a state vs. state game.
I would love to see an end to the state v. state fight with incentives to lure factories. How about we put an end to that? In fact, I wish our congressmen understood just how big an issue that really is.
It’s not as easy as just electing officals….both AL and MI are both run my nimrods…plain and simple. Basically, when MI or any other state gives tax braks and incentives to companies they are really taking out of my pocket and yours.Can TN guarantee its taxpayers that VW will be there 20 years from now?
The future of the America corporation is all about seeing which state gives the most $$$ for plants and offices….their focus is NOT going to be about moving to “hip” or cool places. That’s secondary.
Landie
I’ve corrected a number of people who have tried to wrap the Detroit automakers in the flag. I’m very aware that the Detroit automakers are not at all valuable to the nation’s defense. That is exactly my point. Neither is Alabama. All the military jobs in Alabama could go away and the country wouldn’t notice, it’s just a jobs program for the state wrapped in the flag. And, subsidizing jobs is apparently morally questionable.
no_slushbox: Mexico is a much better neighbor… and nobody speaks French;
You had me at “nobody speaks French”!
It seems that everything’s gone wrong
Since Canada came along
Blame Canada
Blame Canada
They’re not even a real country anyway
@Bertel
Slightly off topic, but you should also know that FDR’s Keynesian policies greatly contributed towards extending and deepening the Great Depression; something I surely would’ve hoped the current administration and congress would have learned – but they haven’t.
http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx
Umm…That article blames lack of anti-trust enforcement for extending the depression, something that is not part of classic Keynesian economics and actually resembles the sort of lazie faire economics favored by republicans.
Although frustrated conservatives are working hard to spin the data, when looked at as a whole, there can be no doubt that the Keynesian stimulus part of FDRs policies worked.
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apt34 :
April 24th, 2009 at 2:59 pm
@Bertel
Slightly off topic, but you should also know that FDR’s Keynesian policies greatly contributed towards extending and deepening the Great Depression; something I surely would’ve hoped the current administration and congress would have learned – but they haven’t.
http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx
Shiney,
There is doubt, and no “proof” either way. The players in the contest haven’t the integrity to study the matter objectively, and even if they did, they would likely never be able to get the disagreeing side to surrender any ground.
I say the policies were pure evil, even if they did help. Argue with that if you like.
@4hire:
Why don’t you try singing about the Schleswig-Holstein Affair?
Schleswig-Holstein affair? I must confess ignorance. The only Schleswig-Holstein affair I’m aware of was short lived, because the lady was too blonde, too zaftig, and too eager to get married. So my Schleswig-Holstein affair was ended quickly.
Perplexed, I googled said affair. Not many hits. On top of the few, a letter by Friedrich Engels (of Marx & Engels fame) , hosted by marxist.org. That’s where you get your info from?
Back to the topic on hand: When times are tough, blaming an outside villain is a tried & true stratagem too hoodwink the populace. They eagerly buy it, because it points fingers elsewhere, and nobody tells them the consequences. Imports killing jobs? Raise import duties! Consequence (untold: ) Prices shoot up, inflation. Currency goes to the toilet, making imports even more expensive, inflation spirals. Stagflation. (Remember: Inflation was ended by exporting it – along with the jobs – elsewhere. NAFTA, the WTO, the EU all had a reason.)
Foreigners taking our jobs? Kick ‘em out! Consequence (untold: ) Companies and production leave with them to foreign shores. Fighting gravity is a losing proposition.
Even trickier: Your population shrinks (look at Germany, Japan) there aren’t enough young to support the old.
Less people, less buyers, less of a market. Apparently too simple for most to understand. The killer of the Japanese and German markets was a rigid anti-immigration policy, while at home, couples refused to couple and to make babies.
The savior of the US economy is the ambiguous immigration policy that allowed traditionally more baby-producing Hispanics to avoid a population implosion of Japanese and German proportions. One of the reasons for the troubles of the US auto market is a dip in the car buying demographics. This dip will last 10 years, followed by a new wave of car buyers. The reason why the Japanese auto market implodes is a lack of younger buyers. The reason why the German car market is – still – relatively resilient is a bulge in the main new car buying demographics, in Germany between 40 and 60. A look at the chart will tell you where that market will be once the bulge blows out, and when there will be drastically less buyers, caused by Germans who apply protectionist measures during sex, and by German politicians and unions who keep more reproductive immigrants out.
Trade wars are like real wars (and often lead to real wars: ) The little people first get fooled, then shafted, then killed. The big people gain. The “useful idiots” (Lenin) help fan the flames – and then get shafted. Or killed. If you read Engels’ letter, you’ll find shafting and killing of useful idiots even in that obscure Schleswig-Holstein affair.
Unions usually are at the forefront to demand a protection racket and manage to kill themselves in the process. In Europe, unions usually are closer to Marx & Engels, the author of said Schleswig-Holstein piece. In the U.S., they used to be closer to the real pros of the protection racket, the mob. No surprises there.
Also interesting to note: For years, we’ve been running around the world, preached “free markets!” and told other countries how to run theirs. Suddenly, all forgotten. Maybe not by the other countries.
Disclosure: The author is involved in international trade and would be negatively impacted by restrictions thereof.
shiney2: History tells us that any meddling with market forces usually prolongs agony. The one and only exception I would allow is banks. People need assurance that their cash deposits (but not their at risk investments, such as stocks & bonds ) are safe. Otherwise we are back to bartering. I would let banks fail, but deposits must be insured. It’s part of the promise to the people that the piece of paper called money actually has value.
If the car in the picture was in fact made in Mexico, it must be a “Dinalpin”. DINA (DIesel NAcional) manufactured the Alpine for Renault in the 60’s, thus the name.