The Big 3 Bailout Failout

I believe it was the 9th Commandment that said "Thou shalt always have the Big 3 in operation." Of course I may be remembering that incorrectly. This latest proposal however would surely make one believe that it was written in scripture or in stone that the Big 3, which consists of GM, Ford and Chrysler, must never be allowed to fail. I have a very simple question, why? Why not let these companies fail? Besides the amount of many they are asking for, over 20 billion $ will only keep them afloat until February anyway. All three of these companies are losing around six billion $ a month. Yes that's correct, six billion a month! What good is 20 billion? There are a few very simple routes that the government and the CEO's of these companies could pursue. First, let them go bankrupt. Pretty simple really. Now bankruptcy does not mean death. For example, Kmart, Continental Airlines, Delta Airlines, United Airlines, Fruit of the Loom, Texaco, Toys R Us etc all declared bankruptcy. However these companies didn't disappear. They were simply restructured, reorganized and put under new and better management. So this rhetoric about millions of jobs being lost is most certainly not true. Bankruptcy can be a good thing. It shows people that they are doing the wrong thing. Henry Ford had plenty of failures before he started Ford Motor Co. What if Ford had been bailed out after his first failure? Failure teaches people, and those who have the drive to succeed can learn from their mistakes. That is how progress is made. Sometimes failure is and should be an option so that we can learn from it and become better people because of it.

Another option is to cut short term costs. This is the option that most appeals to me. There is one simple way to cut short term costs; tell the union, in this case the UAW union, that their contracts are null and void. Yes that is correct, tell the UAW one of the strongest unions in the country that their contracts are being suspended. Now the economy as a whole is definitely having a huge negative effect on the Big 3. However I believe that the long term cause of the problems of the Big 3 consist of two major problems. These problems are the UAW and the absolute idiocy of the management of these companies. First though is definitely the UAW. Let us examine this further. How come companies such as Honda, Toyota, Nissan and others are not asking for a bailout? If it truly is just the economy's fault, claims Ron Gettelefinger head of the UAW, than all these other car companies should be at risk as well. Nissan, Honda and Toyota have all recently opened up new plants here in America. In fact Handa just recently hired over 900 Americans to work in one of their car manufacturing plants. So obviously the economy is not the only cause of the Big 3's problems. The main problem is the UAW. According to Daniel J. Ikenson, Assistant Director of the Cato Institute, "The average compensation for an hour of work at GM is $74. While at Toyota it's about $47." In fact economist Dr. Peter Morici has said that "Honda pays an average $18.41 and hour." He also argues that along with the absolute insane wages and benefits that the Big 3 offer, in order to make money they have to cut corners. Cutting these corners screws us, the consumer. They use cheaper materials for things such as upholstry, and it shows. The quality of GM car is nowhere near the quality of a Nissan or Handa car. Much of this is due to the outragious and I would argue criminal demnads made by the UAW.

For example, the UAW has entities called Jobs Banks. What are Jobs Banks? They are buildings that the UAW forced the Big 3 to create where laid off, or ex Union workers for any number of reasons go to get paid. What do they do there? Nothing, absolutelty nothing. Many of them simply sit around and watch TV or read magazines. Many times they have the continue to pay these idel employees for as many 4 years after they are let go. This actually made headline news on 20/20. I will link at the end of this article to that story and anyone who is interested can watch it. It is only around 5 mintues long.

A final option that they could pursue is trying to sell their company to a successful company. However with the power of the UAW hindering these companies, they may be hard pressed to find a company who is willing to take them over so quickly. They could attempt to weaken the union but doing this is easier said than done. The CEO's are also to blame for this. They made cars that consumers did not want. They also have a less effecient assembly line than companies such as Honda or Toyota. Handa and Toyota CEO's didn't waste money on private jets either. These CEO's need to be held responsible for their actions and their mismanagement of these companies.

The simple fact of the matter is this; no company is "to big to fail" and that the American tax payers should not be on line to bail these companies out. With the recent Wall Street bailout, the biggest redistribution of wealth in this country's history, these auto companies are thinking that maybe now they can grab a slice of that pie. To them I have one thing to say, the buck stops not here with the taxpayer but with YOU; deal with your own problems.

-In Liberty,
Mr. Jefferson

"Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all."
-Frederick Bastiat.

Here are a few links to the video sources I quoted in the article

http://www.youtube.com/watch?v=73c-1YwEPH4

http://www.youtube.com/watch?v=SEPJFWWprMo