All politics is local! This article gives insight as to why Alabama's Republicans are calling the Big 3 "dinosaurs."
Note that Alabama paid $175,000 in tax concessions and subsidies for each job brought to the state by auto makers Mercedes, Toyota, and Honda.
Gee, if only the answer to helping the Big 3 were as simple as "letting free markets work," then we wouldn't have to worry. But what free markets? Where are they? Where is the auto market in the U.S., Japan, China, EU, or S. Korea that is free of protective tariffs, preferential subsidies and tax breaks?
If GM offered to close its plants in Detroit and move them to Alabama, at a cost of $175,000 per job to Alabama's taxpayers, would free-market cheerleaders like Sens. Rick Shelby and Jeff Sessions support the deal? You bet your free markets they would.
I wonder if Japan, China, S. Korea, and India allow foreign investors to play off different regions/provinces, inciting internal FDI bidding wars for the biggest subsidies and tax breaks, like the United States does? Are we the only developed country that encourages this self-defeating "race to the bottom?"
Alabama emerges as foe to auto aid
By Bryce G. Hoffman
November , 2008 | The Detroit News
1 comment:
The "big lie" being spread by the "big three" is that there are only two alternatives at the present time:
1. Give the automakers all the money they want, or
2. GM, Ford, and Chrysler disappear forever, taking millions of jobs with them forever.
The reality is, of course, is that the unions and management would lost a lot in a bankruptcy reorganization. No golden parachutes, no million dollar a year salaries. No workers making 4 to times the market norm and of course a lot less union dues being paid.
And of course, even if these companies disappeared forever, other companies would take up the market share slack, increase production and hire many of the laid-off workers from the big-3.
There is a third way. Let GM, Ford, and Chrysler go bankrupt. The government can provide bankruptcy financing. The union contracts and golden parachutes can be cut down, and the companies can re-emerge as truly competiative entites.
I think the "big 3" are just hoping gas prices go down and people start buying huge overpriced and highly profitable empty steel boxes (SUVs and pickups) again.
But Toyota, Nissan and even Honda were making dents in that lucrative market share before the downturn.
So I think the bailout plan is nothing more than a band-aid on a bleeding artery.
Post a Comment