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Originally Posted by AVGWarhawk
Yes, probably a canned response for anyone who writes his/her congressperson. But this congressman is correct. Throwing good money after bad is not a good practice. As a free market, these automakers should be allowed to fail. Under most circumstances, a better company replaces the defunct company. As this person has written, the auto industry is addicted to the taxpayers money. Although Iaacoca had a business plan,giving Chrysler the money started a bad trend. Why bail them out because they suck? Makes no sense. But the automakers are pulling a fast one by stating all of these workers will be without jobs and the subsidiaries that supply the factories will shut down. That is a shame but not my problem nor the governments problem. Management slept at the helm, the UAW strong armed more money far better then what the job called for. Let the factories close and the UAW leaders can figure out how to dispurse the unemployment checks to the union workers. When that is exhausted and the workers are still out of work perhaps they will realize that some concession should have been made to save a company and save their jobs. Just my opinion on the matter.
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Exactly.
And anyone who feels bad for the workers, THEY are the problem (or more specifically, their union).
The reason these companies are in trouble are due to a thing called "legacy costs". Primarily, this refers to pension packages. So what happens is that these companies are paying 2 workforces - 1 productive and 1 not productive. That puts them at a distinct disadvantage against foreign automakers who can produce cars for far less.
The bigger problem with legacy costs is that they don't get smaller. They are always increasing, far outpacing inflation.
The ONLY bailout I would consider is this: the automakers abandon all current pension plans in favor of retirement savings (401K, IRA, etc). Leave them on the hook for current pension dollars as they would decrease as there would be no more costs incurred.
Finally (here's the bailout part), allow the government to supplement the auto worker's retirement accounts with an amount calculated based upon a national average of employee retirement savings via tenure. That way, workers depending on a pension won't be completely up the proverbial creek.
Going this route, surely there would still be struggles. But, those would be limited if the companies develop a solvent business model. If they don't, they go out of business.