Just How Sensitive Is the Economy to the Auto Industry? 11 comments
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Nice chart from Economy.com’s Mark Zandi showing the economy’s sensitivity to the auto industry. It comes from his auto-related Senate testimony.
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This article has 11 comments:
Ford looks and smells more sound than the other two -
Keep Chevy, Caddy, and GMC Trucks, kill all other GM op's -
At Chrysler - kill all except Chrysler Minivan and leading 2 models at Jeep
Forge all under "USA Motors" and these remaining lines need to be moving quickly towards Nat Gas fuel
Give this new entity $25B to get going on -
Zandi said today that "we cannot let the auto industry fail." If he had any business sense he would realize that reorganization under chapt 11 is not failure, but a chance at success.
Pat Buchanan – Fri Nov 21, 3:00 am ET
More from Pat Buchanan:
Pat Buchanan has been a senior adviser to three presidents, twice a candidate for the Republican presidential nomination, and the presidential nominee of the Reform Party in 2000.
Creators Syndicate – Who killed the U.S. auto industry?
To hear the media tell it, arrogant corporate chiefs failed to foresee the demand for small, fuel-efficient cars and made gas-guzzling road-hog SUVs no one wanted, while the clever, far-sighted Japanese, Germans and Koreans prepared and built for the future.
I dissent. What killed Detroit was Washington, the government of the United States, politicians, journalists and muckrakers who have long harbored a deep animus against the manufacturing class that ran the smokestack industries that won World War II.
As far back as the 1950s, an intellectual elite that produces mostly methane had its knives out for the auto industry of which Ike's treasury secretary, ex-GM chief Charles Wilson, had boasted, "What's good for America is good for General Motors, and vice versa."
"Engine Charlie" was relentlessly mocked, even in Al Capp's L'il Abner cartoon strip, where a bloviating "General Bullmoose" had as his motto, "What's good for Bullmoose is good for America!"
How did Big Government do in the U.S. auto industry?
Washington imposed a minimum wage higher than the average wage in war-devastated Germany and Japan. The Feds ordered that U.S. plants be made the healthiest and safest worksites in the world, creating OSHA to see to it. It enacted civil rights laws to ensure the labor force reflected our diversity. Environmental laws came next, to ensure U.S. factories became the most pollution-free on earth.
It then clamped fuel efficiency standards on the entire U.S. car fleet.
Next, Washington imposed a corporate tax rate of 35 percent, raking off another 15 percent of autoworkers' wages in Social Security payroll taxes
State governments imposed income and sales taxes, and local governments property taxes to subsidize services and schools.
The United Auto Workers struck repeatedly to win the highest wages and most generous benefits on earth — vacations, holidays, work breaks, health care, pensions — for workers and their families, and retirees.
Now there is nothing wrong with making U.S. plants the cleanest and safest on earth or having U.S. autoworkers the highest-paid wage earners.
That is the dream, what we all wanted for America.
And under the 14th Amendment, GM, Ford and Chrysler had to obey the same U.S. laws and pay at the same tax rates. Outside the United States, however, there was and is no equality of standards or taxes.
Thus when America was thrust into the Global Economy, GM and Ford had to compete with cars made overseas in factories in postwar Japan and Germany, then Korea, where health and safety standards were much lower, wages were a fraction of those paid U.S. workers, and taxes were and are often forgiven on exports to the United States.
All three nations built "export-driven" economies.
The Beetle and early Japanese imports were made in factories where wages were far beneath U.S. wages and working conditions would have gotten U.S. auto executives sent to prison.
The competition was manifestly unfair, like forcing Secretariat to carry 100 pounds in his saddlebags in the Derby.
Japan, China and South Korea do not believe in free trade as we understand it. To us, they are our "trading partners." To them, the relationship is not like that of Evans & Novak or Fred Astaire and Ginger Rogers. It is not even like the Redskins and Cowboys. For the Cowboys only want to defeat the Redskins. They do not want to put their franchise out of business and end the competition — as the Japanese did to our TV industry by dumping Sonys here until they killed it.
While we think the Global Economy is about what is best for the consumer, they think about what is best for the nation.
Like Alexander Hamilton, they understand that manufacturing is the key to national power. And they manipulate currencies, grant tax rebates to their exporters and thieve our technology to win. Last year, as trade expert Bill Hawkins writes, South Korea exported 700,000 cars to us, while importing 5,000 cars from us.
That's Asia's idea of free trade.
How has this Global Economy profited or prospered America?
In the 1950s, we made all our own toys, clothes, shoes, bikes, furniture, motorcycles, cars, cameras, telephones, TVs, etc. You name it. We made it.
Are we better off now that these things are made by foreigners? Are we better off now that we have ceased to be self-sufficient? Are we better off now that the real wages of our workers and median income of our families no longer grow as they once did? Are we better off now that manufacturing, for the first time in U.S. history, employs fewer workers than government?
We no longer build commercial ships. We have but one airplane company, and it outsources. China produces our computers. And if GM goes Chapter 11, America will soon be out of the auto business.
Our politicians and pundits may not understand what is going on. Historians will have no problem explaining the decline and fall of the Americans.
Patrick Buchanan is the author of the new book "Churchill, Hitler and 'The Unnecessary War." To find out more about Patrick Buchanan, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at creators.com.
There is no guarantee that the economy will come back anytime soon if we bailout the auto industry.
What we need is to get money in the hands of the consumer so he can buy
cars!!!
Frankly, I'm down on the whole economy and I think we should stop throwing money away and just let things bottom out....MarvinMBA
Bankruptcy???? Again, what are you thinking??? If any one of them goes bankrupt, it will affect EVERY facet of the global economy. You really think the foreign car makers will even be able to make ALL the cars, and then what about all the profits made, will they be put back into US economy, or their home land economy??? That will help US! Every job, every paycheck in this country has been affected by the auto industry. You make the wages you make today because of the auto industry.. If they made 20% less, so would you! If their health care was crappy, you probably wouldn't even have any!
There is no doubt that changes need to be made, and maybe a loan to them is not the answer!, BUT just letting them fall off the face of the earth, just because you spite them, will help no one!
Most of you read and listen to the media bullshit, and do not have the true facts...
For example: the auto worker does not get to sit at home getting 95% of his wages while laid off! What he gets is unemployment benifits, and a supplement equal to the difference of unemplyment and 95% of his TAKE HOME pay, minus $25.00, and that is taxable.
The media doesn't give you the straight truth! But go ahead and believe what you will, we will see where YOU are after this all crashes, I'll bet you'll still blame your fellow american neighbor auto worker!
Why has no one in the press pointed out that GM paid 37 Billion in Federal Taxes last year in addition to the federal taxes paid by their employees?
Is a 12 Billion loan request really all that unreasonable?
To verify: www.gm.com/corporate/i...
We are seeing the consequences in America of a one-world globalist vision of economics. Moving manufacturing out of the US may be better for "the world" but it destroys the US. America can no longer produce and trade. America now borrows and consumes. Subprime mortgages made McMansions available to people with McJobs, but that was a fantasy that is now crashing down to reality.
The truth is, people with McJobs earn peasant level incomes. A service economy is a peasant economy. Readily available credit disguised this fact for a long time, but now the piper is calling for his loans to be repaid and the peasants have no money. There are not enough good paying jobs to employ all these people because those jobs have been exported to Asia by the globalists.
If consumers can buy a Chinese product at Walmart for 1/2 the price of a competing US product, they will buy Chinese. For awhile, as long as these consumers can keep getting deeper into debt to buy all this cheap Chinese stuff, America will enjoy a higher standard of living measured by the goods people possess. But without good paying jobs earned by producing products that America can sell to China, this debt-fueled prosperity is an illusion.
I don't know what the globalists' plans are for America in the future. With Detroit's needs and Obama's willingness to borrow and stimulate there is a historic opportunity for America to develop next-generation auto technologies that can be sold to the world. American preeminence came from inventing, perfecting and manufacturing things that the world wanted. I think the opportunity exists to get back this position with energy and auto technologies. The question is, will America be allowed to do this?