On the Futility of Bailouts, Part Deux

Robert Reich has a question:

"[GM's labor problem is] an almost impossible dilemma," said former labor secretary Robert B. Reich, now a professor at the University of California-Berkeley. "GM is a global company -- so for that matter is AIG and the biggest Wall Street banks. That means that bailing them out doesn't necessarily redound to the benefit of the U.S. or American workers.

"More significantly, it raises fundamental questions about the purpose of bailing out these big companies. If GM is going to do more of its production overseas, then why exactly are we saving GM?"

I love how all these super duper smart former government people never bother to ask the question until they are former government people. When they are in government, they insist on bringing home every mangy kitten they find because, good golly, if these companies go out of business well that would be bad. And so without considering any possible adverse consequences, they spend all manner of taxpayer money to allow the company to keep doing the kinds of things that got it in trouble in the first place.

Like this:

"While paying a U.S. autoworker with benefits costs about $54 an hour, a South Korean worker earns about $22 an hour, a Mexican worker earns less than $10 an hour and some Chinese workers can earn as little as $3 an hour, industry sources said. "

If US autoworkers demand more than $100,000 a year to do the same job a Mexican will do for a fifth of that, then they will lose those jobs, sooner or later, because the consumers have neither the responsibility nor the desire to support that wage differential(1). You want to keep jobs here? Immediately halve the salary of US auto workers. They'll still be making more than the average accountant, and for a job that's a lot easier.

But be that as it may, Reich has finally stumbled onto the truth: there is almost no such thing as a national company anymore, at least not a company of any size. That means that any bailout coming from the government is guaranteed to hurt the people under that specific government without any guarantee that they will receive any benefit from it at all.

Then again, I suspect the people who are supposed to benefit are those who run the bailouts and their friends, anyway.

(1) Which is precisely why, in addition to being economically stupid, it's morally wrong to use tax dollars to "save" them. What the government is saying is that since you won't voluntarily pay that extra money for a car, we are going to take your money and give it to the carmaker anyway. Oh, and not give you a car.

Comments

DOTDOT 13 years, 3 months ago

Even if you do voluntarily pay that extra money for the American car, they will (have) also take(n) your (children's) tax dollars and give to the car makers.

God bless America.

At least I know I'm free.

Keith 13 years, 3 months ago

"They'll still be making more than the average accountant, and for a job that's a lot easier."

I just want to say that this is about the dumbest statement I've read on this blog, which is saying a lot.

13 years, 3 months ago

"which is saying a lot."

It sure is, because I'm sure I've said a lot of stupider things. But because I'm so stupid, I'm not sure exactly which part of it is so stupid. It can't be the math, as it's pretty obvious that a starting accountant will make $18-$20/hr. Those numbers are a little old, so let's bump them 30% for inflation ($24-26/hr), and we will still find that about half of the $54/hr that the article claims for autoworkers: http://www.collegegrad.com/salary/entrylevelaccountingsalary.shtml

Maybe it's the part about the job being harder? As one bit of evidence, I would submit that the above $25 demands at least a bachelor's degree in accounting, maybe a master's, some professional certification, and should one move into the top ranks of accountancy/auditing and become a CPA, one could make $91,608, or $46/hr., almost what an autoworker makes: http://accounting.smartpros.com/x57059.xml

To be an autoworker, one must be able to perform "any combination of following repetitive tasks... Loads stamped metal body components into automated welding equipment ... Bolts, screws, clips, or otherwise fastens together parts to form subassemblies, such as doors... " There's more, like applying "precut and adhesive coated vinyl tops and pads to vehicle roofs," but that's the gist of it: http://www.occupationalinfo.org/80/806684010.html

Now, does one need a degree or even any specialized education to do so? I have not been able to discover it (maybe you can), but I did note that there was a little bit of "one the job" training available to autoworkers:

"In 1979, Eastern Michigan University received a federal grant to establish a basic skills literacy center through the Right-To-Read program. The "Academy" developed a learner centered, research based approach aimed at upgrading adult literacy in nearby counties. In 1984, union and management from a nearby Ford plant invited the Academy to set up a basic skills training center for its hourly workers. These workers had been out of school for 10 to 20 years and were being hit with workplace changes that were part of Ford's quality initiatives. The program concentrated on applied math since the plant was introducing statistical process controls." http://www.nald.ca/fulltext/report3/rep23-27/rep24-03.htm

So if you've been an autoworker for 10-20 years, you might be able to learn to read and to do "applied math." Plus if you started at the right time, you would be able to retire on most of your salary at age 55.

Certainly the autoworker job is more physical, and repetitive works is tiring and can take a toll on the body, but it would be very difficult to say that it's a harder job to do. At least so much self-evidently harder that my statement should rank anywhere near my Idiocy Hall of Fame.

I usually have to work hard to outdo myself. That time I wasn't even trying.

Keith 13 years, 3 months ago

"Certainly the autoworker job is more physical, and repetitive works is tiring and can take a toll on the body, but it would be very difficult to say that it's a harder job to do. At least so much self-evidently harder that my statement should rank anywhere near my Idiocy Hall of Fame."

Funny, but all that is my definition of a harder job. The most physical danger an accountant encounters are paper cuts and staple piercings, with perhaps a bit of carpal tunnel thrown in. If you had said at the outset 'for a job that requires less education' I would have agreed.

DOTDOT 13 years, 3 months ago

"...the autoworker job is more physical, and repetitive works is tiring and can take a toll on the body..."

Whew. I need a raise just reading this blog.

DOTDOT 13 years, 3 months ago

Anyway shouldn't that read "...the autoworker job WAS more physical, and repetitive work WAS tiring and COULD take a toll on the body...?"

that_will_do_pig 13 years, 3 months ago

Man.. I just had this debate the other day with a friend. It's all a little relative, but certainly always frustrating. For instance, my 5'4" frame can't even fathom the amount of physical exertion some factory workers put out every day. There's no way my body would handle it. But then, say, I didn't have a degree, wanted to make a lot of money still... could I be a car painter? A precut adhesive vinyl coater? Work with car fabrics? Snap little pieces into place on an assembly line? Because the thought that I could be making $54 an hour doing any of those things, with little to no education, is absolutely ridiculous.

But my biggest concern with the discrepancy in pay here is that though it might not be fair to say earning a college education is "harder" than not (though really? I worked damn hard for my degrees and am continuing to work hard for my master's...) and instead performing physical labor, it's not the point. In MY opinion, the more educated people we have in our society the better. Encouraging citizens to pass on education options because frankly they don't need it to make a good buck is a horrible policy that seems to give incentives for a lack of advanced thought and interpretive and social skills. Further, I think these things are crucial in selecting the right policies and officials that govern us, even on the smallest of local levels. I mean... our country is run by supremely educated individuals. We wouldn't elect someone who passed on a college (or even a doctorate) education but sure is strong and made a lot of money in the auto industry.

Keith 13 years, 3 months ago

"I mean... our country is run by supremely educated individuals."

And that has worked out so well for us recently. Education =/= intelligence.

that_will_do_pig 13 years, 3 months ago

Sometimes true. I deleted and retyped that sentence many, many times before I posted because I knew somebody was going to say that. But I still think it's important. Notice that I wasn't arguing that a college education necessarily brought intelligence but rather "advanced thought and interpretive and social skills"... and if our officials aren't "supremely educated," I still maintain that the smarter our population is the better, no matter what our brute strength is.

Keith 13 years, 3 months ago

I don't disagree with you on that at all. I only say that technical mechanical skills, whether in auto assembly, HVAC, plumbing, etc. are at least as valuable as intellectual skills. My opinion only, we have for too long favored college over technical training, leaving those who are not college material with few options for a career instead of a job.

that_will_do_pig 13 years, 3 months ago

It makes me wonder if there's a possibility to rework what it means to have technical training... because I hate the thought that by the time I finish my PhD, nearly 10 years of collegiate academics, and tens of thousands of dollars in debt, that my monetary worth in society is far less than someone working on the auto line... I think that's where it gets me every time. Good point though.

cfdxprt 13 years, 3 months ago

Auto assembly is not a technical mechanical skill. The jobs are designed to be as simple and unskilled as possible, that's how you achieve repeatability. Auto mechanics have technical skills, plumbers, HVAC techs, etc...but an assembly line worker has about the most boring job on the planet. If you don't have to do a apprenticeship for several years it is not a technical skill. I worked at GM, designing assembly processes and figured out very quickly that there was a massive disconnect between what people got paid and what was required of them. While I'm very mechanically inclined I know when to pay someone to do something that I'd probably screw up - I could do about any job on an assembly line with 30 minutes of training.

13 years, 3 months ago

Dots: "I need a raise just reading this blog."

Consider your salary doubled, my friend.

Keith 13 years, 3 months ago

I could do about any job on an assembly line with 30 minutes of training.

But you don't, so the company ends up paying what they bargain for. Or they move the jobs overseas, thus making it harder to sell their product domestically, since an unemployed worker usually can't afford to buy their products, or other products. Once the downward spiral hits sufficient momentum, we get what we are now experiencing economy wise. Which maybe brings us back to the original premise of this blog.

DOTDOT 13 years, 3 months ago

I've engaged in the education v. labor debate all my life, with college grads favoring education, and non-grads favoring labor.

The expectation that a high paying job will be awaiting the individual who spends their twenties in school accumulating debt belies the same sense of entitlement as the welfare mom pumping out babies to fatten her check.

Their are extreme examples of abuse on both ends of this spectrum. I've met factory workers who are grossly overpaid, but I get more irritated with professionals who sit on their arrogant asses and expect a couple hundred bucks an hour for just showing up because they "worked hard" for 6-8 years a couple of decades ago. Like the motherfucker that showed up an hour and a half late for my colonoscopy. (Note to self: don't bitch at the guy who's about to put you to sleep and stick something up your butt next time).

Labor v. Education?

How about both?

DOTDOT 13 years, 3 months ago

Keith: "...so the company ends up paying what they bargain for..."

No.

The company never pays anything. You and I foot the bill in every case. Some monies go to crooked politicians, some to thieving bankers, some to union thugs, but it all comes from the same place.

13 years, 3 months ago

Just because it's not worth an entire blog entry all to itself:

WASHINGTON -- The Obama administration is weighing plans to detain some terror suspects on U.S. soil -- indefinitely and without trial -- as part of a plan to retool military commission trials that were conducted for prisoners held in Guantanamo Bay, Cuba.

The proposal being floated with members of Congress is another indication of President Barack Obama's struggles to establish his counter-terrorism policies, balancing security concerns against attempts to alter Bush-administration practices he has harshly criticized.

On Wednesday, the president reversed a recent administration decision to release photos showing purported abuse of prisoners at U.S. military facilities in Iraq and Afghanistan. Mr. Obama cited concern that releasing the pictures could endanger U.S. troops. Mr. Obama ordered government lawyers to pull back an earlier court filing promising to release hundreds of photos by month's end as part a lawsuit brought by the American Civil Liberties Union. http://online.wsj.com/article/SB124223286506515765.html

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