That's a very good point. All factory jobs are not fungible. You can't say, "Mr. Auto Factory Worker, now you can go work in the Steel Mill." Further, those factories left working in the U.S. wouldn't necessarily have openings for all the auto workers. Mr. Steel Mill Owner has a full payroll and doesn't have room for any auto workers.
Finally, Mr. Steel Mill Owner is a dying breed. There's not that many manufacturing jobs left in the U.S. Those auto workerswillbe losing their jobs and they won't have anyplace to go.
If we can give money to auto companies with stipulations, then we can give money to other companies with the stipulation that they use it to open new factories. It doesn't have to be untested startup companies. We give it to surefire winners.
For example, we could give money to Samsung to open up a flash memory factory in Detroit. Pay some clothing company to move their Chinese factories to the US. The money we give them will make up for the fact that they lose money by opening a factory in the US vs. Asia. If we've already decided we're going to spend tax payer money to keep people employed, we might as well spend it getting people employed at companies with real futures instead of a short-term band-aid.
Someone mentioned major strings attached...I think that's the best option. I think they should be extreme strings. Start with an extreme audit of the management. Replace ALL of the top people who are questionable with new people at more reasonable salaries. Reduce any excessive salaries of people who did not drive the company into the ground. Dictate that the new management must achieve certain milestones within the next few months, year, several years, etc. This should include working towards sustainable/green automobiles, and they could even give tax credits and other incentives to the companies for working in that direction, which would help them out further. State that the company must pay back the borrowed bailout money at a certain rate over a certain amount of time. It's not a complete plan drawn out in detail, but I think it's an idea that could work.
That's a very good point. All factory jobs are not fungible. You can't say, "Mr. Auto Factory Worker, now you can go work in the Steel Mill." Further, those factories left working in the U.S. wouldn't necessarily have openings for all the auto workers. Mr. Steel Mill Owner has a full payroll and doesn't have room for any auto workers.
Finally, Mr. Steel Mill Owner is a dying breed. There's not that many manufacturing jobs left in the U.S. Those auto workerswillbe losing their jobs and they won't have anyplace to go.
If we can give money to auto companies with stipulations, then we can give money to other companies with the stipulation that they use it to open new factories. It doesn't have to be untested startup companies. We give it to surefire winners.
For example, we could give money to Samsung to open up a flash memory factory in Detroit. Pay some clothing company to move their Chinese factories to the US. The money we give them will make up for the fact that they lose money by opening a factory in the US vs. Asia. If we've already decided we're going to spend tax payer money to keep people employed, we might as well spend it getting people employed at companies with real futures instead of a short-term band-aid.
Giving a hot injection of money to open up a factory is worthless. For starters, it's going to take a while to get the factory up and running. Then, the industry in question will actually need the factory. If there isn't a demand for the product, then the new factory will just be useless. It'll eat up more money than it winds up making them.
If we can give money to auto companies with stipulations, then we can give money to other companies with the stipulation that they use it to open new factories. It doesn't have to be untested startup companies. We give it to surefire winners.
For example, we could give money to Samsung to open up a flash memory factory in Detroit. Pay some clothing company to move their Chinese factories to the US. The money we give them will make up for the fact that they lose money by opening a factory in the US vs. Asia. If we've already decided we're going to spend tax payer money to keep people employed, we might as well spend it getting people employed at companies with real futures instead of a short-term band-aid.
So, not even addressing the other weirdness in your proposal, you expect auto workers to be simply start working as computer factory workers? Yeah, there's a lot of transferable skills between those two jobs.
Actually, they probably are to a large degree. Beyond the specialists - engineers, maintenance, etc... - the majority of factory work is low-skill labour, and many factory processes share much in common. Factories are so streamlined and production steps are so specialized that, for many factory jobs, training effectively amounts to "Stand here, hold this metal thing, touch it to the top of every widget that comes down the line, and don't accidentally touch it to yourself or anyone else; stop when the bell rings."
I'm not trivializing the specialized and highly-skilled labor that does exist in factory work, but from experience, most of the jobs are pretty simple. The car factory line worker loads the masks into the machine every twenty minutes and presses a button. The "computer factory" line worker loads the trays of wafers into the machine every twenty minutes and presses a button. The only people who have any access to the higher functions of the machines are the engineers and the maintenance workers.
Subsidies are an effective incentive to get private industry to take up a task that it is unable or unwilling to do on its own which the government does not want to control outright. They're just one of many economic tools we have at our disposal, and I believe that, for certain sectors, they are woefully underused.
So, not even addressing the other weirdness in your proposal, you expect auto workers to be simply start working as computer factory workers? Yeah, there's a lot of transferable skills between those two jobs.
Actually, they probably are to a large degree. Beyond the specialists - engineers, maintenance, etc... - the majority of factory work is low-skill labour, and many factory processes share much in common. Factories are so streamlined and production steps are so specialized that, for many factory jobs, training effectively amounts to "Stand here, hold this metal thing, touch it to the top of every widget that comes down the line, and don't accidentally touch it to yourself or anyone else; stop when the bell rings."
I'm not trivializing the specialized and highly-skilled labor thatdoesexist in factory work, but from experience, most of the jobs are pretty simple. The car factory line worker loads the masks into the machine every twenty minutes and presses a button. The "computer factory" line worker loads the trays of wafers into the machine every twenty minutes and presses a button. The only people who have any access to the higher functions of the machines are the engineers and the maintenance workers.
Also, the people in the auto industry who actually have skilled jobs will have no problem finding new jobs, if they are willing to do what it takes to get them, i.e: leave Detroit. The executives and managers will also have relatively few problems getting by. The only people who are really getting screwed by this are the unskilled laborers. If they're unskilled, they'll be able to do just about any other unskilled job just as well.
Also, if we've got $700 billion, some of that could be spent on training, yes?
The major problem with bailing out the auto industry is that all it does it temporarily maintain the status quo and delay suffering. In fact, most of the things we try to do to fix the economy don't really fix anything. They either spread suffering, or delay it. The bailout itself spreads suffering. Instead of the people directly affected by the banks going under getting royally screwed, we spread the suffering via taxes so everyone gets screwed a little bit. Bailing out the auto companies, even with stipulations, just keeps them in business for a little while longer so that they can fail in the future instead of right now.
Subsidies are an effective incentive to get private industry to take up a task that it is unable or unwilling to do on its own which the government does not want to control outright. They're just one of many economic tools we have at our disposal, and I believe that, for certain sectors, they are woefully underused.
But but but that's socialism! :-) We should blame this on Clinton somehow.
Seriously, what major industry in the U.S. doesn't have some sort of subsidies already. I mean,almost all science research is subsidized in some way, farming don't even get me started, as well as most of the energy production (especially Oil). There are already subsidies for Car companies that want to make fuel efficient cars but they don't take advantage of them. Rym is 100% correct. Subsidies are just a tool, however I would agree that sometimes subsides are just there for political capital for a particular candidate that owes a industry for funding their election. However, gedavids made subsiding sound like killing babies.
Bailing out the auto companies, even with stipulations, just keeps them in business for a little while longer so that they can fail in the future instead of right now.
So, not even addressing the other weirdness in your proposal, you expect auto workers to be simply start working as computer factory workers? Yeah, there's a lot of transferable skills between those two jobs.
Actually, they probably are to a large degree. Beyond the specialists - engineers, maintenance, etc... - the majority of factory work is low-skill labour, and many factory processes share much in common. Factories are so streamlined and production steps are so specialized that, for many factory jobs, training effectively amounts to "Stand here, hold this metal thing, touch it to the top of every widget that comes down the line, and don't accidentally touch it to yourself or anyone else; stop when the bell rings."
Do you have any proof, such as a finding from the Bureau of Labor Statistics, or is your conclusion wishful thinking? Factory work, even at an unskilled level, is not fungible.
Also, the people in the auto industry who actually have skilled jobs will have no problem finding new jobs, if they are willing to do what it takes to get them, i.e: leave Detroit. The executives and managers will also have relatively few problems getting by. The only people who are really getting screwed by this are the unskilled laborers. If they're unskilled, they'll be able to do just about any other unskilled job just as well.
You're simply stating what you believe to be the case. Have you tried to find a skilled or an unskilled job lately? I know that you're familiar with computer and IT jobs, but I simply don't believe that you understand how difficult it is for factory workers to obtain new jobs.
Do you have any proof, such as a finding from the Bureau of Labor Statistics, or is your conclusion wishful thinking? Factory work, even at an unskilled level, is not fungible.
I worked at several factories around Rochester while I was at school. Making sub at Dibella's was more challenging than any of them. I also worked extensively on the floor of two of IBM's larger factories/fabs. Most of the line work involved data-entry, loading, and unloading, and most of the jobs were pretty interchangeable. It was common practice to hire temps whenever workload increased, and they had no trouble doing their jobs. Hell, I'll bet you could do most of the line jobs in there with less than an hour's training.
Also, having grown up in Detroit, most of the people who worked or had parents who worked at the auto plants made it clear that their work was mindless: the hardest part was standing there all day regardless of what you were actually doing. My grandma worked sometimes at a local plastic plant on the floor, and they spent maybe fifteen minutes "training" her.
The only reason factory jobs aren't fungible is that there simply aren't enough factories. Of course, I'm basing this all on personal experience, but I have more than you might think. ^_~
You're simply stating what you believe to be the case. Have you tried to find a skilled or an unskilled job lately? I know that you're familiar with computer and IT jobs, but I simply don't believe that you understand how difficult it is for factory workers to obtain new jobs.
I agree with you here: Scott is wrong. Factory work translates into "unskilled" work outside of factory environments, and there simply aren't enough factory jobs for everyone. IT is booming, so tech jobs are trivial to get, but most other sectors are suffering.
Still, there are tons of job offers in the Mid-Hudson valley that pay pretty well for low-skill work or OJT. Factories are a special case, in that they tend to account for a large percentage of the total job market in a given area, where places like Beacon have a large number of jobs spread out over multiple industries. Factory workers are about as screwed as coal miners: can't just move on to the next coal mine if there aren't any more, can't get job skills if there are no jobs to be had, can't move if there's no job to save up the money...
Regarding subsidies...you'd be surprised how many things the government already subsidies. There's a huge amount of farming funding coming from the government already. I mean,the govt pays farmers for the extra corn they produce when there's a surplus so they don't go out of business and reduce the number of farms. If we're going to do that, why not subsidize manufacturing?
Regarding subsidies...you'd be surprised how many things the government already subsidies. There's a huge amount of farming funding coming from the government already. I mean,the govt pays farmers for the extra corn they produce when there's a surplus so they don't go out of business and reduce the number of farms. If we're going to do that, why not subsidize manufacturing?
You don't think there's any kind of problem with this system?
If we've already decided that we're going to spend taxpayer dollars to create jobs, why create jobs doing something useless? We're going to pay people to make cars that nobody wants and nobody can afford to buy. We'll flood the market with these extra useless cars, supply will far outweigh demand, and the auto industry will be fucked anyway. The only thing we will accomplish is to lose a bunch of money and delay the inevitable. We can instead spend the money to create jobs doing things that are actually economically viable, and will create permanent jobs and actual long-term growth.
Think of it like this. You've got a bunch of people on a sinking ship. Some people on the ship know how to swim, they'll be fine. You have to save the people who can't swim. It costs a huge pile of money to patch the boat and keep it going, but it will still sink a few years from now. It costs the same huge pile of money to build a brand new ship and transfer everyone over, and that ship won't sink for decades, if ever. Who in their right mind would patch the sinking ship?
If we've already decided that we're going to spend taxpayer dollars to create jobs, why create jobs doing something useless? We're going to pay people to make cars that nobody wants and nobody can afford to buy. We'll flood the market with these extra useless cars, supply will far outweigh demand, and the auto industry will be fucked anyway. The only thing we will accomplish is to lose a bunch of money and delay the inevitable. We can instead spend the money to create jobs doing things that are actually economically viable, and will create permanent jobs and actual long-term growth.
I wouldn't call the car industry not economically viable. Lots of car companies actually do make money. What we need are cars that aren't disposable pieces of crap. Look at VW, small, well-built, efficient cars and they've got enough money to blow $5 mil or so on every Bugatti Veyron they make. I mean they only make about 10 of those or so a year, but that's a lot of money to burn. Despite this they had 4 bil euros in profit last year. Same story with Toyota and BMW.
There's no reason you can't make money making cars, people just have to buy them, and the American auto makers weren't diversified enough to survive. They relied to heavily on their bread and butter SUVs and didn't develop small cars enough. They didn't even go through the trouble converting their successful European models and their small efficient engines to meet US regulations. There's really no excuse for them to go belly up in a nation that relies so heavily on cars.
And it's not like it's going to be the end of the world. GM, Ford, and Chrysler will liquidate and sell off the marques they own to companies that can actually run them successfully. I think half the plants will reopen making new cars.
They didn't even go through the trouble converting their successful European models and their small efficient engines to meet US regulations.
US regulations? What is wrong with these models that make them not meet US regulations? They don't waste enough gas nor spew out enough crap? Other than that I can't think of something serious that would make these cars not meet US regulations. So what are these problem points?
They didn't even go through the trouble converting their successful European models and their small efficient engines to meet US regulations.
US regulations? What is wrong with these models that make them not meet US regulations? They don't waste enough gas nor spew out enough crap? Other than that I can't think of something serious that would make these cars not meet US regulations. So what are these problem points?
There's nothing design wise that would cause a major issue. There's legal a process they have to go through to get any engine certified for the US market and it costs money and time to do. They just didn't do it because they thought SUV sales would carry on forever. Hence my not feeling sorry for US auto makers because they had everything they needed to adjust to changing demand and did nothing at all.
Also, having grown up in Detroit, most of the people who worked or had parents who worked at the auto plants made it clear that their work was mindless: the hardest part was standing there all day regardless of what you were actuallydoing.
I can corroborate that. My mom put herself through college working on the floor of GM's Saginaw Steering Gear. I've had a variety of family members involved with Michigan's Auto Industry.
What I hope will happen is that if GM and the others go out of business, Japanese and European companies will take advantage of the infrastructure already in place and make the cars they sell in America with American labor. Toyota has already had great success with this strategy in the past. I mean, it's not ideal, because the main company is not American, but there will still be labor to be done. America needs to take back manufacturing.
Gomidog: People working for foreign companies is part of the modern globalized world. American companies "offshore" their jobs. Now Toyota are doing the same. You've lived in more than one country, I'd have thought you'd see the worlds in a post-nationalist way. Jobs are jobs, companies are companies, people are people. What matters is who or what they are, very little has anything to do with which national boundaries they once fit in.
What I hope will happen is that if GM and the others go out of business, Japanese and European companies will take advantage of the infrastructure already in place and make the cars they sell in America with American labor. Toyota has already had great success with this strategy in the past. I mean, it's not ideal, because the main company is not American, but there will still be labor to be done. America needs to take back manufacturing.
They'd be stupid not to. Think about it, they can get manufacturing facilities for 25 cents on the dollar with a workforce near by already. There's going to be a huge void in the American car market without domestic production. It makes total sense to buy these things up and Foreign manufacturers have the profit dollars to back the potential loans they need.
Gomidog: People working for foreign companies is part of the modern globalized world. American companies "offshore" their jobs. Now Toyota are doing the same. You've lived in more than one country, I'd have thought you'd see the worlds in a post-nationalist way. Jobs are jobs, companies are companies, people are people. What matters is who or what they are, very little has anything to do with which national boundaries they once fit in.
Oh, I think you misunderstood my sentiments. I have no problem with this. From an economic standpoint, however, it is ideal when considering the effect on the GDP for a country's economy to reap the benefits of both the numerous blue collar jobs that manufacturing provides and the white collar science and business jobs that an industries "R and D" and financial headquarters provide to the country. For a healthy national economy, and for globalization not to fuck everyone, there must be a mix of the two. Developing countries get used only for manufacturing at a low wage, and the US has shifted toward predominantly white collar work. I have nothing against Toyota. For crying out loud I was a Nagoya girl, man. How could I be against that? I have nothing against the idea of global economics, in fact I hope for more cooperation between companies, but the fact is globalization as it is practiced now leads to a number of abuses.
Here are few things I would like to point out: -Not all jobs lost would be exclusive to Detroit. -Giving the capital to other companies to start new factories or steal them back from China would likely require far more money than what is being asked for by the Big Three. -Conservative estimates place job loss if the Big Three go down to 2.5-3 million jobs lost. With the current state of the economy (not factoring in any further downturn) only 40%-50% of these jobs can be absorbed by the labor market by 2011. Keep in mind that these are conservative estimates (numbers taken from a NY Times article). -Job listings are down 50% over the last month and significantly down since last year. Where are these workers supposed to find new work? (Numbers taken from NPR broadcast of three days ago.) -This holiday season will likely bust (projected to be the worst Holiday season in two decades) and some estimates project that 1/4 of retailers will fail in some way - ranging from bankruptcy to outright insolvency and liquidation (numbers taken from CNN). This obviously is not a good sign for people seeking to get new jobs and will increase competition for dwindling jobs throughout the market.
-This holiday season will likely bust (projected to be the worst Holiday season in two decades) and some estimates project that 1/4 of retailers will fail in some way - ranging from bankruptcy to outright insolvency and liquidation (numbers taken from CNN). This obviously is not a good sign for people seeking to get new jobs and will increase competition for dwindling jobs throughout the market.
So we bailout the auto industry. Hooray! Jobs saved, disaster averted. But wait, Circuit CIty is failing, should we bail them out too? What about the mom and pop stores on main street that are also failing? Where does it end, how do we keep the government from subsidizing every industry and becoming like England in the 70's.
For crying out loud I was a Nagoya girl, man. How could I be against that? I have nothing against the idea of global economics, in fact I hope for more cooperation between companies, but the fact is globalization as it is practiced now leads to a number of abuses.
This is why I was so surprised at what I thought was your position. I am also all for more globalization but also see current abuses. I just dislike the way so many seem to think that only when it comes to business foreign = bad.
I'd have thought you'd see the worlds in a post-nationalist way. Jobs are jobs, companies are companies, people are people. What matters is who or what they are, very little has anything to do with which national boundaries they once fit in.
That's terribly naive, however. Physicality and locality haven't dissolved (until we invent farcasters), so the issues remain.
For example, production local to consumption saves massive amounts of transportation energy and infrastructure. Different nations have different levels of workers' rights, and we have a vested interest in maintaining ours over the production practices of most other nations. Post-nationalism doesn't mean ignoring your own collective self-interest; the reality of the world is that phsyical distance still separates.
But wait, Circuit CIty is failing, should we bail them out too?
No. They provide no essential boon to our society. There are no "Circuit Cities," relying primarily on the employment provide by CC for their livelihood. Unlike factory work, Circuit City provides practically zero local skilled work. There are several domestic competitors in the same sector ready to take up the slack and profit. It creates no tangible value, existing solely as a service-sector entity.
Bailing out the auto industry provides a boon. We can argue about whether the boon is worth the cost, but it is a societal boon nonetheless. Circuit City brings nothing essential to our general well-being to the table: bailing it out would provide no essential boon.
But wait, Circuit CIty is failing, should we bail them out too?
No. They provide no essential boon to our society. There are no "Circuit Cities," relying primarily on the employment provide by CC for their livelihood. Unlike factory work, Circuit City provides practically zero local skilled work. There are several domestic competitors in the same sector ready to take up the slack and profit. It creates no tangible value, existing solely as a service-sector entity. Bailing out the auto industry provides a boon. We can argue about whether the boon is worth the cost, but it is a societal boon nonetheless. Circuit City brings nothing essential to our general well-being to the table: bailing it out would provide no essential boon.
Also, historically, retail business rebounds far faster than manufacturing. If a major manufacturer (or three in this case) goes down, there is little hope that even small manufacturers will spring up in its place within the US in any amount of time to be of any help to those that lost their jobs and the economy in general. It is naive to think that the other auto makers will make new factories in the US even with great tax incentives. Any new auto factories will be built in another country - and even Scott's "move where the work is" theory can't apply as the wages would be far less, the language barrier a huge hurdle, and immigrating to another nation not an option for many (due to laws, spouses having jobs in the states, the fact that they would have a better quality of life living on unemployment in the US than working at a factory in some places around the world, etc.).
Regarding subsidies...you'd be surprised how many things the government already subsidies. There's a huge amount of farming funding coming from the government already. I mean,the govt pays farmers for the extra corn they produce when there's a surplus so they don't go out of business and reduce the number of farms. If we're going to do that, why not subsidize manufacturing?
You don't think there's any kind of problem with this system?
I think there's loads of problems with the system. I'm just saying don't say "OMG we can't do that! It's socialism!" about one kind of subsidy but ignore a bunch of others. Subsidies for positive reform would be preferable to huge one-time bailouts in my opinion.
If we've already decided that we're going to spend taxpayer dollars to create jobs, why create jobs doing something useless? We're going to pay people to make cars that nobody wants and nobody can afford to buy. We'll flood the market with these extra useless cars, supply will far outweigh demand, and the auto industry will be fucked anyway. The only thing we will accomplish is to lose a bunch of money and delay the inevitable. We can instead spend the money to create jobs doing things that are actually economically viable, and will create permanent jobs and actual long-term growth.
Think of it like this. You've got a bunch of people on a sinking ship. Some people on the ship know how to swim, they'll be fine. You have to save the people who can't swim. It costs a huge pile of money to patch the boat and keep it going, but it will still sink a few years from now. It costs the same huge pile of money to build a brand new ship and transfer everyone over, and that ship won't sink for decades, if ever. Who in their right mind would patch the sinking ship?
That would be true if we were trying to create new jobs with the bailout. We're not. The point of the bailout is to prevent the loss of jobs, not to create of new ones. If you direct the money elsewhere, you'd lose somewhere around 3 million jobs. If your diversified stimulation doesn't create at least 3 million jobs, you've got a net loss of employment. Add in the fact that building a new factory from the ground up, as well as training new personnel, is more costly than maintaining existing jobs. You're also assuming that you could create stable, growing manufacturing jobs; the economy is such that spending is down overall, especially in the manufacturing industry. While the auto industry is certainly not in good shape, no other manufacturing industry is a solid investment right now either.
You also have to account for supporting industries. If the auto industry fails, how would that affect the industries supporting them? Until something else steps in to fill the gap, related industries would suffer losses as well.
Bail out the auto industry with strings attached. Give auto manufacturers money to make cars and products that are actually in demand, in order to actually stimulate spending.
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For example, we could give money to Samsung to open up a flash memory factory in Detroit. Pay some clothing company to move their Chinese factories to the US. The money we give them will make up for the fact that they lose money by opening a factory in the US vs. Asia. If we've already decided we're going to spend tax payer money to keep people employed, we might as well spend it getting people employed at companies with real futures instead of a short-term band-aid.
Yeah, there's a lot of transferable skills between those two jobs.
I'm not trivializing the specialized and highly-skilled labor that does exist in factory work, but from experience, most of the jobs are pretty simple. The car factory line worker loads the masks into the machine every twenty minutes and presses a button. The "computer factory" line worker loads the trays of wafers into the machine every twenty minutes and presses a button. The only people who have any access to the higher functions of the machines are the engineers and the maintenance workers.
Also, if we've got $700 billion, some of that could be spent on training, yes?
The major problem with bailing out the auto industry is that all it does it temporarily maintain the status quo and delay suffering. In fact, most of the things we try to do to fix the economy don't really fix anything. They either spread suffering, or delay it. The bailout itself spreads suffering. Instead of the people directly affected by the banks going under getting royally screwed, we spread the suffering via taxes so everyone gets screwed a little bit. Bailing out the auto companies, even with stipulations, just keeps them in business for a little while longer so that they can fail in the future instead of right now.
Seriously, what major industry in the U.S. doesn't have some sort of subsidies already. I mean,almost all science research is subsidized in some way, farming don't even get me started, as well as most of the energy production (especially Oil). There are already subsidies for Car companies that want to make fuel efficient cars but they don't take advantage of them. Rym is 100% correct. Subsidies are just a tool, however I would agree that sometimes subsides are just there for political capital for a particular candidate that owes a industry for funding their election. However, gedavids made subsiding sound like killing babies.
Also, having grown up in Detroit, most of the people who worked or had parents who worked at the auto plants made it clear that their work was mindless: the hardest part was standing there all day regardless of what you were actually doing. My grandma worked sometimes at a local plastic plant on the floor, and they spent maybe fifteen minutes "training" her.
The only reason factory jobs aren't fungible is that there simply aren't enough factories. Of course, I'm basing this all on personal experience, but I have more than you might think. ^_~ I agree with you here: Scott is wrong. Factory work translates into "unskilled" work outside of factory environments, and there simply aren't enough factory jobs for everyone. IT is booming, so tech jobs are trivial to get, but most other sectors are suffering.
Still, there are tons of job offers in the Mid-Hudson valley that pay pretty well for low-skill work or OJT. Factories are a special case, in that they tend to account for a large percentage of the total job market in a given area, where places like Beacon have a large number of jobs spread out over multiple industries. Factory workers are about as screwed as coal miners: can't just move on to the next coal mine if there aren't any more, can't get job skills if there are no jobs to be had, can't move if there's no job to save up the money...
Think of it like this. You've got a bunch of people on a sinking ship. Some people on the ship know how to swim, they'll be fine. You have to save the people who can't swim. It costs a huge pile of money to patch the boat and keep it going, but it will still sink a few years from now. It costs the same huge pile of money to build a brand new ship and transfer everyone over, and that ship won't sink for decades, if ever. Who in their right mind would patch the sinking ship?
There's no reason you can't make money making cars, people just have to buy them, and the American auto makers weren't diversified enough to survive. They relied to heavily on their bread and butter SUVs and didn't develop small cars enough. They didn't even go through the trouble converting their successful European models and their small efficient engines to meet US regulations. There's really no excuse for them to go belly up in a nation that relies so heavily on cars.
And it's not like it's going to be the end of the world. GM, Ford, and Chrysler will liquidate and sell off the marques they own to companies that can actually run them successfully. I think half the plants will reopen making new cars.
What I hope will happen is that if GM and the others go out of business, Japanese and European companies will take advantage of the infrastructure already in place and make the cars they sell in America with American labor. Toyota has already had great success with this strategy in the past. I mean, it's not ideal, because the main company is not American, but there will still be labor to be done. America needs to take back manufacturing.
-Not all jobs lost would be exclusive to Detroit.
-Giving the capital to other companies to start new factories or steal them back from China would likely require far more money than what is being asked for by the Big Three.
-Conservative estimates place job loss if the Big Three go down to 2.5-3 million jobs lost. With the current state of the economy (not factoring in any further downturn) only 40%-50% of these jobs can be absorbed by the labor market by 2011. Keep in mind that these are conservative estimates (numbers taken from a NY Times article).
-Job listings are down 50% over the last month and significantly down since last year. Where are these workers supposed to find new work? (Numbers taken from NPR broadcast of three days ago.)
-This holiday season will likely bust (projected to be the worst Holiday season in two decades) and some estimates project that 1/4 of retailers will fail in some way - ranging from bankruptcy to outright insolvency and liquidation (numbers taken from CNN). This obviously is not a good sign for people seeking to get new jobs and will increase competition for dwindling jobs throughout the market.
For example, production local to consumption saves massive amounts of transportation energy and infrastructure. Different nations have different levels of workers' rights, and we have a vested interest in maintaining ours over the production practices of most other nations. Post-nationalism doesn't mean ignoring your own collective self-interest; the reality of the world is that phsyical distance still separates. No. They provide no essential boon to our society. There are no "Circuit Cities," relying primarily on the employment provide by CC for their livelihood. Unlike factory work, Circuit City provides practically zero local skilled work. There are several domestic competitors in the same sector ready to take up the slack and profit. It creates no tangible value, existing solely as a service-sector entity.
Bailing out the auto industry provides a boon. We can argue about whether the boon is worth the cost, but it is a societal boon nonetheless. Circuit City brings nothing essential to our general well-being to the table: bailing it out would provide no essential boon.
You also have to account for supporting industries. If the auto industry fails, how would that affect the industries supporting them? Until something else steps in to fill the gap, related industries would suffer losses as well.
Bail out the auto industry with strings attached. Give auto manufacturers money to make cars and products that are actually in demand, in order to actually stimulate spending.