Let's face it, American-built cars are an embarrassment when compared to their European counterparts. Even we Aussies are set to add quality to the market with the Down Under built Pontiac G8 that features a 402hp donk (that's Aussie for engine) giving it unbelievable performance for the price.
Competition does a number of things: it leads to an improvement in quality; it leads to a reduction in price; and it tends to maximise the number of economically sustainable jobs.
Ford, GM and Chrysler - thanks to decades of destructive bargaining by the UAW, supported by the Democratic Party to whom they are a massive contributor, as well as tax breaks by successive governments - have not had to face up to the reality of competition or gain the benefits that true competition brings.
The government now needs to decide whether it should bail out the auto industry by spending tens of billions of taxpayers money, which raises some pertinent questions:
1) Why should the government bail out any industry? It goes to show what a poor decision it was to bail out Wall Street.
2) How is the reduction in investment capital that pouring good money after bad going to help the US economy or taxpayer?
3) At what point does the government say stop, this can't go on?
Check out this amazing graph showing the average hourly salaries of workers in the Big 3 auto companies versus other categories:
How do you make the case for bailing out an industry in which not only are the workers so well paid compared to the average but earn heading towards twice as much as their main rival's workers?
If the car companies had have lived in a truly competitive market then they would have been better placed to squeeze out foreign competitors years ago rather than give those companies such a terrific leg up.
We have the same problem here in Australia where the government has somehow been scammed into providing a $6 billion injection to the local car manufacturers.
There is no value in propping up companies that cannot compete in the world market.
Unfortunately, world events have led to an increased acceptance of protectionism by the public.
Many jobs will be lost because of it.
(Nothing Follows)
5 comments:
The UAW is out to screw as many people as it can to extort as much money as possible for their own benefit, without regard for their members, the companies they work for or the American people. This is a truly Democrat organization.
Best regards,
Gail S
Jack, I live in Ohio, grew up in Detroit. This is part of a comprehensive move to reshape America. The Democrats institute National Healthcare, outlaw retirement accounts to create a National Pension, the Union doesn't have to worry and gets the elimination of secret ballot as a reward, to consolidate their power for the future, taking over the foreign plants here. It is insidious. Check out my post on it if you're interested...
http://cincyconservative.blogtownhall.com/2008/11/14/big_three_obamanomics.thtml
Great blog Jack. The UAW will fight tooth and nail to preserve itself. They don't get the name organized crime for nothing!
Actually, I'm all for any bailout that comes along, because every dollar spent bailout out somebody is a dollar that can't be spent to enlarge or institute an entitlement program.
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