Why Keep GM, Chrysler Alive?

There is a well defined method to amend the constitution,

hey look we agree :D

my comment was referring to the notion that we have strayed from the constitution

taxes & monetary policy could use a bit of a dusting up

we should build in advantages to producing goods as close to the end user as possible

We're probably more in agreement than we think, one thing we'll always have in common, we both like a good argument debate.

Simple redistribution of wealth will never work either. One thing I haven't heard mentioned in the "tax the rich" scheme, is that the govt is going to take a huge cut for playing middle man. For every dollar that is taken from the rich guy, the poor guy will be very lucky if he ever sees 10 cents of it. Administrative costs are quite steep.

I Finley took the time to read (reed) your book like ideas...

More simply put: Schools; Need to reverse their structure! Collage should be taught from K - 12 & 13 Extensive training in the fields most attributable to the results from the 12 Grade. ( Alabama, Busing was the worst thing that ever happened to schools.)

Taxes: Citizens: Pay 10% of income "only", to the City of Primary Residence. The Cities Pay 10% to the Counties. Counties Pay 10% to the State & States Pay. 10% to the Feds.

Sift out all the Illegal Aliens, & Build Safe Borders.

NOT LAST: NOT LEAST: Abolish the Criminal System & Inforce the CIVIL SYSTEM...

Adopt a LABOR PARTY!

Citizens: Pay 10% of income "only", ...... & Businesses pay 10% of Profit & CHURCHES Pay 10% of Donations & Tithes..

Good post with a few points that I am not sure I follow and in some cases disagree (if I understand them correctly).

Let's examine each bullet:

Bullet 1:

"I'm for finding ways to reduce our overhead so that we can lower our cost of living with a minimum impact to our standard of living."

Seems like a good plan. That should be a natural state of things.

"The main cause of our current economic problems is the wage differential between the developed and developing world."

In part that is true. Currency should float more or less in sync with other nations. Some nations artificially devalue their currency in order to gain an advantage at the peril of others. China has assumed that role today and it adversely impacts the West.

However, I am not sure that is the main cause of the West's economic crises. One large problem is the debt to income ratio. We have borrowed too much, both public and private. Another is the runaway government spending. Basically, it is simply buying votes of the citizens and just follow the Roman roads to see where that led.

"All the talk about lowering taxes, stopping wasteful government spending, and repealing regulations to 'unleash' the power of the free market was a useful smoke screen, but not a realistic theory."

Doing all of those things is exactly the right thing to do. It is no smoke screen, just common sense. There are plenty of other things to do, and revamping laws that punish good business practices and excuse unethical practices would be one of them.

There is no reason this government or any other should be living so far beyond its needs.

Bullet 2:

Right on about adjusting the tax structure, but I would go further and revamp it from the ground up. Doing that would require a long term committed effort to unravel the current state of things, but it needs to be done.

Bullet 3:

Fixing the education system is a good thing. Showing respect for an institution or people that are unworthy of it is unprincipled! It needs to be fixed, not patronized.

It is wrong to denounce a group of people because of a few bad people. It is right to fight for change when a group is not living up to its promises because of internal rot. I do not endorse political correctness to avoid offending those that have offended. Respect is earned and when someone or an entity is wrong, it is only principled to stand up, state it as such, and fight to make it right.

Th chaos in our classrooms has more to do with how we choose to live as families and citizens, not how we voice our opinions in the confines of our homes. As a society we have given in to an attitude and a belief that anything goes when it comes to what is acceptable in society.

As a result we (the US) have the highest divorce rate in the world, have a disproportionate number of blacks in prison because of the leaders we choose, and a no moral compass except what we think we can get away with.

The chaos in the classroom is not the problem, but the symptom of a pathological society on the Bullet train to social anarchy.

Bullet 4:

Economic literacy is a good thing. However, I'm sick of the politics in it. Creating jobs is only done by creating demand, not the other way around. That is, unless it is done like the Soviet Union did, but they only pretended to work as long as they were pretending to be paid. I think your argument that we should be rolling in jobs after three decades of supply side economics is a total fallacy (fallacy of Questionable Cause). Obviously, the argument is not that simple and the statement is a gross generalization.

You wrote, "The net result has been to drive up the prices of the things we already have."

Do you have specific examples of this? Our inflation rate has been very benign, so I am not sure where the evidence of that lies.

You wrote, "Far too many people still seem to think that this is just a speed bump, and that the good old days are just around the corner."

I think better times are ahead. However, we may not have seen the worst of this down turn. Still, it is just a speed bump. Economies are cyclic in nature. This latest downturn is a mix of the perfect storm, some bad private sector practices, and the dues we are paying for letting our politicians play social engineers at our expense.

Bullet 5:

I don't think we are clinging to the past, but many would not mind if some of it revisited us. Just what would you have us embrace?

What is with all the rhetoric that anything old is bad? Are there no principles that are immutable and stand the test of time, or must we change simply for the sake of fashion?

Right now there is a war between the ideologues of Marxism and Capitalism. I think many people would rather not think about it, which is just fine with the tyrants, both financial and political.

I disagree slightly on "Right now there is a war between the ideologues of Marxism and Capitalism."

From reading several threads and asking several questions, I think Americans don't understand either. They are just catch phrases or buzzwords to win some point.

I think the bigger issue is "entrenched greed" and "media" telling you what attitudes you should embrace.

And I don't mean just Fox news. I mean the output of Hollywood for decades and TV drama of the last 4 or 5.

Start with "High school" recipes for 'success' as portrayed - and many 'problems' above are fairly predictable.

Pick a 'married couple' show for "respecting your partner" lessons.

Start watching at 10 and your well set for "puberty" and later to run the country, or just get one over on the family next door.

I don't view today's global economy as anything like a war of ideologues of Marxism and Capitalism. I think that issue was put to rest when the cold war ended. However, I do believe there is a realignment of world economies and wealth that is happening as we in the wealthier countries sleep. The giants of China, India, and Brazil are awakening and they are attacking while we are defending.

Maintaining the status quo of the haves and have nots is not an attainable position. Oh yes, there will remain some of the more impoverished countries that will be scraped of the road when all is said and done.

But all you have to do is put yourself in the position of one of the wakening giants. They have tolerated years of inferior life styles and only see the same dreams everyone in the west is living. OK, maybe not everyone, but everyone who wants to live the dream at least has the opportunity. The same cannot be said for everyone in China or India or Brazil. The aspirations of the people in these countries are as ever strong as anywhere. They want to live in comfort, they want to be educated, and they want to go to bed not hungry.

The globalism is really about redistributing wealth. What more powerful way to accomplish the redistribution than to see the change of economic capitalism as we are witness to in today's history. Right now China and India are rife with cheap labour. Part of the redistribution is the value we need to place on resource and to hell with the financial fiat money. An economy that inflates its worth beyond its real capital in resource cannot be sustained. We have resources as do the giants. As the world moves to harmonization of economies (it will happen), those countries with the best resources will find themselves in a relatively better position.

I would think if the majority of the world countries would simply adopt a common world currency we could flatten the playing field. One earth dollar will be worth one earth dollar everywhere. I can say nothing about American politics but I think we all need to be aware of what is going on in the world economies. There needs to be a plan beyond democratic electioneering terms and that will require cooperation not only internally but internationally.

Another GA. Hell, I'm damned near broke right now, but I have no wish to sit and wither away while collecting unearned benefits for the rest of my life. Once a person goes there, turning back is near impossible.

I think you are missing the point. The auto industries are just a small part of the shifting of overall global positions. No one is advocating giving up wealth on a voluntary bases. Even if your graph is correct (the website is suspect), the problem with a have not country is that they will always want or need more. Sometimes that more is just a bare minimum to survive and realize hope. I read an article where a young man in a south east Asian slum was asked what he wanted most in the world and the answer was a piece of plastic to provide shelter. Simple and basic.

The media is available to everyone and everyone knows what is going on everywhere. The slum dwellers see well fed, well clothed, educated people everyday on TV. They want to see their children better off than themselves. These are nothing but the same aspirations we all want. How would you raise a family in a third world slum? If you are part of the governing body of the country where these people that have very faint hopes, you will try to improve the position by any means. The reality is that the emerging giants are ready to do what is needed from their viewpoint to improve things. The biggest resource is people. And the governments of the giants are using the competitive edge they are provided. If you or I were a part of that system, we would do whatever was possible to improve our lot.

I suspect there are more post graduates in either China or India than can be found in North America. However, at the same time there is a substantial part of their societies without access to education. It is this education by the elite sector and people resource that the NA auto industries must now compete. It is not a tyrannic government as in China that is the issue. I believe the governments of these countries could take any form (other than radical theocracy). These competitors do not necessarily follow rules of democracy but we must deal with that fact. War is not an alternative that I would want happen. China appears organized and with a plan. The China of Pearl Buck's, "The Good Earth" is long gone.

The advantage with a modern Chinese government is that they are not making decisions based on what the electorate wants to get reelected but rather the decisions are based on the longer term issues that puts that country to advantage. Look at what our governments do that is in the interest of an election but does not reflect long term advantages. We lower taxes, we raise taxes, we make empty promises, and react to polls. The Chinese are modernizing their infrastructure, they are garnering world assets, they are building schools, and they are taking advantage of their best resource, people. These are the same things we need to do with vigor. Politicians need to be cooperating and stop competing to the point of inane policies.

Congratulations on your personal achievements. I too feel I have earned my way into retiring comfortably and do not wish to give it away. Yeah, I worked hard and was never handed anything on a silver platter. I came from a large family raised in Northern Ontario mining towns. My parents aspired for us to be better than them (very big shoes to fill). They were raised in out ports of Newfoundland and were just barely literate but knew how to work and passed that characteristic to all their children. All seven of us kids managed to get post secondary schooling, we always worked from a young age, and it would shame my father to no end if he thought one of us collected pogey. They showed a lot of love and died rich in friends but poor in monetary terms.

The point is we have the opportunity to aspire better lives for our children in the west. The slum dogs are just starting to get these advantages. There will be winners and losers and much wealth will shift hands. We will not hand them anything, but they will take it anyway by legal trade. It would be my hope that everyone can raise their standards of living worldwide, without compromising existing standards in the west. It will be a difficult task. The Auto industry problem is a part of the mechanism these emerging giants will use and now NA auto industry and its workers will be forced to compete. In the long run the market will decide winners and losers, its just global now and that does not conform to everyone's cup of tea.

Here is an interesting video on statistics that demonstrates world economies and a great lecture (~19 minutes) worth viewing. It does support the graph presented by AH but most of shift is in the past 40 years or so. Globalization is still shifting these statistics and we need to be aware of looming changes. FYI

Given money spreads opportunity around, to me this is a curious dilemma.

For instance; Bill Gates by making the computer accessible, created great wealth for himself - a vast snowball of opportunity and millions of 'new professions'.

In the 'free enterprise' model, Bill is "left to be rich", so it's his choice to spend or not spend. Or spread or not spread 'opportunity'.

So what happens if Bill just sits on his wealth?

He has not - as much as he might have - but what of the people that do just sit? (widening those curves).

Perhaps, that they are currently 'sitting' is why the US is not recovering?

So what can a government do if the sitters (holding 80%) won't spend? and an ideology defends the rights of unemployed wealth, to be unemployed?

Well, as you see of late - Gov can only print 'substitute funding'. Which is inflationary. Which devalues their wealth and the entire country - and of course curtails any foreign investors - and sees the 'sitters' bolt for 'greener pastures'.

A curious dilemma on many levels.

You wrote, "So what happens if Bill just sits on his wealth?"

Who do you know just hordes their cash?

Rich people do not stuff their wealth under their mattress. The wealth is sitting in investments. Even when you have a savings account in the bank, your money is busy in a spectrum of investments. That is how the bank makes its share on your wealth.

There are some ill people that literally horde cash, but they are few and the amount is trivial.

It doesn't matter who the rich are, I can assure you their wealth is already invested in something. It doesn't sit in treasure chests in some cave.

True of cash and bonds, arguable for shares, but not true of 'free and clear' personal use real estate, art, jewelery, bullion and safety deposit box contents. Or the very rich can have very big caves.

Your argument suggests that the rich should be compelled to sell all their free and clear assets.

However, if they do, that means that someone else just buys it and it becomes free and clear, just changing hands - circular logic.

No, I just answered your economics query on inactive assets.

I'm not suggesting 'compulsion' or asset stripping, or 'nationalisation', or any of the ideologically driven extremes people are bouncing between.

If you want a stable economy, you need 'steady goal posts' and 'modest change', not this crashing back and forth between regulation and deregulating, or encouraging irresponsible 'ethics', then wondering why it got so dishonest.

Think on this for a minute: What if everyone paid the same tax rate on gross income?

No "deductions", no "lurks", no 'offsets', corporates regarded as individuals.

What would that rate have to be?

No, I just answered your economics query on inactive assets.

first you have to define at what level due assets become inactive assets. And to who would this apply, There are middle class that have hunting cabins that only gets used a couple of weeks out of the year, where would you draw the line. I did not see this in your posts.

What?

No I don't. I wouldn't. What line? And no you wouldn't because it's not there.

But you can always grow a crop, or raise some critters, or rent it, and have the asset earn - that is, if you seek a path to revitalizing your economy.

Or you could sell up and invest in China, like the rich folk and big corporates that exported your industry and jobs did/are doing.

It's all 'free enterprise', all your choice.

What?

No I don't. I wouldn't. What line? And no you wouldn't because it's not there.

Don't quite understand what you just said, or maybe thats what you should have said.

But you can always grow a crop, or raise some critters, or rent it, and have the asset earn - that is, if you seek a path to revitalizing your economy.

At what level? across the board? or a select few? More thought on your part will have to be put in here

Or you could sell up and invest in China, like the rich folk and big corporates that exported your industry and jobs did/are doing.

That has been happening through out the history of this country, if you like it black and white the other alternative is to become an isolationist.

If you label rich folk, then there must be poor folk. Just stop and think, who writes your pay check it isn't the poor folk, and it isn't always the rich folk.

How about the companies that remain here just turn a profit, they are capable of that.

You seem to be viewing my comments as a plot to legislate and keep asking for demarcation definitions and 'thresholds'.

I'm actually taking about attitudes of positivism verses the negativism of waring ideologies preventing the former in folk.

You can't legislate a positive attitude, but you can undo a positive attitude by legislating poorly.

It's interesting that prohibition produced a great many gangsters and law enforcement employees. Equally that Indian hemp, a Founding Fathers major crop, once legislated 'compulsory', was made illegal, to the same set of "War On Drugs" outcomes, including uncontrolled production of the modern version of 'methanol moonshine'.

It's interesting that the 'enforcing' legislation was passed at the end of prohibition and aside from the rather 'Déjà vu' climate, some say it was to keep the government employees employed. Shades of what do you do if you simplify the tax system?

So to restate my central thinking on 'recovering America'; stop moving the goal posts - start thinking country first, positivism second, vested interests third, and if you must think ideology, think mid-ground, not 'win/loose'.

I.e. do a 180⁰ in attitude ranking.

Like that Kennedy caused, before some ideology 'win/loose' driven idiot/s shot him for it.

_{And kindly desist from putting me in bold - it looks like I'm the one yelling}

You seem to be viewing my comments as a plot

no, only as opinions. And even with opinions there should be some type of substance to it.

Unless you talking with a touch in cheek.

Or at least type checking

Holy Booming Economy Batman!!!!!!

Now you're talking my language! A flat tax........ brilliant!

Let's pare the IRS down to about 10% of its current size, have a starting point of around 25% flat tax for both corporations and individuals and see what happens.

I think you're on to something here.

Let's pare the IRS down to about 10% of its current size, have a starting point of around 25% flat tax for both corporations and individuals and see what happens.

problem is, where would all those people work......government working efficiently....no way.....I believe those government employees are also unionized.......oh yah, that'll happen

Hey, I can still dream, can't I?

Make them all into prison guards at 1/3 their former salary.

Welcome to the world that the rest of live in.

I live close enough to one of the IRS centers [fresno] & see the job postings [which are seasonal]

the jobs for the federal prisons pay much better than the IRS :D

Cool, we can lock them into their current salaries for the next decade.

To expand

one of the bigger bureaucratic drags on the economy is the war on drugs, didn't work in the 20's for alcohol. The present prohibition effort hasn't been successful at much beyond becoming a nice boondoggle.

People should be able to entertain themselves anyway they want, The negatives aspects are illegal anyway [public intoxication]

Yep - but it's a 'patch on patch' world run by 'patch on patch' thinkers.

Were it otherwise VAT (value added tax, UK) or GST (goods and services tax, Australia) would have been 'instead of' - not 'as well as' - all other taxes.

i.e. under a UTT (universal transaction tax) you would 'forward to gubbermint' the same % on 'income' as you do on 'purchases'. And because it would apply to all transactions, that net is wider and so of less %.

The other potential "easy" is the State gets the 'retail sales' and 'real estate' part and the Feds get the 'income' and 'commercial' part.

Thereby States are less beholding to the Feds for 'handouts' and more involved in 'succeeding fiscally as a State'.

Those of us who have built prototypes probably find it less effective to do the patch, patch routine

typical procedure being

design, build

refine the design, build [possibly repeat several times]

the refinement process varies from minor changes to new from the ground up

the ability to assess the prototype has much to do with the overall success of the project

Not too many have the 'lack of arrogance' to concede, when 'new from the ground up' is due.

But again, in my opinion, much about America is not "broken", it's just some parts are 'off song' and in need of a 'strip down, thorough cleaning and a tune up'.

And as 'someone' might want 'some substance' - Trans's and/or your idea of corporates treated in law and tax, as 'people', not 'shields', is not a bad start point.

When I say corporations shouldn't have equal or superior rights to people, that doesn't mean corporations need to be abolished, just that there needs to be some revisions to the necessary protections & advantages LLC's enjoy

'zacly - tune out the gunk there and you tune out the 'negative forces' of 'backdoor deals', cronyism and 'political favors' - so the ordinary American can believe (again) he/she has 'equal opportunity' to succeed by effort.

Which, IMHO, said 'belief' was crushed pulverized, by the 'administration' of the Wall Street bail out, and by other 'rescue packages', no ordinary 'person' would have a look in at, if they 'managed so poorly'.

N?T tax income- tax spending. Taxing income, especially on a graduated scale, discourages savings, and encourages people to live beyond their means. Tax spending- that encourages savings and investment, discourages people from living beyond their means. Of course, everybody pays the same rate on what they spend- therefore, the rich (those with more to spend) pay more taxes.

everything?

business spending too?

would different products have different rates

There are several different schemes have been proposed, from taxing (at a very small percentage of each and every transaction, anytime ownership of anything changes hands), to only taxing those transactions that result in some product transferred the final consumer (i.e., no tax on something that is used to build a product), to exempting necessities like food and housing- but once you start allowing for exceptions, you start opening doors to the same sort of mess you face today...

An excessive VAT on only certain items that applies to only a certain group of consumers, on top of an income tax doesn't count- again, too many exceptions as VATs are used today...

Absolutely, I think a national sales tax would work too, maybe.

I could see a possibility of people buying real high dollar items off shore and shipping them in to avoid the taxes though. It could also create a boom of luxury item sales up in Canada, that would have to be addressed somehow.

There is no easy road to equity, I am afraid. But it just makes a whole lot more sense to me that one be taxed on what one takes OUT of the system (i.e., consumption), than on what one puts IN to the system (i.e., labor). That way, people pay according to their participation in society in general, rather than paying for the privilege to work themselves in to an early grave without any real opportunity to accumulate much...

Yeah........the current system is definitely flawed. I don't have the economic acumen to come up with one good answer. Unfortunately, even if I did, I don't think anyone would listen.

Some people think I'm a right wing zealot, which isn't true. If I had to define myself, I guess libertarian would come close, although I don't waste my votes on them. I have an inherent distrust of the Federal all government.

I would like to see more power ceded to the states. At least different approaches could be tried, and failure wouldn't run the risk of taking down the entire country. We could take the good ideas and implement them into a workable plan on a federal level.

None of the wealthy, (unless inherited), got that way by sitting on their money. Nor will they stay wealthy by sitting on their money, doing so would only devalue their net worth daily.

They know that to stay wealthy, their money needs to be put to work somewhere. If their money is working, people are working.

Bill Gates is a great example of why not to tax the rich out of existence. I wish I knew the exact number of people around the planet that are gainfully employed, who's jobs can be be attributed to the existence of Microsoft.

Not to mention the other evil corporations, IBM, Apple, GE...................oh hell, why try to list them.....they're all evil, and need to be taxed, regulated and reigned in. Somehow, in their greed, they all forgot, that the reason they exist is to take care of the "little guy".

You raise some good points, and I appreciate the thoughtfulness of your reply, but I disagree with you on the 'weight' you give to the cost of debt and taxes compared to wage differences. My contention is that wasteful spending is not confined to government, and that grossly inflated costs for housing, education, and medical care are bigger factors in keeping wages inflated than government spending. I'll get back to you in more detail when time permits (this is an especially busy week for me). By the way, I'm certainly not opposed to everything or even most things old. I do think however that many of our citizens profess an almost mystical reverence for the FFs and the 'original intent' of our Constitution, and I don't think such feelings are helpful to the discussion. I also believe that they (FFs), like us had a wide variety of opinion regarding such issues as the relative power of the federal govt and the states. George Washinton, having spent most of the revolution begging states to help support his troops was very critical of giving them too much power.

We will have to disagree on the debt issue. Watch Europe and others struggling with that issue now.

However, public debt is not driving private wages. It is going to impact our quality of life.

Your second rate intellect is serving you very well except now I think mine is third rate. GA for a well thought out answer.

Your thoughts could be expanded to include most of the western world practices of capitalism. It will take a mind set that is ready to forgo their own personal assets and investments to see a change for the betterment of a country's worth or entitlement. This is a very hard pill to swallow but maybe one we will be forced to swallow. (USA is ahead of us in Canada in taking it meds) Unfortunately ( or fortunately) for me I am now have a major investment in real estate. My pill will be a big gulp I can take in stride if the cure works. I remain optimistic about long term changes and the quicker the mindset changes, the quicker changes for the better can occur. No small task.

The loss in asset value is going to hurt a lot of good people. None of us want to watch that part of the movie, but we have the front row seats so we probably will.The assets will find their level because market forces will dictate that. My hope is that more people will see it as you do. My brother used to tell me that 'if you're going to fall it's better to jump'. If too many people try ignore the inevitable, and try to prop up the value of their investments indefinitely through tax and interest controls, the price in lost competitiveness will just get higher. We would be 'renting' a few more months or years of 'prosperity'.

Coffee man myself but my wife is Brit and likes tea.

Our provincial government paid out $5 Billion and is now selling the stock to the public at $29.00/share. It will get back something like 1.6 billion from this sale. I am not an economic major but that adds up to a gift of $3.4 billion to the auto companies. It might be worth it just to slow down the inevitable. But the governments of both our countries should realize that this is just a shot across the bow and get prepared much better than I see happening.

Yes let then die, as someone who for years called on the auto giants in Detroit, I saw first hand how they were masters of waste, paper pushing and did not give a hoot about the end user. When the assistances had assistances and the boss had his feet up reading the sports section his main concern was how close he was allowed to park to the elevator.

As a GM insider, I sometimes grow weary of the constant barrage of mis-informed hostility that is directed our way. A few facts that might help temper your invective:

1. Yes, UAW workers are paid a slightly higher wage, about $2/hr, than their non-union counterparts working for the transplant Japanese automakers. Over the course of a year, that nets them about an extra $4,000 gross income. It's a nice chunk of extra spending money, but really doesn't qualify for the inflamatory adjective "highly overpaid." You could make that much mowing lawns on the side. Compare that to a typical government employee who makes twice what the private sector is paying for equivalent work. As far as the subject of keeping people employed goes, the plant where I work has dropped from 5000 employees to 1200 over the past decade, and that is characteristic at plants across the board.

2. Yes, we borrowed a substantial amount of money from the taxpayers, and we are deeply grateful for the generosity of the American people who pay those taxes giving us a second chance. We are determined to prove that their trust in us was well deserved. That portion of the taxpayer's money that was in the form of a loan has already been repaid with interest. Following the new GM's successful IPO stock offering this month, approximately half of the remaining taxpayer's money is being returned by buying back government-owned shares, also with a net gain. If people will allow us to succeed, by continuing to buy our excellent new products, rather than carping about the fact that we needed help to get here, then by sometime next year or so we should finish repaying all of the taxpayers' money, and disentangle ourselves from governmental ownership in our business. I would consider that as "investing and returning" the taxpayers' dollars, rather than "absorbing" them.

3. For every Big 3 job, there are dozens of jobs - often non-union jobs - in the many suppliers that provide components, productive materials, construction support, janitorial services, and other supporting work that enables us to build American cars in America. And don't forget all the service sector jobs (doctors, retailers, school teachers, waitresses, etc.) in the communities where auto manufacturing plants are located, where their employees live. I am not a GM employee; my job is one of those that exists solely to provide support to that industry. Those suppliers are all over the country. There are only 9 states with virtually no industry involved with the automaking business. So, the "Let's just let Detroit sink" policy is a bad economic plan for the whole country. Here is a simple truth: a vibrant national economy requires a strong manufacturing base, and like it or not, the auto industry occupies a large chunk of the U.S. manufacturing base.

4. Fire them all? By my rough estimate, about 75% of the executive leadership team of GM are new to their positions within the last 2 years. You'll have to pardon us for being of a mind that hiring/promoting into those positions people who actually know something about building cars makes more sense than hiring someone who built, say, a pizza empire. Although, our current CEO comes from the telecommunications world, if that makes you feel better.

5. Yes, we freely admit to making mistakes. Before 2008 the total sales of new vehicles in the North American auto market was about 16 million. GM's past "mistakes" brought them down to the point that they only received about a fourth of the sales in that market, and at poor profit margins. In the crash that followed, the total market sales dropped to 8 million. All automakers, including the vaunted Toyota, saw their sales plummet by around 40%. Did all automakers, including the transplants, suddenly begin making junk in November of 2008 and chase away all those customers? No. The truth is that the collapse of the financial markets then, and the subsequent chilling effect that had on the economy, was what caused potential car buyers to decide to wait or forego purchasing new vehicles. GM and the other US manufacturers were in a bad position to absorb those losses, due in some measure to past management decisions that people like the author of your blog enjoy trashing us for. But I challenge you to find any heavily-capitalized industry like the auto world that can seamlessly glide through losing half their customers in the space of a few months!

6. Last point: The folks who work here are not zombies on life support. They are professional, energetic and enthusiastic. Working at GM right now is as challenging and exciting as any job I have had in 30 years of professional engineering work.

Thanks for this perspective, besides the collapse of the financial markets, there was the doubling of gas prices, this affected the domestic makers, as most other countries due to our much lower fuel taxes. this doesn't excuse the lack of foresight...

we shall see if you guys can make the most of this opportunity

Guest wrote: "Yes, UAW workers are paid a slightly higher wage, about $2/hr, than their non-union counterparts working for the transplant Japanese automakers. Over the course of a year, that nets them about an extra $4,000 gross income."

What is the hourly wage of a UAW auto worker? What is the cost of all their benefits (either on an hourly or annual basis)?

I think he was just saying the non union autoworkers are overpaid as well?

Even more than the hourly wage, I think the pension plans the unions have been able to get US automakers to agree to are sucking the life blood from them, that was not addressed.

$2 per hour more, hmmm.

The company would look at it as the workers total cost per year divided by working hours. Like you note, the cash value per hour without considering the whole package is meaningless.

It just occurred to me that I could google it, duh. This kind of puts things in perspective.

http://www.manufacturing.net/News-GM-Vs-Toyota-Wages-And-Benefits.aspx

I don't quite follow this preoccupation with 'who negotiated the most gravy'.

You actually want 'cars made' per wage package.

Or actually: Are 'cars sold' per package competitively sustainable?

But I have to admit; 69 is an ironic number for 'management and labor' to 'settle on', as neither seem to have thought much past that.

Like as far as "or actually ...."

Correct - same as for a ton of steel - man hours per ton.

My complaint is that the companies were not even allowed to talk to each other about labor negotiations -

The union had the same negotiating team for all the different companies -

Who do you think held the upper hand.

It has been 40 years since I worked at GM and Chrysler for a short time while going to school. At that time I saw a few highly skilled jobs and a lot of labor type jobs.

I think it's proving out, that whether it's a company or a government, fat pension and healthcare plans provided until death, ultimately are not sustainable.

Allowing these companies to file for bankruptcy would have allowed them the opportunity to renegotiate union contracts, the bailouts didn't. We may see short term profitability, but in the end I think these continuing benefit packages will crush them.

the link is from 08, from before the bailout, the union cut some kind of deal, I wonder what it was?

I tried to do the search some different way & didn't find much beyond opinion

even without the union the per hr compensation is pretty steep, I saw opinion that the difference between the highest & lowest labor costs per car is 10%

there aren't all that many hours difference between between a GEO & a Hummer, so of course it's more attractive to sell hummers, until the bottom drops out of the demand, much like the financial market, management didn't do any long term planning, it costs money, it's hard to spend $ for tomorrow when you're shyttin' in tall cotton today & can't see anything further in the future than the next quarter

This sheds a little light.

http://www.criticalbias.com/2010/08/09/gm-bankruptcy-seems-to-be-a-union-bailout/

you, wonder what kind a deal?.......a job would be a good guess. I thought that the automaker wanted to file bankruptucy instead of a bailout, this could have released them from the union contract......bet the next contract the union draft will cover that

Here is an easier to view site. Bear in mind that the older big 3 companies have many more pensioners that seem to increase the benefit package when compared to the import company located in NA. I do believe that actual benefits to current auto workers are in the line of $10/hour and more realistic. Much of the pension fund is not sustainable in the long run, so much work is left between the union, companies, and government.

I also read somewhere that the Mexican labour rates ($4.50/hour) are at or lower than the Chinese auto workers. More problems ahead or can we (Canada and US) advantage Mexico labour for export and competitive edge? Of course the worker is still at peril. The stew pot is getting too many ingredients.

On the other hand, historically, major US corporations have an average life span of something less than 100 years. This information comes from a study done back in the early '90's by Forbes magazine, where they compared the highest-capitalized corporations on the US stock market in the 1890's with who was populating that list in the 1990's. Virtually none of the original major corporations of the 1890's existed in the 1990's in a recognizable form, or at a similar level of capitalization. Furthermore, the majors of today did not exist (or existed below the radar) in the 1890's. In fact, in the 1890's, the major industries of today did not exist (auto manufacturing, electronics, computers, electric utilities, the oil industry- except, of course, Standard Oil of Ohio, which was actually broken up as a result of the anti-monopoly laws of the early 1900's). The fact that the major car companies are in their death throes should not come as a surprise, in light of historical trends.

On the other hand, I do not recall the original study addressing why these major corporations tend to fade after 100 years or so- maybe something similar to bloating as a result of overeating? I believe Forbes has done some follow-up studies on this phenomenon since I first read it, but I have not followed up on it...

Interesting post.

So does your working for, but not employed by, relationship give you a knowledge of how the new management intends to handle the 'design process' from this point forward?

I ask, as I see the 'prior approach' as the root of the drop of product acceptance (prior to the meltdown).

Your observation of the 'prior approach' to vehicle design as the primary agent of Big 3 loss of market share is perceptive. Face it: people both inside and outside the auto business recognize that we put out some unimaginative, poor quality stuff over the past 20 years. We chased away a lot of customers, and we are smart enough to know they are not likely to return unless and until whoever else they switched to manages to irritate them as well as we did. It has been very encouraging to me to see the corporation honestly admit to themselves that fact, and begin taking steps to rectify that problem. For example: the design teams have historically been dominated by one easily-recognizable and often villified segment of society - white males. Like me. However, a great deal of investigation into who actually buys cars revealed some startling facts. About one-third of car sales are directly to women. Of the remaining two-thirds, the lion's share are sold to married men and, not surprisingly, his wife has substantial influence on the car buying decision. In the aggregate, women play a critical role in about 80% of the car buying decisions in this country. Yet the people designing those cars were designing them for Luke & Bo Duke! Armed with that revalation, one of the first things we did was recruit a bevy of talented women to the design teams, to create new designs that appeal to the folks who wield the buying power! Is that sexist? No, that's market sensitivity. Never lose sight of this important fact: In spite of all media diatribes to the contrary, the Big 3 do not purposely build vehicles that the public dislikes, then try to figure out gimicks to make that public swallow their offerings. Their primary goal is to give the buyers what the buyers want. That is the only proven path to profitable business. They don't always get it right, but they never knowingly build a car that they are confident will NOT sell. When you consider how much of a person's takehome pay buying a new car represents, that customer will buy precisely one thing: EXACTLY WHAT SHE WANTS. She will not part with half of her annual salary to purchase something she does not like. If you look carefully at the new products coming out of Detroit, (at least for Ford & GM) you can see that they have really stepped up their game with some truly nice products. GM wants the customers to compare, say, a Toyota Camry & a Chevy Malibu, then say to themselves, "I really like the Malibu better," and buy one. Like the commercials said, "May the best car win."

"white male", "exactly what she wants" (in caps)

"GM wants the customers to compare, say, a Toyota Camry & a Chevy Malibu"

Sounds like a recipe for 'following Toyota" - not taking back design leadership.

To do that you need to understand what 'design' really is, and what enables a 'design' to function. First of which is an information flow structure that is not; serially reinvented via buzzwords, or a slave to ad agency big ideas, or hobbled to compartmentalized management structure.

And just to start you on that road to understanding; a "designer" is not a stylist, or an engineer, or a board member, or a floor sweeper - but a person who can move freely through all layers, collecting and compiling information into a 'full product solution'.

GM have no 'designers', because they had, and have simply restyled, a structure that prevents "design information flow".

Had they: their 'designer' would have pointed out, the "much vaulted" Toyota are falling into the fat, arrogant, careless, 'top dog', lost touch, pattern.

And "following them" would be 'dead easy'.

Thanks for the view. When we can't see what's going on and who done it, it's easy to assume that bad decisions were made by bad people. I think that where we find ourselves now is that decent people find themselves in outdated systems that lumber on through inertia, and none of the choices seem particularly good. I think the US auto industry clung to building big cars for too long because that was the easiest market for them to compete in. The small car market was pretty crowded, and from the inside maybe that decision looked like the least bad one.

Why indeed. Look at their cars, they suck for the most part: poor quality, poor design, cheap materials. If they were left to die, better companies with vision could have scavenged the remains and received the government funding to create new exciting products instead of this dribble being pushed forward by the petroleum industry. If you ask me, the only reason why these two companies did not fail is because the petroleum industry does not want them to fail. Their absence would leave a vacuum that could be filled by some real visionaries that are not their puppets. Electric cars should be the main type of vehicle in all the warm climates on earth. Have you ever asked yourself why they are not?

If I were to write something as silly as you just did I would post it as 'guest' to.

A conspiracy? You gotta be kidding us!

Ok, who are the major stockholders of nearly every car company in the world?

Who?

With some kind of reference please.

Ok. Unfortunately, it was a while ago that I came across this info. Gimme a chance and I will find it. In any case, I'm sure it's not that hard to find. You could even find it yourself if you were sincerely interested.

Hi John, Not trying to be a wise ass but I don't believe it and am not interested in looking to prove what I already know.

Was the oil companies big holding before or after the meltdown?

I believe this is one of the 'green' historical truths that many take at face value.

Russ

BTW, I just registered but my name hasn't gone through yet. As far as conspiracies go, It is well known that those who have something good going go to great lengths to protect their cash cow. No one can say that the automobile industry is not a cash cow for the petroleum industry.

Non sense the confirmation email goes through within 5-10minutes at the most

the energy companies don't care who make the cars

they make their money no matter what brand is being driven

First of all, I wrote my fist comment as a guest then registered just before replying. My registration has now passed through. Second of all, you are right, petroleum companies will continue making money no matter who sells cars... as long as they are gas powered cars.

Products from Crude Oil, Well Go on well after the Internal Combustion Engine, is forgotten

I think that the petroleum industry is one of the more powerful forces in opposition to increased CAFE standards, and against increased tax on energy. They seem to profit more if prices are kept low (so everybody feels better about driving more) and if every body drives a bigger car. The real cash cow for this industry is shortages, due to refinery shutdowns. Small changes in the supply/demand ratio make for big swings in the pump price. It's fascinating that you can often make more money by closing down one of your refineries, and then reaping the higher profits from the ones that are still running. This is one of the reasons you often hear speculation about motives when a refinery is 'shut down for maintenance'.

the germans,japanese,italians etc would pick up our companies we already have enough

competition. it is. about time americans stood up for our own country.

wake up america, stop giving everything away.!!!

dave

I wouldn't hold my breath on the Italians taking over anything soon.

I note someone has already given you an OT. It's probably because you really need to research facts, not deal in jingoisms like "wake up america, stop giving everything away.!!!"

And do have the manners to spell America with a capital 'A'