Wednesday, November 19, 2008
Class Warfare Is A Poor Solution
Yesterday I listened, while I painted, to the Senate hearings on the auto industry “bailout.” First, calling it a bailout is the wrong word. It is a loan. Why does the federal government have to loan the three American auto makers money in the first place? Well, this is where the debate begins.
The auto makers claim that the financial crisis has made it more difficult for people to borrow money to buy cars. They also claim that the banks, where they usually go for a loan, are not willing to lend them any money. Banks, as we all know, now are tightening their borrowing requirements after they left them too loose for too long. So, now car buyers find it more difficult to qualify for a loan. The fact that the economy is in the toilet does not make the situation any better for the auto makers.
The auto makers and the president of the auto workers’ union now claim that they have improved their cars and trucks and that without the financial crisis, which has taken funds out of the equation, that the auto makers would not need a loan from the federal government to get them through this difficult period. However, there are those that don’t believe that line of reasoning.
Here is my take on the whole thing. First, I would make the loan as I do believe they are making a better product and that the reason they are in trouble is because of the financial crisis which they really were not a part of. Remember it was mortgage loans and in particular sub prime mortgages that has brought the whole world into the economic recession we all now face. Wait. You mean the whole world is having an economic crisis and it was brought about by the few people that signed up for a sub prime mortgage? How can that be? Relax, I do not believe for one second that the sub prime mortgages caused this world wide financial crisis. But, it plays well in the old game of class warfare. What is class warfare?
Class warfare is when you blame the problems on the class least able to defend themselves. The people that took out sub prime mortgages and the union auto workers make great targets for those that wage class warfare under the title of economic debate. Management will come out of this much better than the union worker if the three American auto makers are forced into bankruptcy. Does anyone not agree with that statement? Everything gets thrown on the high priced American worker. What about the less than level playing field when it comes to American car makers exporting their cars and trucks? Oh, that is another story to be discussed later? No, let us talk about that right now. The trade deals stink. Let us have a few union guys in on the trade talks the next time we sit down to negotiate a new trade agreement on cars and trucks.
First, the bankruptcy is the last thing we need right now with so many other things happening to our domestic economy. The macroeconomics professor can lecture all he wants about our cost to their costs to build cars and trucks, but the bottom line is do no harm to the patient. Letting the three American auto makers fail at this point is bad for several economic reasons, but also for our national security. I can wrap myself in the flag too. The flag is not just a symbol of the conservatives, it is everyone’s flag and liberal economists can wrap themselves in it too.
I hope that each member of Congress will put themselves in the place of the auto worker when they make their decision on the loan. Remember, since the first oil embargo in 1973, many politicians have had the chance to put together a national energy policy and they took little or no action. The president for the last 7 years has shown no leadership on this issue as well. Now is not the time to stick it to the union worker. These are the same union workers who fights our wars. This is just another war, but without the bullets. Let us not make it a bloody one if we have a choice.