GM Spirals the Drain (Part 2)

[DanS]

This is par for the course for him. For years, he hasn't acted like a Republican.

[KrazyHorse]

Joe Stiglitz says that the 3 stooges are going to need ~125 billion before all is said and done.

14 billion is just the first step into that pit. Personally, I'd rather give my 400$ to somebody less wealthy than the average Detroit employee.

[KrazyHorse]

Originally posted by DanS
This is par for the course for him. For years, he hasn't acted like a Republican.

Dubai and immigration reform (before he caved on both) were giant pluses.

[DanS]

I'm thinking more about the fact that he not once pushed for fiscal discipline. There wasn't a single spending bill that he couldn't sign.

[KrazyHorse]

This is true. And demonstrates why the "starve the beast" technique is a joke.

The only way to cut taxes is to cut spending. And nobody (neither Dems nor Reps) has shown serious commitment to do that.

[KrazyHorse]

But by all means, keep running giant deficits. I have the put option of Canadian citizenship.

I love being in a personal situation where Ricardian equivalence does not apply.

[DanS]

Apparently, the negotiations failed on whether the UAW was to accept comparable wages to the Japanese and European transplants. The UAW wasn't willing to accept this until the next round of contract negotiations, in 2011.

Pretty amazing that Bush is going to roll over for the UAW, when the UAW is being unreasonable.

[MrFun]

Originally posted by DanS
The executives and upper management will have their pay slashed in a bankruptcy proceeding. No need to worry, MrFun.

My point is that some people seem to think that all the problems of this mess came from the working class. The blindness to the corruption and incompetence of the wealthy executives and upper management are the other part of the problem.

And I have a question for those who demonize all unions as being evil. What better alternative do you propose that will enable workers to protect their legitimate interests? Should they just roll over and let plutocrats walk all over them?

[DanS]

MrFun has too many strawmen as best friends.

[KrazyHorse]

My point is that some people seem to think that all the problems of this mess came from the working class. The blindness to the corruption and incompetence of the wealthy executives and upper management are the other part of the problem.

I'm not assigning any blame to anybody. There are two sides to contract negotiations. The Detroit 3 rolled over and played dead for the union for decades, piling up retiree benefits (to be paid in the future) so they could continue to generate profits in the present.

But executive pay has NOTHING to do with why they are in the position they are, except insofar as it impacts the incentives they faced. The actual dollar amounts are minute in comparison with the hole the companies are in.

[MrFun]

I think it's a perfectly fair question. Some people on here have denounced unions in general as being hopelessly corrupt and evil.

If you do not think unions are viable any longer, what alternative would you propose?



x-posting

[Asher]

Originally posted by MrFun


My point is that some people seem to think that all the problems of this mess came from the working class. The blindness to the corruption and incompetence of the wealthy executives and upper management are the other part of the problem.

The problem here is you have no idea why GM is teetering on the edge of oblivion. It has nothing to do with the pay of its executives, which are (AFACT) industry standard.

The pay and benefits of its employees (specifically, the UAW) is so massively out of touch with the free market that it is driving the company to be supremely uncompetitive. You could give the executives $0 in pay and the company would still be on its way to bankruptcy.

So while I appreciate that you think you're speaking up for the little guy, you're not helping the situation. I understand how you think it's unfair that in-demand, experienced, intelligent executives can pull in massive salaries while Lincoln scholars get paid in gummy bears and lollipops, but that's the way the market rolls.

[Asher]

Originally posted by MrFun
If you do not think unions are viable any longer, what alternative would you propose?

Is this a joke? I would propose a non-unionized workforce, like the Big Threes' healthy competitors have?

[KrazyHorse]

Unions try to do their best for their members. That's not corruption. One could argue that they were TOO effective in Detroit, not ineffective and corrupt.

The management and board of the company is supposed to be the other side of that negotiation and look after the long-term solvency of the company, and equity holders are supposed to exercise control to ensure that this happens. Both of these failed in their duties (and have been failing for many decades). The auto workers don't need to take a pay cut because they "deserve" one. They need to take a pay cut because the current balance sheet is unsustainable.

[KrazyHorse]

Again, Fun, your confusion stems from the fact that you think fairness or desert should be the basis of our economic system. In reality, this has nothing to do with it.