Sign a deal with the devil, lose your soul.
That is the lesson for today, children. When you are a big corporation rampant with fraud/waste/bad judgment, your first move should never be to lean on Mommy Government for a free bailout. There are myriad principled reasons for this, many of which regard robbing your own customers, the taxpayers, of their money so you can continue bad practices.
I thought it was the wrong way to go for each of these corporations and for the government, as well. However, I think the punishment for the very executives that caused this mess will be 60% right on target, but 40% completely wrong. Let’s break each half down:
60% on target:
Executives control the direction of a corporation. They push products, investments, practices, and policies to their workers and retail outlets, in whatever fashion they are manifested. These men, bankers and auto guys alike, used poor judgment in handling corporate affairs, and their businesses tanked. They then asked the taxpayers, or more accurately the Congress, for a governmental bailout, funneled by friends in high places to their coffers. They let the government in, and now they deserve the paycuts, and all the crap that comes their way from allowing power-hungry politicians a piece of their own pie. Their moral deficiencies are their own estates’ downfall.
40% way off:
The government caused huge parts of these problems that led to the failure of banks and the auto industry. GM and Chrysler STILL pay far more to their employees than Toyota and Honda, which leads to higher quality at a lower price for the Japanese automakers. Banks were forced by the Community Reinvestment Act to lend to poor risks to maintain profit margins they are obligated to pursue for their shareholders. Unions and housing aid firms like, you guessed it, ACORN, each played their governmentally-backed role in forcing unworkable conditions for these giants of Corporate America.
I’d normally have these ratios at 50/50, but Ford did it the right way. Even under the burden of their problems, this organization stood up to the temptation of “free money” from the Feds, and they are pressing ahead. Similarly, smaller banks, and some of the larger ones have returned (or attempted to return) their money from the TARP program. The banking system was an actual liquidity crisis, so I would rank immediate return of money almost as high as Ford’s flat refusal.
The government is an evil, sinister mistress when it comes to gaining power, isn’t she? When banks wanted out of the TARP controls, she wasn’t quite ready for some of that return. Nay, the hooks were in Citi and the others, and they don’t come out so easily. Even small banks were subject to mysterious “liquidity tests”, and many were refused at the door, even when providing enormous proof of their solvency. As a friend to my father’s bankers, I have heard these tales.
So let us partially enjoy watching the result of giving in to base tendencies and letting the government “save you” for the greater good. Always for the greater good.
A bit OT: What happens if GM fails again? Does it get another bailout? The new car sales bubble directly caused by Cash for Clunkers is hurting the business, as well as creating a new used parts scarcity that we haven’t even seen yet, as all the old cars can’t be salvaged. Does Ford get their fair bailout if their problems swallow them up, or does the government only protect GM/Chrysler? Who decides what companies should be owned by the government if it comes to saving a sector? Who is the almighty arbiter of whether GE, Phillips, Kohler, Sun Microsystems, or Nabisco get a pass on bad business?
Finally, what is the impact on the average citizen who is now being shown that the government no longer respects or is willing to accept that freedom and capitalism is the freedom to succeed AND to fail? Just the other day, a friend was telling me about his science fair experience back in high school (some 20 years hence). He got first place and a blue ribbon in one of them, which he really thought was great, until he realized that the top 1/3 got his ribbon, the next third got a red 2nd place ribbon, and the bottom 1/3 received a third place ribbon. Even the worst showing got a prize. Its no wonder my generation is so effed up politically when no one has been scolded in class, spanked by their parents, out first in dodgeball (not even allowed anymore), picked last in kickball, cut from a sports team, or given no accolades for poor work. Kids aren’t even held back in school anymore for failing to progress! Their social development is too fragile, the teachers (and whoever) argue.
Isn’t that a funny term? “Social” development. Sounds a lot like “social” justice to me, in that its a bastardization of a real term to mean something that you only use when hiding children or even adults from the realities of the world we live in. Our President uses terms like that all the time, which gives me quite the view into his psyche.
Chris said,
October 21, 2009 at 4:43 pm
” GM and Chrysler STILL pay far more to their employees than Toyota and Honda…”
Not if you take the cost of employee-sponsored health care out of the equation. This entire post is a testament to the fact you still don’t seem to be putting 2 and 2 together, on several fronts. It’s reminded me quite nicely of the reason I stopped reading in the first place.
regulusred said,
October 22, 2009 at 10:54 am
Tell me, Chris, where the health care bill says employee-based insurance contracts with unions will be dissolved. Also, right now you cannot remove health care from the equation, due simply to the fact that its not passed yet. Reality is what it is, and right now health care is being paid to the unions from GM/Chrysler. That’s not up for debate.
Without you saying whatever it is you mean, my best guess is that you’re suggesting that health care reform somehow works in tandem with federal bailouts. We shall see if the grand plan comes together and works as well as you think.
Chris said,
October 22, 2009 at 11:30 am
“Tell me, Chris, where the health care bill says employee-based insurance contracts with unions will be dissolved.”
It doesn’t. However, as you well know, I’m ultimately a proponent of single-payer health care, which would indeed alleviate this problem, and many others.
regulusred said,
October 22, 2009 at 4:40 pm
Well, let’s not count the chickens before they hatch.
I think a version of this bill will be passed, but it will lack the public option. I believe that the bill would largely ruin private insurance, as it is the target of this bill. The larger issue, however, is what Congress will look like when this becomes an issue for the citizenry.
I believe the GOP grabs a bunch of seats in 2010, and probably a majority or two in 2012, and recent polls say Obama is less than 50% supported at this point, which opens the possibility of a different President in that year, as well.
The health care legislation takes effect in 2013, according to the bill I have read most strenuously. The full effects will probably hit in 2015 or so, at the earliest, which is nearly guaranteed to lack the Democratic punching power to lay a single payer system on us. (Let’s also remember that England and Canada are slowly reprivatizing their systems even now, which isn’t exactly a ringing endorsement for all to see.)
Basically, the system won’t be derailed until Dems are out of power in this majority at the very least, and likely when the GOP is back in charge. When it falls apart, there will be a movement to kill the bill in action, rather than install the next step. Healthcare will die again, in my awesome opinion, but only after a huge scare that keeps it in the dark corners of liberal thinking for even longer this time.
In summation, I doubt whether your solution will even get off the ground.
PS- Beyond health care, pension programs will still exist, which is another facet of the GM pay structure that does not burden Toyota or Honda.
Chris said,
October 22, 2009 at 4:47 pm
“In summation, I doubt whether your solution will even get off the ground.”
Aren’t you the one who’s always claiming that current health care reform is just a stepping stone to single payer?
regulusred said,
October 26, 2009 at 9:53 am
“Aren’t you the one who’s always claiming that current health care reform is just a stepping stone to single payer?”
Yes, I am that guy, but the Dems are really effing this one up. Two things:
1. Many Dems are going to vote against anything lacking a public option. They are hamstringing the only sure path to true changes, which is slowly boiling the frog in the pot. (Just found out that metaphor with the frog isn’t true. Sad day.)
2. The Dems have handled this reign of power so badly, Gallup shows the entire nation slanting right again, and Zogby showed the GOP leading on all ten major issues. I now believe that even if a non-public option bill gets passed, the sentiment to kill it will be strong enough that the GOP will return and expunge it from the record.
There are dark times ahead for the liberals of the Democratic Party. Once they get swept out of office in 2010 and 2012, I think the moderates grab a handhold again, and the far Left’s run will end. As always, anything can happen, so these are predictions based on current reality.
Chris said,
October 26, 2009 at 12:40 pm
Really? Does the frog jump out? I never actually tried it.
I think it’s a bit naïve to think that the GOP would be able to cut the Public Option after it’s passage; it would be cutting the health care of millions, at that point, a feat more difficult than even cutting Medicare. If they even tried it, they’d be seen as against the citizenry for eons to come, and I’m pretty sure no party wants that.
Exactly how does Gallup show the nation slanting right? I think you’ll find that any apparent rightward movement is actually caused by the Democratic majority stepping away from Congressional Dems who had refused support for the PO (and who, thankfully, are once again on board). Furthermore, I’m having difficulty finding the Zogby numbers; perhaps you could provide a link?
“Once they get swept out of office in 2010 and 2012, I think the moderates grab a handhold again, and the far Left’s run will end.”
The far Left? Please… all we’ve seen thus far is the moderate Left. When your health care is 100% covered by the US Govt, all of our wars/occupations are ended, and your incomes shoot through the roof as a result of smarter regulation, then you can start complaining about the far Left.