Letter: Current bailout plan is wrongly focused


It seems to me that it's been years of poor management that has been the root of the problems with Detroit. Why are fingers being pointed at the auto workers' union?

Shouldn't management take the leadership and cut back their private jets, take salary & benefit reductions, forego bonuses & stock options; maybe even restrict top pay so it is no more than 50 percent, 70 percent, 150 percent (or whatever) more than the highest paid worker? Focus on management before pointing fingers at the union.

Independent auto industry analysts seem to be in general agreement that the wages paid to the Detroit autoworkers are competitive with the wages paid to the workers at the plants of the foreign brands.

Even BUSINESS WEEK has reported that after about five years, wages at the non-union plants are only a few dollars below UAW workers.

Recognizing that contracts have gotten too complicated, the UAW in new plants in California has streamlined its contracts.

I think this is an indication that unions like the UAW understand that work rules have to change to stay competitive.

Studies of labor over the decades have concluded that a unionized workforce is typically 7-11 percent more productive. Overall, generalizations that unions are less productive seems to be a stretch of the imagination.

The industry analysts find that healthcare & other benefits add approximately $1,400 to $2,000 to the price of each American car. The healthcare benefits provided by Detroit is top of the line.

Given the state of our nation's healthcare system, I'm not sure it should be congressmen, who also enjoy top of the line healthcare, who demand that the workers change their healthcare.

The Detroit automakers compete against foreign competitors from countries that have universal healthcare. The playing field is not even, and won't be until we reform healthcare system. This shouldn't be laid solely on the shoulders of the Detroit autoworkers to fix.

We taxpayers should not be bailing out all three auto firms. Chrysler has been to the government trough once before. Once is enough. Chrysler should merge with one of the others or file Chapter 11.

As for government intervention in the economy, I find that most conservatives look for any signs that government intervention will hurt the economy.

So it is with a recent reference to a George Will column where he used a revisionist's analysis of the New Deal that concluded government intervention lengthened

The Great Depression, and that it was supplying our soon-to-be Allies against Hitler and our own massive military build up that took us out of the Depression.

A stronger case can be made has been made by liberal critics of the New Deal that government intervention itself didn't lengthen the Depression.

Insufficient government spending did. Conservatives criticize the New Deal for too much government intervention; liberal criticism is that government didn't do (spend) enough. Support for the liberal view was also the build up to WWII.

The spending for this massive government program was substantially more than the New Deal and is an example of how much more the government should have intervened to end the Depression.

Other supporters of the New Deal who are critical of it have concluded that it was FDR's attempt to begin reigning in New Deal spending to start balancing the budget that caused the economy under the New Deal to stall and fall again after it started to recover.

This combined with insufficient government spending probably lengthened the Depression, not the New Deal.

After 1929, our nation faced a depression that had expanded into urban America, a decade-long & ongoing depression in rural America, a failure of the nation's banking system, a collapse of global markets, & unprecedented unemployment. The New Deal brought electricity, schools, hospitals, roads, & bridges to rural America, provided jobs to the unemployed, and gave the elderly and unemployed some income security. This does seem like government intervention that is bad for the economy and prolongs a depression.

Critics of the New Deal seem to forget that by 1930s a sizable part of the U.S. was already suffering a lengthy depression with no recovery in sight. Rural America, 44 percent of the population, had endured a decade long depression by 1929. Farming accounted for 30 percent of the nation's workforce, and farm income was insufficient to cover farm debt and sustain employment much less livable employment.

No one in 1930 or any other year had a crystal ball foretelling when the economy would recover on its own. With the rural America as an example, in the early 1930s recovery appeared to be years away, if at all. In 1932, for example, farm income was less than 1/3 what it had been in 1929 which was considered a bad year for farmers. What local leaders experienced first hand was that the economic collapse was more than local churches, fraternal organizations, and local governments could handle. From the 1930 perspective, the future looked bleak without government intervention.

From today's perspective, I think the lesson is what kinds of government intervention will help the economy, and how large and it should be. For those who were out of work in The Great Depression, who were losing their homes, who had to stand in breadlines, what was important was not whether or not government intervention was hindering the economy but the availability of jobs. If government intervention provided jobs, then that was good. Doing nothing was not good.

So, I'm in agreement with President-elect Obama's plans for economic recovery, and I have strong reservations with the current bailout plan. It seems to me that the bailout money is going to the people who got us into this mess without conditions. Conservatives and liberals seem to agree that it took massive spending for a war to end the Depression. Maybe both sides can agree that the current bailout plan is wrongly focused and fix it.

Doing nothing, though, is unacceptable.

Joe Stack



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