Tag Archives: Detroit bailout

Union Men

The United Auto Workers is the labor union wing of the Democratic Party. The attempt to bail out the United Auto Worker via loans to Detroit automakers is an attempt to bail out an unprofitable wing of the Democratic Party at the expense of the American taxpayer

Of course this does not mean that the United Auto Workers and its allies agree completely with the broader liberal movement. Union men ten to be less educated than liberals as a whole, and its fair to say that comments like this (taken from a featured post at Daily Kos) are perhaps more typical of the UAW than Democrats or liberals as a whole:

All gone, our shared national automotive legacy and collective memories stretching back a century, and millions of jobs, all looted by ultra-conservatives eager to punish generations of American workers for the sin of not voting for the GOP in acceptable numbers. Gone forever. In their place will be rice burning Nissons and Toyotas, maybe the occasional German model. Models that legions of newly unemployed Americans, standing on the precipe of Bush’s Depression, will never be able to afford

Empowering the UAW empowers an uneducated, nativist, protectionist, and frankly violent strain in American politics that has no place in our society. Detroit is a union town, GM is a union company, with a union view of globalization

“It’s because of you little motherfuckers that we’re out of work,” witnesses later remembered Ebens yelling at Chin.

Chin struck Ebens, and an altercation ensued. Ebens’ stepson, Michael Nitz – who had been recently laid off from his job at an autoplant – jumped in. But it was soon broken up by a parking attendant. Chin and his friends left the bar and went their separate ways. Twenty minutes later, Ebens and Nitz caught up with Chin in front of a fast-food restaurant. Ebens grabbed a baseball bat and delivered a blow to Chin’s leg. Nitz held the wounded Chin, while Ebens struck his head with the bat, bashing his skull in.

Before he slipped into a coma, Chin murmured to a friend, “It’s not fair.” Four days later – and five days before his wedding – Chin died as a result of the injuries he sustained during the beating.

and union opinions of police protection and justice

Ronald Ebens was arrested and taken into custody at the scene of the murder by two off-duty police officers who had witnessed the beating.[5] Ebens and Nitz were convicted in a county court for manslaughter by Wayne County Circuit Judge Charles Kaufman, after a plea bargain brought the charges down from second-degree murder. They served no jail time, were given three years probation, fined $3,000 and ordered to pay $780 in court costs. In a response letter to protests from American Citizens for Justice, Kaufman said, “These weren’t the kind of men you send to jail… You don’t make the punishment fit the crime; you make the punishment fit the criminal.

There are people ready to make serious contributions to the American auto industry, if they are supported. From Silicon Valley startups to crowding-in spending, from a geogreen stimulus to a rebated gas tax, many auto-related causes deserve our support.

But not the union men.

The Minimum Winning Coalition

In politics, victories are achieved by “minimum winning coalitions.” To the extent possible, each side does what it can to win, which involves selling the goods of victory to potential allies in exchange for their support. So grand coalitions that obtain 70% or 80% of the vote are unusual. Whatever side is losing will promise everything — up to and including kitchen sink bail-outs — in order to attract friends.

While flying cars are still off the agenda, GM, Ford, and Chrysler are beginning to hear what terms will be needed for them to form their minimum winning agenda.

The farm states sound like they can support a bail-out… in exchange for a massive increase in ethanol consumption. Others are talking about federal Volt fleets… or even a free trade agreement with Colombia.

Time is running on Detroit. The median home/condo price there is $9,250. (That is not a typo.)

Militant Protectionism

Wes Clark has a bizarre editorial, arguing for a 2nd Detroit Bailout (this year alone!) on the grounds that it will help develop better batteries.

Economist’s View: “What’s Good for G.M. Is Good for the Army”
Now, though, as Detroit moves to plug-in hybrids and electric-drive technology, the scale problem can be remedied. Automakers are developing innovative electric motors … that will have immediate military use. And only the auto industry, with its vast purchasing power, is able to establish a domestic advanced battery industry. Likewise, domestic fuel cell production — which will undoubtedly have many critical military applications — depends on a vibrant car industry.

Wouldn’t it be smarter to subsidize the consumption of batteries, instead of throwing money away on saving UAW-GM contracts?

How much does the $25,000,000,000 bailout of Detroit cost?

(I’m talking about the proposed second bailout. We already gave Detroit a $25 billion bailout in September.)

Over the next few years, several Plugin Hybrid Electriv Vehicles (PHEVs) will come on the market, from Toyota, Nissan, and other manufacturers.

(You’ve heard more about the Chevy Volt than any others, in a desparate attempt by GM to make up for lack of innovation with an expensive marketing push. We were making plug-ins a century ago, when they competed against flex-fuel vehicles. GM’s position on innovation is better shown by the EV-1, where GM threatened to sue Western Washington University for driving theirs)

So how much does the $25,000,000,000 bailout of Detroit cost?

Well, consider than such a plug-in electric vehicle can achieve greater than 100 miles per gallon in normal driving conditions. Swap out the standard gasoline engine with one capable of running an 15% ethanol blend (E-85), and you should get about 500 miles per gallon of gas (with the bulk of the power typically coming from either electricity or ethanol).

So how many vehicles capable of 500 miles per gallon could we subsidize with the funds needed for the $25 billion bailout? How many PHEV-E85s could we help America purchase for the money that is going to go into saving the skins of people ot put the Detroit Three in this mess?

If we make the provide a subsidy of $1500 for each plug-in ethanol-burning electric, that means we could subsidize the purchase of 1,666,667 500 mile per gallon of gas vehicles for the cost of the Detroit Bailout.

President George Bush and President-Elect Barack Obama have a choice: investing in saving GM and the UAW, or invest in freeing ourselves from foreign oil.

Bush’s job seems easier: all he needs to do is hold tough through January 20, by which time GM should declare bankruptcy.

Obama has to choose between investing in the future or investing in the latest and greatest in 1950s ideas.

I hope both of them are up to the job.

The Detroit Push-poll

Courtesy of Gas 2.0 and Hybrid Car Blog, I found the Peter D. Hart Research Associates poll on a bailout for auto-makers.

It is a push-poll.

The poll sensible begins with demographic information, and as expected with a poll of “landlines” is demographically skewed. The modal age group is 30-34 yera olds, with 35-44 year olds being dramatically underrepresented. The poll undercounts both blacks and hispanics, and has a shows more respondents as indicating being black than hispanic.

Question 4 begins the substance of the poll, and asks

How important do you feel the American automobile industry is to the American economy–extremely
important, very important, somewhat important, not important, or not at all important?

Sensible enough. However, consider the next two questions:

If the American automobile industry no longer had the resources to produce vehicles, how much harm would
it cause to [America’s manufacturing job sector / The American economy / America’s standing in the world / Consumer choice for America’s car buyers ] a great deal of harm, quite a bit of harm, just some harm, or very little harm?

And Question 6, which is the first of the serious of “do we bail out Detroit” questions:

Do you believe that the government should or should not provide loans to America’s automakers so they have the money to manufacture vehicles?

Question #5 is what we call a “Prime” It is a stimulus that changes what responses will be elicted. So for instance, if you ask a question emphasize harm to the American economy, and then ask about things that might reduce that harm, you of course get resposnes skewed to “doing something.”

In the same way, if Question #5 had been

If the American government began bailing out industries that were no longer able to pay their bills because they had made unwise business decisions, how much harm would
it cause to [America’s manufacturing job sector / The American economy / America’s standing in the world / Consumer choice ] a great deal of harm, quite a bit of harm, just some harm, or very little harm?

The answers would have been dramatically different.

There is an easy way to correct this problem: randomly vary the order in which questions are asked. Then you can examine what effect, if any, your prime has. If it has an effect, then you can be safe by reporting the unprimed result: if it does not have an effect, so much the better. However, the method section…

The accompanying poll results are from a survey conducted by the polling organization of Peter D. Hart Research Associates for General Motors on November 11 and 12, 2008. The survey was conducted by telephone among a cross section of 804 American adults.
The national sample for this poll was drawn in the following manner: 350 geographic points were randomly selected proportionate to the population of each region and, within each region, by size of place. Individuals were selected in accordance with a probability sample design that gives all landline telephone numbers (both listed and unlisted) an equal chance to be included. One adult, 18 years old or over, from each household was included, selected by a systematic procedure to provide a balance of respondents by sex.
The data’s margin of error is ±3.5 percentage points for 804 adults at the 95% confidence level. Sample tolerances for subgroups are larger.

… provides no indication that this was done.

The poll, titled “Study #8877: Auto Industry Survey” displays results in percentages, but does not appear to indicate how many participants kept answering questions. It people surveyed were against the bailout and recognized the biased nature of the questions, they may have ceased responding, causing the sample to skew to those who are in favor of a bailout anyway.

Socializing General Motors for the Public Good

The news that Deutsche Bank considers GM shares to be worthless helps us understand the Detroit bailout talks that are underway.

If GM shares are expected to be worth nothing regardless wehther or not there is a bailout, then the choice is not between rewarding shareholders or punishing them: the choice is between whether we should process the bankruptcy of General Motors through the exeuctive or judicial systems.

Thus, the question becomes more technical, and the ranges of possible answers less troublesome.

Still, some things are clear. GM has attracted workers through a system of unsustainable benefits, and those who “gambled” on a company being able to pull it off are in the same boat as those who gambled on housing pricies always going up. From this disaster we need to build a national health care system that business can love.

It also means that we should use this opportunity, where the corporate structure of GM is dependent on federal generosity and shareholders are going ot be wiped out anyway, to optimize the American auto industry for hydrocarbon efficiency. Cars like the Saturn Vue plug-in hybrid should not be delayed. Likewise, any support for GM must work alongside a geogreen stimulus to get us off foreign hydrocarbons and help protect us from Gap states like Russia,

I have said before that Russian leader Vladimir Putin is notable incompetent. Tom even calls him “stupid.” He is a Saddam Hussein with nuclear weapons and an economy the size of Portugal. Putin and leaders like him are nothing to fight a “new Cold War” over — but we need to think hard about every dollar we send to Putin and buddies.