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November 15, 2008

Comments

Is it just too unfair to Hilzoy to point out that while he started out in "humanities" (mostly art and art history) his highest degree is in philosophy?

Not quite sure where to begin with the number of things wrong with that comment.

it just too unfair to Hilzoy to point out that while he started out in "humanities" (mostly art and art history) his highest degree is in philosophy?

Its worth pointing out that Hilzoy's metaphors make sense.

And she's not a callous a-hole, but that's a given.

Please, tell me the odds that any piece of writing that begins, "Megan McArdle has been righteous" will be worthy of allowing my cat to crap on it.

It's also probably worth pointing out that this wasn't by hilzoy.

Beyond religion, it also reminds me of the worst of Communist thought; the idea that we are simply cogs in the dialectical deus ex machina grinding towards the Glorious Revolution. And if some people can't see that, and need to have their class consciousness raised, well, sometimes a sparrow must fall.

what really pisses me off about this Wilkinson guy is his feigning of some sort of empathy for other people, when it's so obviously the last thing he cares about. think dick cheney mourning the "collateral damage" of the Iraq War. cheney mouths the words, but he ain't losing any sleep at night.

Like darth dick, Will Wilkerson is a moron. But worst of all, he is a pretender and a coward. He doesn't have the balls to come out and say it outright: he really could not give a shit about human suffering. Why would he? it's just the unfolding of his perfect System of the World. wipe away the crocodile tears and the only thing left is a repulsive, joseph mengele-like clinicism.

i'd have at least a grain of respect for the man if he had the balls to admit this. But he doesn't, so fuck him.

This sort of thing is an example of a tendency that goes beyond its parts. It begins in the tendency, in a political enthusiast for this or that line of things, to feel that simply referring to economics or to part of economics as supporting him or her, without going into the subject in any detail or in specific, is enough. I have thought that the real complexity and trackless you-may-understand-it-later-backwards of real market behavior reinforces this, sort of: it spanks detailed just-so story-making going forward. Between the two, sometimes the world disappears, and you just focus on the right nonspecific example of the right graph, or of some graph along those lines, while dwelling in the clouds ten thousand miles from the real situations... and even comparably distant from the theoretical subject, in that the "invisible hand" is no longer limited in its capabilities and nature by the results of incentives to which it originally referred, but is simply a comfortable, fuzzy limb that represents the world going right. A subject not deserving mockery still exists, by the same name, and in which some of the same words are used, but it is not present.

I'm not sure what to put in the backdrop of this phenomenon other than the real indeterminacy of true and reliable knowledge through economic theory about actual courses of events as time passes, continuously reconfirmed by experience.

But the pure, unruffled no-need-to-concern-yourself that can become the center as the world disappears is not limited to talk that involve gauzy references to market forces. I have sometimes seen it break loose, into pure attitudinal Desiderata: "doubtless the universe is progressing as it should" - not-caring naked, without reasons or usefulnesses or arguments by future desirabilities. One example I remember was in an afterword or addendum to Robert Heilbroner's An Inquiry Into The Human Prospect. One fellow, asked what he thought about the theoretical possibility that unchecked environmental degradation might lead to human extinction, said that it was nothing to him. He explained himself by comparing the situation to a plane full of passengers circling the sun, and said that, frankly, he did not care whether this plane made more or fewer circuits of the sun before it landed and the passengers disembarked.

I, and you, might say that no possible envisionable sequence of events leading to human extinction - whether it happened quickly through one short horrifying event, or through dozens or more of generations of people, each generation desperately, with increasing setbacks and privations, trying to scrabble through and to reach some point of stability and improvement and not making it, all the way to extinction, accompanied all along by knowledge of how much was being lost already and how much would soon pass into oblivion - can be imagined that would remotely match the bland, placid meaninglessness of some planeful of passengers somewhere unbuckling themselves, gathering up their belongings and proceeding up the central aisle and out into a jetway. But this person considered the problem solved for himself by simply not being interested in imagining the matter. And he was quite serious. The matter was not one to be concerned with. He had disposed of it.

... Argh. I try to restrain myself from writing this sort of prose, and I'm usually successful and short and choppy, but it gets like this when I'm amazed. And I have been amazed, by both halves of this, over and over for a long time. People leaning bonelessly back into such total complacent supersummary that anyone who may be affected actually vanishes as a concern is... something to gawp at, no matter if you've seen it before.

*grins* Man, I like that. If we started with the comparison of two people who both come from central background in philosophy - who and who have both left extensive written samples to look at - and went from that and really nailed down in short and clear what it is that hilzoy does so diligently and that Will Wilkinson does perhaps less well... we might actually end up with something truly worth explaining to a bright nine-year-old.

Whether hilzoy could survive a topic-thread like that without terminal blushing is something else. Me, I couldn't, I'd cower. :o)

Ashton Kutcher, of That 70s Show and Demi Moore fame, was one of Bill Maher's panelists tonight. His wise-ass suggestion that we ought to make the oil companies bail out the automakers had a certain logic to it.

But seriously: I am with Publius in being of two minds on bailing out "Detroit". I don't give a damn about the companies except to the extent that they are useful conduits for delivering paychecks to millions of workers. Their final output -- cars and trucks -- is a secondary consideration.

Evidently, they cannot sell enough cars and trucks to break even. So load the surplus ones on ships and dump'em in the Pacific. Or give them away to poor countries as foreign aid. Or offer them to Americans who drive old, gas-guzzling, oil-burning clunkers on an even-up trade-in basis. Let the workers and the suppliers keep doing what they're doing, subsidized by the taxpayers temporarily.

But ONLY temprorarily. Paying people to do busy-work may be necessary in the short run, but it is a net loss to society. You can't get back the manhours that went into making cars to be dumped in the ocean. But neither can you get back the manhours whiled away in unemployed idleness.

The goal, if I had my way, would be to ultimately disband the existing auto companies, just as the invisible hand would disband them. The world needs cars and trucks, but not necessarily Fords and Chevys. A whole lot of machinery and tooling is currently set up to make Fords and Chevys, but much of it could be used to make Toyotas and VWs, or even something better. Even the greenest cars of the future will need seats and brakes and windshields and tires -- parts whose manufacture employs most of the "3 million workers" associated with "Detroit". Saving those jobs requires an auto industry, but not necessarily today's auto industry, headed by today's auto execs, owned by today's stockholders.

--TP

Wilkinson writes: "adjustments in the market, even violent ones, tend to make the human world more hospitable over time"

The housing market is adjusting. It's not making the world more hospitable.

Wilkinson is a Cato dude, and they have no idea how real economies work. Idealized economies, that they know (it's basically constructed using simple algebra). But not real ones.

Be nice to Wil.

He grew up in a household that got by on regular checks from the government and he can't live with the shame...so he lashes out.

That guy sounds like somebody who would seriously consider Swift's modest proposal.

Ya know, if someone is making an argument to me as to whether we should take action to bail out the auto industry and there is not a single *number* or *calculation* anywhere in that argument, I can almost guarantee that the argument's going to be a lot of hot air. What ideologues of all persuasions don't seem to ever recognize is that principles alone (free market good! nationalized health care good! whatever) seldom get you enough information to make a sound decision. At some point in time, you have to go out there and figure out what state the world is in and what state your proposed actions are going to position it into.

I've made the argument here before. There's a big difference in chess between principles and calculations. It's fine and dandy to think that a fianchettoed bishop is a good thing, but you have to actually calculate whether it makes sense given the ACTUAL conditions on the board. There is no such thing as a chess master who is an ideologue over how he likes his pieces arranged.

To that effect, I don't know what I think of this bailout. First of all, what's the fundamental problem here? Solvency? Liquidity? If the problem is solvency, how does a bailout help? And how soon before we might be in this position again? I'm certainly motivated to help, but I just don't know what the long-term prognosis is on government action.

Wilkinson was always a callous idiot. He was a callous idiot in February 2005, he was a callous idiot in March 2006, he has been an even less remarkable callous idiot at many points in between, so it's no surprise that he's a callous idiot in November 2008. The only surprises over the last almost-four years have been the times that some of the almost-reasonable libertarians have cited him approvingly as though they couldn't see that he was a callous idiot. There's apparently a market for his crap, and that itself is proof of markets' imperfection.

Pubilus,

You're one to talk. When you think a policy is clearly wrong you say so and don't waste everyone's time pretending it is a close question. That is why I read your posts.

Wilkinson here is similarly clear about his position, and I think you're too quick to assume bad faith. The post is not devoid of substance. It argues that we should not bail out GM because propping up unprofitable companies slows economic growth which will, over time, cause more human suffering than letting the unprofitable companies fail.

This is not a crazy argument, and making it does not mean one is deaf to human pain. In fact, one might note that the argument is premised on the assumption that we should follow the policy that leads to the least amount of human suffering.

Nevertheless, if you think this line of reasoning is incorrect you should say why, not call the author callus. Economic growth has a well established track record of alleviating human suffering and saying so is not like saying that everything will be better after the glorious revolution.

I'm disillusioned with Obama, and it's not even January yet. Both the rumoured Clinton pick for State and his support for the car company bailout share the same characteristics: good politically, bad policy. Of all HRC's potential skills, FP is the one area is she is notoriously hopeless. I suppose the calculation is to remove her as a threat to him in the senate?

Likewise, no one seems to think shoveling more cash at the automakers will actually work, as they have been zombies for years already as is, and it will send a catastrophic protectionist message to other countries in the context of a major economic downturn and the failure of the most recent global trade talks.

I'm worried Obama is our own Dubya: a fearsome electoral machine that, on getting elected, chooses to continue being a fearsome electoral machine at the expense of policy.

Early days, but I'd like to see a less craven decision at some point. After all, I helped pay for this guy's lease on PA avenue.

Wilkinson is guilty of poor framing, but he doesn't deserve this attack -- which also shallowly framed.

First, it's not a binary choice between "lose 3 million jobs" and "bailout". Even if we do nothing, are there are lots of alternatives -- including market alternatives -- that make it very unlikely that we'd suffer the catastrophy assumed by Publisious. There are bankruptcy laws. Reorganizations. Asset purchases by healthier companies. Workouts. Mergers. By suggesting that we either enact the bailout or lose 3 million jobs, you're ignoring reality and fearmongering.

Second, you're ignoring the main problem facing the "Big Three": the overwhelming legacy costs imposed by retired workers and the fact that the Big Three generally pay wages higher than industry. (That's the primary reason why Detroit is in trouble, but Honda's, Toyota's, BMW's, and Mercedes-Benz considerable US presences are not.) Unless you're going to force hard cuts in these areas -- or effectively make them public -- you're not dealing with the fundamental problems.

Third, where do you draw the line? You're willing to pay billions for a temporary fix for the big three. What other industries are you prepared to "save"?

The financial bailout made a very loose sort of sense because of the cascade effects in the markets -- effects that threatened every business and individual that borrowed money. But if you haven't noticed, it has been about 100 times less effective than sold, and it's being accompanied by substantial reform of the banking system. You're supporting a bailout that isn't directly systematic without the necessary fundamental reforms (presumably because they damage the unions).

That doesn't make a lot of sense, and no amount of invective against Wilkinson will change that.

Second

Publisious - Publius. I have no idea where that come from.

So can I assume that the government will bail out my job when the time comes?

My brother-in-law and his wife recently got laid off. They live in NC and worked in the textile industry all their lives. But that industry has pretty much just died over the last decade or so. Where is their bailout? Why is an automotive worker in Detroit somehow more deserving than they are?

10% of the purchase price on the last car I bought went to pay for union and retired healthcare. Healthcare is and has been the biggest problem for the big 3 for a long time.

Put that $25B towards universal healthcare. Get that monkey off of GM’s back and they’ll do fine.

db - the argument isn't that he's writing in bad faith. i'm certain he actually believes what he's writing. and i also agree 100% that there are good arguments against a bailout -- no dispute there.

the reason this post annoyed me was b/c the substance of it was less about the bailout and more about showing the greater glory of God the Market. it's a worldview that i find heartless, and that leads to lot of politically unacceptable results (e.g., can't have health care b/c market will ultimately will it if it wants, etc.).

so that's #1. #2 is i think his description of the people was obnoxious and belittling. he treats them as ignorant saps who can't see hte greater wisdom. look, regardless of one's position on this, the pain is going to be deep. and to frame it in this way irritated me.

in fact, he seemed positively gleeful about it, once you get past his obligatory "aw, that's too bad." you don't write analogies about sparrows and islands ifyou're not secretly happy about it. he may be happy b/c it shows the greater wisdeom of the market, or b/c he simply despises unionized workers. but he's certainly not very torn up about it

von - i like Publisious. let's go with that.

seriously, a lot of the same points apply. the slate and TNR piece make clear that bankruptcy isn't a good answer here for unique reasons. i also emphatically reject the idea that unions are the source of the problem.

byrningman - i think you're being melodramatic (i.e., donor-esque). no prez is going to be 100% awesome. but already talking about disillusionment feeds into the idea that both parties are essentially the same and nothing will change. but lots and lots of things will change -- he's already announced (stem cells, regulatory reversals, w/draw from iraq, health care, etc.). it's too early for that. (and if you're not byr, you aren't expected to know what "donor-esque" means)

sorry byr - "melodramatic" isn't a word i should have used. "prematurely pessimistic" would have been better. sorry about that. though i stand by donor-esque

Of all HRC's potential skills, FP is the one area is she is notoriously hopeless.

I'm wondering what prompts this. During the campaign, the knock was that she was claiming more than she had, but not, I don't think, that she was hopeless. Her big debacle was healthcare, and that floundered in part because there was no clear path or structure and she was taking it on as part of an ad hoc effort. State would actually be much less prone to that, and could offer her, like the Senate has, relatively clear cut traditions and ways of doing things that would serve to help her.

Publius,

My point about bad faith was that Wilkinson could have really meant the obligatory "aw, thats too bad." The argument does not rely on minimizing the human loss of a GM failure.

Even if you genuinely care about minimizing human suffering and also thinks GM's collapse will be a genuine human catastrophe, you can still oppose the bailout if you accept Wilkinson's logic.

I agree that the analogies and tone are off, but they seem far worse if you assume the stated concern for the dislocated workers is disingenuous.

Detroit autoworkers deserve absolutely no sympathy. For decades the vampires at the UAW sucked the blood of the Big Three, who foolishly trusted their assurances that they would only take small bites and that the government would provide transfusions as necessary. Now that they have sucked them dry, they deserve whatever is coming to them. Their last straw was to put their money into electing the extreme leftist Obama regime. It will do them no good. God will not be mocked: He has promised the evildoers plague, famine and death and He will keep His Word.

Re: Sec. State.

It's a post of immense prestige. If she turns it down because she'd rather stay in the Senate, Obama has done more than enough to reach out to her and her constituents and honor them.

Re: Detroit

Yes, buggy whip manufacturing is no longer the employer it used to be. But before we all start pretending we understand and approve of the forces of "creative destruction", let's remember that Ford and GM are actually building and selling millions of cars every year.

If legacy health care costs coupled with the credit crunch are preventing these enormous companies from being successful, I would swear we've just elected a President who ran on a policy of moving the country away from employer-sponsored health care.

I remember seven years ago when the steel industry was loking for tariff ptotection, in part because of a huge problem they share with Detroit: both have legions of retirees who are owed benefits. And, of course, neither the steel executives nor the auto executives have shown any self-awareness that their position could have been improved by universal healthcare and perhaps a more robust pensions system. It's not enough to solve these companies' current problems, but government action in these areas years ago could have improved their situation, and even now it could improve their future. Another issue is that while it's often said that GM is a health care company that makes cars, because so much of its efforts now go to caring for employees and retirees, the truth is that GM is a health care company that makes car loans, because car loans are more profitable than cars - until the entire credit system goes haywire. I wonder how stabilizing the credit system, and perhaps regulating lending more so the automakers would have to make their money on the car sale in future, would affect their long-term health. Of course, none of this structural talk should distract anyone from the degree to which the automakers are in it deep for their poor decisions, or especially from the true crux: that there are millions of Human Beings whose livelihoods and whose health care are now at stake.

Yes, if only we could get over “fellow-feeling”

excuse me, but you left out 'uncoached' before 'fellow feeling'. As the saying goes, you have to be very carefully taught.

The most pronounced problem with this discussion is the use of the term "bailout." I suspect we all bring our particular meanings of the term to this table when we post here about what to do.

If GM closes, there will be available a huge facility for producing vehicles, as well as other machines needed in our economy. Someone will snap that up, I expect.

There are so many different ways to approach the so many different problems presented by GM's failure. I suggest that either a group composed primarily of industry people make recommendations, or that the President-elect appoint a more diverse group to make recommendations.

Warren Terra's point up above is right on. The role of inept car manufacturing, overblown pricing for gas guzzlers, and an overreliance on credit to induce purchasers to purchase cars against their own long term financial interest is really what is at work here, not retiree benefits (such as they are). I am astounded that the press corps continues to insist, against the facts and logic, that UAW contracts that specifically traded current pay for future benefits were somehow a "gun" clapped to the heads of auto manufacturers or that retiree benefits owed to actual retirees are somehow not identical to other forms of loans owed to the loan maker.

I heard the business correspondent for USA today giving an equally garbled account of credit card issues when she asserted that it was a terrible thing that credit card holders were defaulting on paying for basic items like dinners and plane tickets--they consumed those things so why didn't they pay for them. Apparently the fact that many credit card holders have, in fact, paid the original bill hundreds of times over and are defaulting on usurious interest rates levied on late payments has escaped her.

the same holds true for these popular accounts of the relation between car manufacturer problems and worker's pay/retiree benefits. The workers paid for their benefits in advance. This wasn't some free gift the auto dealers made them.

aimai

Wilkinson is a Cato dude, and they have no idea how real economies work. Idealized economies, that they know (it's basically constructed using simple algebra). But not real ones.

I basically agree with this.

The board of directors includes a number of people with real, significant private experience, but in terms of their research and work product, everything I've ever read from them is party-line libertarian free-market propaganda, by the numbers. Cartoonishly so. You can generally just read the title and you'll know what's inside.

IMO their work has exactly the same relationship to the real world as position papers from the Socialist Workers Party.

Wilkinson is guilty of poor framing, but he doesn't deserve this attack

Unless by "framing" you mean "he didn't actually say what he meant", Wilkinson is a callow prick.

Maybe he'll grow out of it, but if this work is any example, that, and nothing else, is exactly and precisely what he is.

The question of whether it is good public policy to bail out Detroit or not has little or nothing to do with it. It's a question of the thought process and the assumptions he starts from in thinking about whether it's good policy, or not.

Thanks -

Early days, but I'd like to see a less craven decision at some point.

Maybe I'm just ignorant, but I don't think Obama has made any decisions yet.

God will not be mocked: He has promised the evildoers plague, famine and death and He will keep His Word.

Dude, you are f*cking insane.

Thanks -

May I suggest that we wait to be angry at Obama for his choice of Sec of State until he actually makes that choice? He hasn't. In fact, since the Sec of State pushes policies for the President, why don't we wait to see what policies Obama asks his Sec of State to push and what his priorities are before we get all bent out of shape.

The man's not President yet. Sheesh.

I think a blanket statement that "the automakers wouldn't be able to get a DIP loan" is false. GM *may* not be able to get a DIP loan. If it couldn't, wouldn't it make sense for the government to back a DIP loan? It would be a better use of taxpayer money than a hand-out or a loan to the existing business.

IF GM can get a DIP loan, it can go into bankruptcy and keep making cars. Its suppliers will keep supplying parts, because trade creditors are the most "senior" in a bankruptcy, and will almost certainly see their money. Four things will happen: (1) GM's debt burden will be substantially reduced in court; (2) GM shareholder value will be wiped out; (3) compensation for existing unionized employees will be cut; and (4) some employees will be laid off. #4 sucks. But that's okay - GM will become a viable business again, and we (the taxpayers) can provide lots of benefits to those who've lost jobs.

The alternative, a bailout, means: (1) taxpayers fund GM executive salaries; (2) taxpayers fund GM's current (higher) debt costs; (3) taxpayers fund keeping employees' great benefits packages in place (folks making $100k+ on average); and (4) taxpayers money pays the salaries of some employees who would've been laid off. In that list, I think only #4 is worth doing. So why not just let those employees lose their jobs and give all the money to them, in the form of healthcare, unemployment benefits, and pension guarantees? It's way more efficient because we don't need to pay for #1-3! Even if we fund GM's DIP loan, money if being used more efficiently. And we can give some of that money we're saving to people living below the poverty line, where it can make a much bigger impact and will flow immediately back into the economy.

I just think a taxpayer-funded bailout of the automakers is a terribly inefficient use of taxpayer money.

The Big 3 are in Big Trouble for numerous reasons, and now we are being told to avert our eyes and let the markets do what they do best (the Invisible Hand is wearing an Invisible Proctologist's Glove).

How did this happen?

- Foolish management made short term profit driven decisions courtesy of pressures from Wall St. for quarterly results.

"Do nothing" we are told by free market ideologues who say "think of the long term, not the short term". Too bad the actual, ummm *markets* weren't sending that message a little bit earlier when it might have done some good.

- Crushing health care costs are dragging these companies down.

"Do nothing" we are told by people who fought tooth and nail against govt. healthcare.

- Enormous pension obligations are dragging these companies down.

"Do nothing" we are told by people who campaigned to privatize social security so we could rely instead on the stock and bond markets to safeguard our retirement savings.

- The unions are too strong. We can't compete with European and Asian labor.

"Do nothing" we are told by people who have xenophobically denigrated those other countries and bragged about how our economy was so much more modern than those fossilized economies of Old Europe with their Paleozoic unions.

- These companies derive most of their profits from financial services, and as a knock-on effect support millions of manufacturing jobs.

"Do nothing" we are told by people who said we had to save the big investment banks on Wall St., because without the financial services provided by companies like AIG, millions of jobs in the real economy would be lost.

For some reason I don't find the cries of "do nothing" to be very persuasive here, but maybe I'm just not looking at this right.

I think a blanket statement that "the automakers wouldn't be able to get a DIP loan" is false.

Who the hell would write that?

Anyone talking about "Detroit auto workers" doesn't know what they are talking about and really needs to STFU. It's not about them, it's about an unemployment bomb that would wipe out the entire midwest. Millions of unemployed that would *stay* unemployed for years while people lined up thousands deep if a janitor died or something.

The government supports red state economies and has done so with the support of conservatives and Republicans for over a hundred years. It isn't enough for isolated bloggers here and there to say,"Oh I'm against that, too." If conservative economic theory is deserving of respect then it's adherents need to start appying it to their own voters and neighbors and selves. Until that happens conservative economic theory should be a mindmasterbation game of think tanks and late night undergrad drinking binges and should not be applied to the real world.

Or are some sparrows more equal then others?

AS for the auto dealers being in trouble because they are supporting their retired workers--shhesh, are we headed back toward the days of Dickens?

Well, yeah, actually we are. That's exactly the kind of society we would have if the conservative economic theorists got their way. Except only in blue states since Republicans don't apply their economic theories to themselves.

AS for slippery slopes: why not slide down towards socialism? All the other civilized countries have done so. I'd trade our standard of living for Denmark's any day.

I do think, though, that if we taxpayers bailout the car makers, then there should be strings attached, lots of them. We could, for example, use the factories to produce fuel efficient vehicles. Right now there is no market for vehicles because supply side economics impoverishes most of the citizens and results in a depressed domestic market, but the Republicans are out of power and we are not bound by their stupid ideas any more.

There is a small truth on the conservative side: government controlled economies in the Communist sense don't work. The problem with ideologues (of any sort) is that they take their little abstract truths and use them as a bludgeon to smash any attemts to deal with real problems in the real world. In the real world there are lots and lots of ways for a government to internvene effectively in an economy. We have a hard time getting to those kinds of policies in this country because rightwing ideologues come crawling out of the safety of their personal economic security and start screaming about their precious ideology is being violated.

The post by Doran Williams at 10:51 a.m. is very cogent. We, as a country, have a national security interest in having an American company with American workers building a product on which most of our country depends to keep the economy running. Doran Williams says "I suggest that either a group composed primarily of industry people make recommendations, or that the President-elect appoint a more diverse group to make recommendations." Yes, good - recommendations TO CONGRESS who should ACT to maintain production capacity here in the United States with the workers and manufacturing facilities that we already have. If necessary, let's have the government buy GM, at least temporarily. The facilities and workers can be directed toward providing the kinds of fuel efficient, nonpolluting vehicles that our country needs to further our environmental and national security interests. There would still be industry competition by foreign owned corporations and such competition could be encouraged, but at least we would recognize that the public policy interest is greater than merely helping workers in a single industry (which would be accomplished in the process).

@Ed,

Polite conversation, please. If the government were willing to guarantee a $10-20bn DIP loan for GM, you don't think it might be able to get done? I mean, some banks would be willing to be the most senior lender in a loan of that size for a company with $110bn of assets.

Thank you, wonkie. I'm absolutely not in favor of a bailout in the form of handing GM a boatload of cash (just as I was against the financial bailout in the form of Paulson handing financial corporations boatloads of cash). There have to be strings attached in the form of Government direction of the corporation. Bankruptcy would be the answer if what was at stake was merely the company, its shareholders and its creditors. What's really at stake is the industry, and whether we have an interest in preserving it. That's a legislative, not a judicial, matter.

Why even do that? You can buy GM for a billion dollars.

We, as a country, have a national security interest in having an American company with American workers building a product on which most of our country depends to keep the economy running.

Wha? What exactly is this national security interest? I mean, if GM disappeared tomorrow, there would still be plenty of cars and there would still be plenty of people making and selling new cars. Many of those cars would even be manufactured in the US. So can you characterize exactly what this national security interest is and explain the limits on its application?

Sorry to be grumpy, but for too long, "national security interest" has been the trump card that people use whenever their arguments are really really awful. Everything we do abroad is in our national interest; no one dares to define what those interests are or whether there are any tradeoffs to be made of course. Every useless bit of security theater we've had to endure has been justified by national security interests; every act undermining the rule of law has been defended as necessary because of national security. I'm getting a little tired of it.

If necessary, let's have the government buy GM, at least temporarily. The facilities and workers can be directed toward providing the kinds of fuel efficient, nonpolluting vehicles that our country needs to further our environmental and national security interests.

I don't think this is a good idea. Let's say the government buys GM and orders its engineers to design and build some new awesome fuel efficient vehicles -- that's a process that will take upwards of five years. And even if GM rushes immediately to sell awesome fuel efficient vehicles, how will the government make people buy them? GM already sells some small fuel efficient cars and people generally aren't interested in them. That's not because the cars are crummy, it is because people don't want really fuel efficient cars. A really fuel efficient car is one that is light, has a relatively small and underpowered engine and is going to be somewhat less comfortable. The first two factors are huge safety issues. Drivers are in an arms race with SUVs and hummers; getting a super fuel efficient car means reducing your likelihood of walking away from a crash. Getting an underpowered car means that you'll feel much less safe (and you might even be less safe) trying to merge onto highways. My wife bought a car a year ago and she ended up upgrading to a bigger less efficient vehicle because when she test drove the super efficient cars she wanted, she didn't feel safe getting on the highway.

I tentatively lean towards the bailout, but the notion that buying up GM is a good way to influence the shape of the auto market is silly. If you want to induce buyers to buy certain types of cars, give them a tax rebate. Or price carbon. You can do either without buying any huge companies.

Also, there are no non-polluting vehicles that can be made. All transportation produces some pollution. Even battery powered cars produce pollution; the only difference is that the emissions come from a power plant rather than from your tailpipe. Furthermore, we don't really need non-polluting vehicles per se. What we need are vehicles that don't produce much greenhouse gases, which is a different problem.

Ed, I wouldn't be opposed the the gov't buying GM.

@Ed, and then what? We'd be the proud owners of a business about to run out of money, and the government would have to inject a bunch of cash or have the company file for bankruptcy, just like we're considering now. What's magical about owning the nearly-worthless equity?

May I suggest that we wait to be angry at Obama for his choice of Sec of State until he actually makes that choice?

No - why is he even considering an Iraq war supporter and Iran hawk for Sec of State?

These people should be locked up in the basement for the next 10 years writing "I will not invade other countries and kill more brown people" until they fall into a coma.

Is it really so hard to find somebody who has exhibited sound judgment in these matters, as opposed to having supported the biggest FP disaster since Vietnam? Is the US running out of sane people?

Funny, David Brooks cited the thinking of Wilkinson and some of the other wingnut welfare queens at Cato as "unpredictable"**. What an astounding howler. Libertarians are as predictable as the sun rising in the east.

**wikipedia

No - why is he even considering an Iraq war supporter and Iran hawk for Sec of State?

Because most of the power players in Washington were Iraq war supporters and are Iran hawks. In order to get anything done, you have to cut deals with them and placate them by offering at least tokens of respect. I suspect that in terms of limiting foreign policy stupidity (like Iran hawkery) getting Clinton into an executive position like State will be an improvement. As Secretary, she has to do what Obama orders, but as Senator, she has an unfettered hand to continue pushing for all sorts hawkish lunacy. To be honest though, I doubt very much that Clinton will take the job for just that reason. The leaks are just a way for Obama to get some news cycle time as being conciliatory and willing to work with rivals.

These people should be locked up in the basement for the next 10 years writing "I will not invade other countries and kill more brown people" until they fall into a coma.

You're a better person than I am. I want trials followed by executions and lifetime sentences at hard labor. But I'd settle for your proposal.

Is the US running out of sane people?

If you're talking about our elites, yes, yes we are. How else can you explain the fact that Thomas Friedman and Maureen Dowd get the most valuable op-ed space in the world?

I don't mind if Obama picks someone who isn't perfect in their past positions provided that person understands that going forward she/he must carry out Obama's agenda.

After all finding a promenent Dem who opposed the war is like finding one who never smoked pot.

I also think that Obama is going to be ghe boss of his administration.

I'm more worried about the kind of help, or "help", he gets from Pelosi and Reid than I am about his Cabinet appoinntments.

this isn’t economics – it’s theology.

Exactly. Libertarians often sound to me exactly like dedicated Marxists. The theory is what matters, and it assures us that all will be terrific if we just keep the faith.

There's lots to be said about the situation of the auto industry, but Wilkinson's sophomoric piece is a negative and annoying contribution to the discussion.

I want to grab people like that and shake them and yell, "This is a complicated problem!!"

Bernard Yomtov,

I would argue that how best to help the workers displaced by a GM bankruptcy is a complicated problem. As others have noted such an event would have far reaching consequences throughout the country and especially in the Midwest. At a minimum, some type of relocation assistance and help with job retraining would be required. But these types of programs are tough to get right, even when they are relatively small. And the scale of any program aimed at 3 million displaced workers would be anything but small.

However, the decision not to preserve the unsustainable status quo with billions of dollars in handouts to GM's management, creditors, and shareholders is not complicated.

amen, brother!

Who cares about the auto companies? They were poorly run and deserve to go out of business. That's how a free market is supposed to work. The money would be better spent in unemployment benefits for people who lose their jobs, and it could also be used to help them get training for new jobs.
Eventually we are going to have to draw the line somewhere. Might as well be here. I don't care how desperate the times are we can't just keep bailing out company after company that all deserve to go out of business otherwise these people won't learn their lesson. Let them go, and use the money on the workers. If Obama is serious about his bottom up rebuilding of the economy he would concentrate on them, and let all the CEO's go file for bankruptcy.

db - Isn't another issue whether the status quo is in fact unsustainable. As the Cohn article points out, both GM and the unions have come a long way in recent years in improving efficiency.

Their current claim is they just need some time to weather this credit crunch to see if those changes bear fruit.

i'm not for indefinitely propping up a zombie firm. but given the collateral damage, i think we owe it to these people to give them a chance to weather it. the auto industry is simply different. line-drawing is tough, sure, but unnecessary b/c they are quite clearly well within that line (to me, though that's obviously debatable).

finally, i think the democrats do owe these people at least a chance. you can think of it as interest group politics i suppose. but the democrats are supposed to be the party of working people -- we support the idea that someone can graduate from high school and still have a decent life at a decent wage. these very people voted for obama and a democratic congress, and these are the people they should be "fighting for."

again, i'm not as gung ho bailout as this post might seem. but i think we should at least give them a chance -- maybe a last chance in light of the times

Publius,

I do agree that whether or not the situation is in fact unsustainable is an issue. If the situation is sustainable but the current recession/depression is leading people to undervalue GM, then I would agree that government assistance would be justified.

I am probably just more skeptical that Congress is better at accurately valuing GM than the capital markets.

And yes, if a GM failure is as bad as people are saying then the government ought to be very energetic in helping its workers.

Publius' point is a good one independent of the question of whether there are arguments against bailing out GM, even good ones or right ones. I do think that he mixed too much positive "government remedy is required" assertion into the palette, but that isn't crucial either. It isn't a question of the right decision in political economy. Wilkinson was being heedlessly sloppy in two respects.

An impressionistic supersummary is not the same thing as detailed actual arguments or fact-collections that might "amount to the same thing" or "make the same conclusion". It does not need to ground itself in the specifics, because - yawn - it has already stated the shape of the world.

And a perspective that is really considering the real human downside for real people that would be involved in following its advice - even if the only possible manifestation it finds possible is discomfort and moral anxiety and being careful in making the decision - is different from a perspective that is serenely stating the foolishness of concerning oneself with the short term and recommending looking through all these blurred irrelevant human snowflakes to the shapes of great trees and the cycle of the seasons.

These differences aren't just rhetorical technicalities, because people really do steer by the terms in which they conceive things in their heads. To not worry about it or not object to it because it seems only a poetic style issue in this or that case is to allow a bad climate of decision-consideration that will tend to end up counting. From time to time, reliably, junctures do and will come up in which the indifferent heedlessness will make its difference: choices will be made which would better have been differently made, in one way or another or in full.

Publius was not off base in comparing this kind of take to the sort of indifference that said, "One cannot make an omelette without breaking eggs." It is something to avoid, and pointing to its ugliness is not mistaken.

db,

I would argue that how best to help the workers displaced by a GM bankruptcy is a complicated problem. As others have noted such an event would have far reaching consequences throughout the country and especially in the Midwest.

But that's exactly the point. Nobody simply wants to "preserve the unsustainable status quo." What the discussion is about is how best to deal with the currently unsustainable situation. Can GM be restructured or reorganized in some sensible fashion? Can pieces be sold off? What will happen in bankruptcy? If we give GM some sort of aid what conditions should apply? What is the best way to deal with the massive economic impact of the company's failure?

What should the goverment do? Note that "nothing" is not available. Bankruptcy itself is a government action. GM's failure would impose huge costs for unemployment and various other sorts of government assistance. There would be all sorts of calls for help. Free-market sloganeering is just silly.

The trouble with Wilkinson is that he addresses none of this, and has nothing to offer from his perch but some bromides. He feels pangs of sympathy - lovely, but really has no proposal to offer.

It's also more than a little irritating to read the McArdle post he cites and realize that it's a standard anti-union tirade. The UAW has a share of the blame here, but anyone who can talk about the problems without a word about the multi-decade incompetence of management is not "righteous."

Turbulence disagrees with the concept that domestic automobile manufacturing is a national security interest, but no one else has opined. Right now, we owe huge debts to China. We're dependent on the Middle East for oil. Do we really want to be dependent on East Asia for basic transportation? No portfolio manager would advise to put all of one's money in Asian markets. Why do we want to put our transportation dependency there? (Of course, I don't share with Mr. and Mrs. Turbulence their small car phobia.)

"though i stand by donor-esque"

This isn't a word; maybe it's just me who has absolutely no idea what you mean by it. Not even the faintest clue.

On a more general note, I personally find really irritating the tendency of comment threads everywhere, when a person is criticized, however justly, to descend into personal abuse of said person, who is typically previously unknown to most of the participants.

It's just unseemly, and I can't think it does anyone's karma any good. Disagree with someone? Fine. Personal abuse is, as a general rule, unnecessary, unkind, and there's something about motes and eyes most people might consider.

Excess of self-righteousness based on a single, or handful, of points of knowledge about someone, is rarely attractive.

Didn't notice this when making previous comment: "(and if you're not byr, you aren't expected to know what "donor-esque" means"

Ah.

Turbulence disagrees with the concept that domestic automobile manufacturing is a national security interest, but no one else has opined.

I'm not sure I disagree. I want to see your justification. I definitely disagree with the notion that adding the words "national security interest" magically makes any argument correct.

Right now, we owe huge debts to China.

So? What's your point?

We're dependent on the Middle East for oil.

Indeed we are. So what? Do you think that allows countries in the middle east to dictate policy? Note however that they are also dependent on us for their economy. They can't stop selling us oil. Some of these regimes can't even credibly defend themselves without us. Interdependence is not the same thing as dependence.

Do we really want to be dependent on East Asia for basic transportation?

Why not? We're dependent on East Asia for most of our semiconductor fabrication facilities. Those provide the vital components needed to every single computer, all electrics, and much of our military's weaponry. Does that bother you? Because that seems a lot more economically important than mere automobiles.

I still don't see what's wrong with being dependent on East Asia for automobile production. East Asia consists of our allies. You know, places like Japan and South Korea, places that depend on us for their defense and whose economies are closely tied to ours. What exactly is the national security risk here?

No portfolio manager would advise to put all of one's money in Asian markets. Why do we want to put our transportation dependency there?

Americans purchase cars made in many countries around the world, starting with Canada and Mexico. And I still don't know what you mean by transportation dependency. We have cars. Losing GM entirely would be bad, but there are other companies in the US that make cars, including foreign owned companies. The US has many problems today, but a shortage of automobiles is not one of them.

(Of course, I don't share with Mr. and Mrs. Turbulence their small car phobia.)

Indeed, our phobia is quite advanced. You can tell because we bought a Honda Civic. It is just like the original hummer and parking it is a huge pain. Maybe you should try coming out to our neck of the woods and dealing with our insane drivers before you make foolish assumptions as to what is and isn't safe.

You still haven't explained what national security interest is at stake. I would greatly appreciate it if you could describe a threat model or some plausible national security scenario that justifies keeping automobile production in the US at such high costs.

How else can you explain the fact that Thomas Friedman and Maureen Dowd get the most valuable op-ed space in the world?

With Friedman it's the Peter Principle; he was a first-rate reporter, so he got promoted to a job where he does no reporting. With MoDo it's because she was smart and funny 20-odd years ago, and the Times treats op-ed columnist as a lifetime appointment.

Publius - "Even worse, he essentially criticizes the people would suffer most by pointing out how they – in their small-minded ignorance of wanting to keep a good job – fail to see the larger picture that only libertarians can see"

Isn't this a blatant misreading? Wilkinson criticizes "our uncoached fellow-feeling" -- that's us (bleeding-heart liberals) he's criticizing, not the people we are feeling sympathy towards.

GM is failing for the good and sufficient reason that it's a terribly run company that can't make cars people want to buy. An infusion of cash won't change that and would simply be good money thrown after bad. By all means, let's do something for the people who will be hurt by its collapse, but trying to prop up this wreck of a corporation has to be the least efficient way to accomplish that.

And if GM was dumb enough to make promises it couldn't keep in the face of rising health care costs and longer lives, that's unfortunate and again we should do something to help the people affected, but the responsibility for keeping those promises doesn't devolve onto us.

When comparing the reaction to the Wall St bailout to the Big 3 bailout, one thing strikes me: opposition vs hatred.

There was a fair amount of opposition to the bailout, but not the virulent hatred that there is towards the Big 3 bailout. Especially hatred towards the middle class. I saw no right-wing/libertarian hatred of the Wall St people who've pulled down tens of millions of $ per year, for what is now revealed to be mostly fraud.

But it's not hard to find simple and strong hatred of the 'pampered' autoworkers.

In the end, it's not about models vs. reality; that's just justification. The glibertarians really, really hate the middle class.


When comparing the reaction to the Wall St bailout to the Big 3 bailout, one thing strikes me: opposition vs hatred.

There was a fair amount of opposition to the bailout, but not the virulent hatred that there is towards the Big 3 bailout.

You haven't been reading the right blogs. Take a trip through the comments section at calculatedrisk some time, and you'll find plenty of "put 'em up against the wall and shoot 'em" hatred for the Wall St. bailout, and from multiple points of the political spectrum, too.

GM is failing for the good and sufficient reason that it's a terribly run company that can't make cars people want to buy.

Is this really true? I thought that the big problem at the moment is that GM is only offering financing to people with extremely good credit. Since most people don't have $20K lying around, they have to buy on credit, so when credit dries up, sales dry up also.

I'm sure that GM management has been awful over time, but I'm not so sure that their cars are truly awful right now. Check out this comparison between the Chevy Cobalt, Toyota Yaris, and Chevy Aveo. Do the GM cars really look that bad in comparison? They seem roughly comparable to me. The quality of American cars has been improving for years; last year my father replaced an Oldsmobile with 150,000 miles. Again, maybe I'm missing something obvious, but it seems like GM is producing competitive cars in this market.

Wilkinson criticizes "our uncoached fellow-feeling" -- that's us (bleeding-heart liberals) he's criticizing, not the people we are feeling sympathy towards.

Yes, and he also says, just before that:

Our sympathy, untutored by a grasp of the larger scheme, can perversely make itself ever more necessary.

Untutored, uncoached. What a pompous, arrogant p***k.

As an independent conservative and a physician who deals with difficult decisions all the time (sometimes a painful or distasteful procedure is necessary for the patient to survive), reading all of this just gave me a headache.
I would point out, though, that no one, including the author, has explained why bankruptcy is not a viable option.

Here's what happens if you bail everything out. It's callous to ignore:

http://www.fool.com/investing/general/2008/11/11/failing-like-japan.aspx?source=iflfollnk0000003

I would point out, though, that no one, including the author, has explained why bankruptcy is not a viable option.

Did you not see these two links right in the middle of publius' post?

My feeling that national security requires that basic industries have some presence in the geographic borders of our country is based on the fact that we don't have any control over war and disasters that befall other nations. East Asia has a peaceful and friendly relationship with us right now, and that's unlikely to change immediately. The countries in East Asia don't have a particularly friendly relationship with each other, and it's unfortunate that we placidly accept any of our industries being largely outsourced, including the semiconductor industry. From this article, it appears that much of the semiconductor industry has been outsourced since 2001. I didn't know that and, yes, it makes me uncomfortable.

As to vitadmd's comment, I will give my opinion: I'm not sure that a bankruptcy isn't a good answer, but Publius's original post links to an article by Jonathan Cohn that states some persuasive arguments that it isn't.

There's a more philosophical question: is the solution to GM's problems a private issue that is susceptible to judicial remedy, or a public issue susceptible to legislative action?

Judicial remedies are designed to solve the problems of individual and corporate rights in property. Bankruptcies help an insolvent corporation either dissolve or "get a fresh start", and try to redress the creditors' claims in an evenhanded manner. In other words, it's addressing the corporation and the corporation's creditors.

Societal problems are solved by the legislature. Even though GM is an individual corporation, its problems are part of a larger economic challenge, and its ruin would affect the entire economy in a major way. Arguably, then, the more we see GM's problem as a larger economic issue, the more appropriate it is that the legislature, not the judiciary, should be addressing it. When someone suggested that "a panel of experts" suggest what should be done about the auto industry, that says to me: legislature.

Bernard - that prior quote is also a criticism directed at *us*, not at the people we are sympathetic towards. So again, Publius was simply mistaken to claim that Wilkinson was criticizing the latter group.

(You might accuse Wilkinson of various other flaws, but this isn't one of them. Suppose Publius claimed that Wilkinson eats babies. If I pointed out that Wilkinson does not, in fact, eat babies, would you respond by saying "Oh, but look, in the previous sentence he used the word 'untutored'!" Please.)

Turbulence,

For some further discussion of the bankruptcy option, see here.

Richard,

I didn't intend to disagree with you. Just expressing my irritation at Wilkinson.

Barry: But it's not hard to find simple and strong hatred of the 'pampered' autoworkers.

Really? “strong hatred”? Jeeze. I know some autoworkers. I like them just fine - great middle-class folks who would go moose hunting with Palin. She might have to field dress the moose though.

It’s no secret that I don’t think much of unions. And I’ll admit to a certain amount of schadenfreude in this situation. But it’s not about the folks on the line. It’s the union leaders knocking down $200k per year and funneling the dues to Democrats. And the folks I know will readily admit that they don’t deserve the total (average) pay and benefits package of $75/hour for the work that they do.

And you know what? I’ve supported these folks since I bought my first car. I’ve never bought foreign – it always had to be American made. And I bought some real crap. Overpaid for it and passed on the foreign models I would have liked to have had. But it had to be American to support American workers. Now, the quality has improved drastically, and now I’m actually happy to own an American built car (with parts built in Korea etc.). But I went “Buy American” even when I knew I was going to get shafted.

Fine – when do we bail out textile workers in NC? Or are we going to make the judgment call that automotive workers are somehow more important in the grand scheme of things?

Never mind the kind of social instability that so many people out of work would create. They wouldn't be harmless "sparrows" for long. I'd love to see that columnist's face when the sparrows turn to birds that start ripping his house apart out of desperation, Hitchcock style..

My feeling that national security requires that basic industries have some presence in the geographic borders of our country is based on the fact that we don't have any control over war and disasters that befall other nations.

We have commitments to militarily defend many of our East Asian allies. And our military is very capable of projecting power abroad; most of our defense procurement is designed specifically so that we can control what happens when war develops in Asia.

I have no idea what you mean when say natural disaster. A natural disaster can strike anywhere and East Asia is a really really big place. Any disaster big enough to affect lots of plants in East Asia is big enough that car manufacturing should be the least of our worries. Do you have some remotely plausible scenario in mind?

East Asia has a peaceful and friendly relationship with us right now, and that's unlikely to change immediately.

That is unlikely to change in the next few decades. Our economies are interlinked. Hurting our economy would hurt their economies. And vice versa.

The countries in East Asia don't have a particularly friendly relationship with each other,

They don't? China and Taiwan have an...interesting relationship, but it seems peaceful since both of them are far more concerned with encouraging development than solidifying their status. And the others seem friendly enough with each other. What specific scenarios are you worried about? Are you concerned that Japan is going to try and invade China? That South Korea will invade Vietnam?

and it's unfortunate that we placidly accept any of our industries being largely outsourced, including the semiconductor industry.

Why is it unfortunate? Without a threat model, why should we believe that there is any danger?

"It’s the union leaders knocking down $200k per year"

Why do you have schadenfraude for them, because of this, and not the management earning far more money, and being actually responsible for running the companies into the ground, rather than protecting the interests of the workers?

Don't people deserve to be paid well for doing their job well? Isn't that a principle you believe in?

Are the interests of mere workers not worth protecting?

What's up with all this?

"And the others seem friendly enough with each other."

You left out North Korea. And Myanmar/Burma, although that land isn't any kind of an external threat.

And I wouldn't call the Japan/China relationship "friendly." Non-belligerent these days, yes. "Friendly," not exactly. "Touchy," would be closer. South Korea and Japan are rather mixed, as well.

Not that I'm defending the point you are challenging. But as a separate quibble, since you mention this.

I strongly disagree with publius. Will is not callous, as anyone who follows his writing closely enough is likely to attest to. I suppose it is possible to read his writings and attach to them the stereotypical "callous libertarian" voice, but that is a rather unremarkable fact of the way people with strong ideological differences see each other.

Had publius included in her post a disclaimer stating clearly she is not accusing Will of callousness, but simply expressing in strong language her aesthetic repugnance for the rhetoric in it, I'd be significantly less put off by the post, but with no disclaimer, the post reads as a personal attack.

My politics is closer to publius' than to Will's, for sure, but I read Will, I feel like I know him better than publius does, and I can say that Will, to my mind, is decidedly not callous.

Don't people deserve to be paid well for doing their job well?

What are you, Gary, some kind of commie pinko? Nobody "deserves" anything in The Market. Workers get paid the most they can obtain from employers who offer the least they can get away with. The Invisible Hand guides The Market so as to produce the best of all possible worlds.

I hope I'm wrong, but that's what I think free-market conservatives really believe.

The thing I don't quite get is the double standard that says company presidents who can extract $2,000-per-hour paychecks from their employers are merely successful economic actors whereas assembly-line workers who extract $50-per-hour paychecks from their employers are cheating the Invisible Hand somehow.

--TP

this isn’t economics – it’s theology.

It isn't even good theology.

I share Turb's opinion that GM is putting some pretty good cars in the market now. If I was in the market for a car, I'd take a good look at them.

I agree with OC's observation that health care costs are one of the key things keeping American auto from being competitive. In other industrial countries, manufacturers are not on the hook for providing all of the social benefits enjoyed by their workers.

I don't know what the right thing to do is with GM. There is a huge asset there, in terms of manufacturing capability, workforce, and generations of engineering skill. "Just blow it up" seems like a pretty big waste.

Just from the comments in this thread, it seems there are a range of options available, from outright bailout, to a structured and (hopefully) well-managed bankruptcy, to short-to-medium term equity injection by the US. The choice of "good money after bad" vs "put 3 million people on the street" seems like a false one.

My biggest issue with Wilkinson can be summed up here:

Large-scale market dislocation is not the worst possible thing

This is true. Plague, total war, or the sinking of a continent into the ocean are all worse.

Large scale market dislocation is merely stuff like people losing their livelihoods and homes, families disintegrating, a generation of young people unable to begin their lives because school and employment are not available to them, people dying from preventable causes, people living in cardboard boxes in all weather, and riots in the streets.

Wilkinson is a 35 year old guy who was a student until he was somewhere around 30, spent some time as an academic, and now opines for a living as a Cato fellow.

Has he ever had to make a payroll?
Has he ever brought a product to market?
Has he ever created a job?
Has he ever had to fire anyone?
Has he ever had to fire somebody with kids?
Has he ever built any tangible, useful thing useful that somebody else was willing to pay good money for?

My guess is that the answer to most or all of these questions is "no". Based on his age and the fact that he lives in the US, my guess is that he also has no direct experience of a significant "large scale market dislocation". We don't have all that many of them here anymore because we have a regulated financial market.

In short, the stuff he is talking about is stuff he's read about in books.

McArdle, same deal.

I think the question of whether, and how, to keep the domestic auto industry afloat is a good one. But folks who consider putting 3 million people out of work to satisfy their theory of how the economy should work can kiss my @ss.

The dude should go get himself a real job and quit trying to tell anybody else about the demands of "harsh reality".

Thanks -

"Had publius included in her post a disclaimer stating clearly she"

What do you know that we don't know?

Turbulence, I'm not as comfortable as you are that the world will remain peaceful, although I certainly hope it does. But you've convinced me - there is no dire scenario imminent enough to worry about. It's fine to export all of our industries and jobs. There will always be jobs for lawyers, doctors, nursing home workers and funeral directors. We'll be able to "retrain" Detroit's workers in their choice of those fields.

Publious: "db - the argument isn't that he's writing in bad faith. i'm certain he actually believes what he's writing. and i also agree 100% that there are good arguments against a bailout -- no dispute there."

In terms of bad faith, I find espousers of Glibonomics 101 to no longer be assumed to be innocent. We now live in a world where Wall Street has crashed and burned.

"The unions are too strong. We can't compete with European and Asian labor."

You are, I hope, aware that European labor unions make our look weak and pitiful?

Re: my post on the sheer hatred towards autoworkers.

"You haven't been reading the right blogs. Take a trip through the comments section at calculatedrisk some time, and you'll find plenty of "put 'em up against the wall and shoot 'em" hatred for the Wall St. bailout, and from multiple points of the political spectrum, too."

Posted by: ThatLeftTurnInABQ |

I see Calculated Risk as a center-left blog; the commenters there (the several threads I read) were not that right-wing.

@russell 5:40pm

Yup, yup, yup. The only part you didn't get right is this:

Plague, total war, or the sinking of a continent into the ocean are all worse.

Actually continents can't sink into the ocean - they are lower in density and hence more buoyant than oceanic crust. Subducted beneath another continent perhaps, but not sunk into the ocean. Too bad, since Atlantis was one of my favorite myths, too.

But I'll give you plague and total war. 2 out of 3 ain't bad.

@mythago 6:26pm:

You are, I hope, aware that European labor unions make our look weak and pitiful?

Sorry, I guess I didn't lay the sarcasm and irony on thick enough.

I see Calculated Risk as a center-left blog; the commenters there (the several threads I read) were not that right-wing.

I'd say that center left opinion is well represented there but so are libertarians of various stripes, including some right of center libertarians. See for example frequent commentor Nemo, who is the author of an interesting blog in its own right: self-evident.org/, and who is highly critical of any possible bailout for Detroit and not sounding like much of an Obama fan lately.

There are a fair number of Mellon-esque liquidationists, which I'd say it is fair to characterize as a right of center position.

No real fascists though.

Actually continents can't sink into the ocean - they are lower in density and hence more buoyant than oceanic crust.

Of course, you are correct.

Sorry, my bad! :)

Thanks -

Detroit autoworkers deserve absolutely no sympathy. For decades the vampires at the UAW sucked the blood of the Big Three, who foolishly trusted their assurances that they would only take small bites and that the government would provide transfusions as necessary. Now that they have sucked them dry, they deserve whatever is coming to them. Their last straw was to put their money into electing the extreme leftist Obama regime. It will do them no good. God will not be mocked: He has promised the evildoers plague, famine and death and He will keep His Word.

I didn't realize God had taken a position on labor unions. Must be one of those lesser-known passages from the Bible.

I would be interested in hearing a response from bailout supporters to the objections raised by von at 9:07 and OCSteve at 9:21.

I would be interested in hearing a response from bailout supporters to the objections raised by von at 9:07 and OCSteve at 9:21.

I'm not specifically a bailout supporter, so I won't really "respond" to von or OC's questions.

I will make an observation about OC's comments concerning his family in NC. I'm not sure exactly how it relates to the question at hand, it's just an observation.

The textile industry originally moved to NC as a way of cutting labor cost. Textiles used to be up here in New England. They had to pay us too much, so they closed up shop and moved south.

Follow any major river through New England and you'll travel through a series of mill towns that are either decrepit and have been for a couple of generations, or which repurposed the mills as condos or space for offices or light manufacturing.

Ditto for furniture. And that's also an industry that is now leaving the south and moving offshore. The annual furniture show in High Point will be in Vegas soon, because that's closer to the Asian countries where the stuff is actually made now.

I don't know what we should do about US auto. I think they've made efforts to bring their game up, and if they can get through the next few years, they might do well.

I also think a lot of the pain they're feeling is of their own making, and a lot is not. If nobody can get a car loan, nobody buys a car.

I also think that just letting the whole industry go to hell will be an incredible waste of infrastructure and manufacturing capacity.

So, IMVHO, we should do *something*. The way you pick what to do is put all the options on the table, run the numbers, and see what looks best. It won't be clear cut, we'll have to trade one thing off for another.

But wistfully sighing "Alas, it must be so" while literally millions of people lose their jobs is, I surely hope, a position that deserves to be dismissed out of hand.

Thanks -

Another analysis of an economic problem that is almost devoid of any financial analysis. It astonishes me that people feel qualified to express opinions without displaying any of the disciplines that would qualify those opinions.

I live in Cleveland, so I'm getting a real kick out of these replies...

No, really. Anyone who thinks that we can let the Big 3 sink and then the market will fill in the blanks should visit northeast Ohio sometime.

"It astonishes me that people feel qualified to express opinions without displaying any of the disciplines that would qualify those opinions."

I think that constantly about innumerable blog comments, and posts. If you don't have a well-informed opinion, my advice to people in general is STFU.

(testing a theory about how to flush comments; pleas ignore)

OCSteve: "It’s the union leaders knocking down $200k per year and funneling the dues to Democrats. And the folks I know will readily admit that they don’t deserve the total (average) pay and benefits package of $75/hour for the work that they do."

I think that this proves my point - not only are upper management (for whom $200K is small change) not mentioned, but Wall St executives were pulling down 100 to 1,000 times that, for performance which we now know is fraudulent. And the Wall St meltdown is clearly rolling through the economy, causing vast damages.

But I don't see too many right-wingers demanding clawbacks and removal of Wall St upper management.

Russell: "McArdle, same deal."

No, Megan actually did work in the business world (according to various statements she has made), where she was a total failure. Despite having an MBA from one of the top 10 programs in the f-ing entire world.

Then she found out that being a propagandist for The Market was about the only thing that she could do for a living.

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