If you think GM deserves to die because of its inept, rapacious, backward-looking management, and their foot-dragging in not raising fuel efficiency standards, you have a point. But there's a lot more to the issue than that. It gets down to this:
- Have we thought through all of the ramifications of what happens if GM goes bust?
- Does any one of us really believe we and/or our families won't be adversely affected if it does?
- Did we actually learn anything from this Presidential campaign?
- Are we smarter than the Republicans?
This diary was inspired by Inky99's diary here: http://www.dailykos.com/... It extends Inky99's epiphany and insight about the Republican's desire to kill the UAW at all costs.
The crisis is obvious and real.
Some suggest, "Let GM die; just take care of the workers". Hmm. The best way to take care of the workers is to let them continue to work. Right now, the Federal government's wiggle room is zip when it comes to extending support to 10 - 12 million people and their families who would lose their jobs if GM goes down. This is right out of the Republican playbook of starving the Federal government of resources needed to implement social assistance programs, then pumping up a crisis that makes the situation even worse. How many times are we going to fall for this?
The cascade effect is obvious. More mortgage defaults. More failing banks (and particularly, locally owned community banks and credit unions, further concentrating the financial industry into fewer hands). Declining tax revenues to states and municipalities for funding schools and workers compensation. Lost county and state sales and use tax revenue for maintaining infrastructure and social programs designed to help people who are out of work. Declining Federal income tax revenues needed to push forward our progressive agenda. Workers would lose their pensions and health insurance, straining health care facilities and social services to the max. More and more local businesses would close as consumption contracts even more.
What would happen to GM's physical infrastructure? Who would buy it? -- or would it rot into the ground like something in a Mad Max movie? There's no credit for buying and retooling. Foreign companies are not much better off than ours in this regard. The whole upper Midwest economy would grind to a halt. Parts of Detroit and other Rust Belt cities might as well be bulldozed over, as Youngstown already has started doing in several of its neighborhoods. Millions of families would suffer.
There would be a domino effect throughout the whole economy. Car dealerships would close. So would after-market parts suppliers and independent service shops as there's no credit for retooling and retraining to service other brands. The stock market will tank even further, and the associated contractions would spin through our economy further and faster than anything we've seen so far. Every one of us would be affected in one way or another.
More of our economy would be dependent on imported vehicles -- assuming anyone could scrape together the money to buy them. Yes, many Japanese carmakers have US plants. And yes, many US cars are made in part or in full in other countries. But, the profits on foreign cars would go to foreign-owned companies and governments, not into our own economy.
The opportunity is more subtle, equally real and, if we do it right, long-lasting.
Does it make more sense to just hand over another part of what's left of our manufacturing capacity, or to try and strengthen it, make it work better, and yield a product built with a sense of conscience? Do we have the capacity broaden our own perspective? On the one hand, the Republicans seem willing to cause suffering to millions just to kill the UAW. On the other hand, many progressives are doing basically the same thing by saying "screw management for their ineptitude". Neither view is complete -- but we're smarter than the Republicans, aren't we?
A carefully structured loan to GM with strict provisions for greater fuel efficiency, retooling for alternative energy vehicles, management salary cuts, bonuses tied to higher sales of fuel-efficient cars and other progressive provisions could, over time, turn this behemoth around and into something credible, something we might even be proud of. There even could be a provision that offers incentives for management and labor to work together, Japanese-style, to produce better vehicles, perhaps with a strong profit-sharing plan that could, in time, be meaningful. The payback for the loan: preferred stock in the company with profits going back into the public coffers, allowing us to fund the kind of humane programs that this country desperately needs.
I'm no fan of John D. Rockefeller, but he had it right when he said, "I always try to turn every disaster into an opportunity." We've gotten through hard times in the past by working together, by being creative, by breaking new ground. President-Elect Obama reminded us how cooperation works far more effectively than division, and we showed this in this recent election. Here's another chance to prove this principle by using it to pressure Congress and auto industry management to repair a significant part of our economy, and help all of the people dependent on it.
What do you think?