20 February 2009

auto-destruct

i don't own a car. i never have and, considering that it's my preference to live in cities, i don't plan on owning one in the near future.

that said, when the auto industry came begging to government to save them, both in the united states and, more quietly, here in canada, i wasn't entirely averse to propping them up. even if you take the libertarian capitalist view that, if these companies are allowed to collapse, someone will buy up their assets and start a new car company, you need some kind of plan for dealing with the interim real world where millions of people in both the primary and secondary industries will be thrown out of work. basically, the government is going to pay for those people one way or the other, either in the form of auto-industry support or in the form of employment insurance and welfare. by bailing out the car companies, you at least have the chance of getting the money back at some point in the future.

this was supposed to be the week where we found out what the payback plan looked like. this was the week when the automakers were going to reveal their plan to get lean and get serious about reversing the flow of money out their door. and they seem to have got a handle on the first part, however, the plan is decidedly lacking on details about the second half of that equation.

car companies have shown that they are more than capable for planning for cutbacks- that they can strategically eliminate jobs and facilities or curtail benefits to current and previous employees. the problem with that, if you're the one loaning them money (and you are), is that cutting back on expenses doesn't help them pay off their loans. It just means that they're going to take a longer time to go through the money your handing them. in the midst of discussing what concessions workers are and aren't going to agree to, no one seems to be asking what it is that's going to generate the money that will be used to repay the loans their taking out now.

to put this in perspective, picture yourself applying for a bank loan. the person at the bank asks you to tell them your plan for repaying the loan and your answer is "i'm going to move to a cheaper apartment, get rid of my cable and high speed internet and i'm not going to eat take out any more". what are the odds that you're going to get that loan? (actually, to carry this analogy further, the auto industry's ascertain that, in contrast to actual events, americans will just buy more cars than ever and that this will allow them to pay back what they owe would be akin to telling a banker that you intend to repay your personal loan by earning more money and leaving it at that.)

i don't like the idea of putting millions of people out of work. i don't like the idea of shutting down a sector that will throw the economy into more turmoil. i'm looking for work as it is and, to be selfish for a moment, i don't need the competition.

however, what i've seen this week doesn't inspire me to open my taxpayer's purse. we may need an auto industry in north america, but i think we also need a completely different group of people running it.

1 comment:

Michael said...

You've never owned a car? Wow!

I'm sure there can't be Americans who have never owned a car. Unfortunately I live in a city with almost zero public transport and commute into a larger city very not much more than that.

I envy you being in the position where you can get around without a car. I wish I could.

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