Posted by Kromey at 12:59pm May 3 '12I'm mostly asking questions to challenge your assumptions.
I'll grant that my examples are not the greatest -- I just came up with them off the top of my head -- but it nonetheless remains a fact that when companies fall -- even if only by losing market share, rather than completely failing outright, as IBM and Atari show -- others will swoop in to pick up the pieces. It happens all the time, and it's the most fundamental principle of the market and capitalism.
Were GM and Chrysler to fail, a huge ecosystem of supporting businesses would also fail.
Who's making assumptions now? You're assuming that there's all of two possibilities: give them huge wads of free cash, or let them close their doors forever.
That's a false dichotomy.
For starters, bankruptcy law is all but designed to keep a failing company from actually failing -- going through the process allows a company to dramatically restructure itself and frees it from potentially toxic contractual obligations (while still leaving it free to try to retain beneficial ones, or get new ones).
Further, even during their worst periods, all 3 of the Big Three were still selling cars. Take Chrysler for example, since you brought them up: They have at least 4 factories (3 in the US and 1 in Mexico; they may have others, these are just the ones I know about). If they're only selling, say, a third of the cars they need to maintain costs, they could shut down 3 of those to cut their operating expenses to 1/4 and again be profitable! Or in a really tight bind, they could sell off one or more of those factories to another company -- even a foreign one, which would still mean jobs for Americans to work those US factories.
Or, they could cut the salaries and bonuses of their executives -- interesting that that wasn't on the table, no? Why wasn't it? Because the government was there to coddle them and ensure it wasn't necessary! Ditto all of the other cost-cutting measures -- why cut costs when the government is there to swoop in and bail them out, no matter how badly they've fucked up?
Why make good business decisions when the bad ones carry no risk whatsoever and let you pay for that glitzy new gold inlay on your private jet? (Obviously these last two paragraphs are more hyperbole than fact -- just so we're clear that I'm not, in fact, saying that this is exactly how it went down.)
Meanwhile, how many Americans lost their jobs because their companies weren't given ginormous sums of cash? How many mom&pop stores -- supposedly the American Dream -- had to shut their doors forever because the government was too busy propping up obscene executive salaries to help the rest of us out?
You say there are 2-3 million jobs tied to the US auto industry? Putting aside the fact that not all of those would have disappeared had the Big Three not been handed huge wads of cash (for starters, Ford didn't even need it at all, apparently -- something you're conveniently ignoring, it seems), many millions of Americans did lose their jobs despite the government handing out money like it's free candy!
And you know what? Sure, it did hurt, but we've survived. Millions of jobs evaporated into thin air, and yet we're still here. We could have weathered the loss of many millions more without much more hurt to the nation at large, especially if those bailout funds had gone toward unemployment benefits instead, or gone to the people who were actually hurt by the recession instead of helping to line the pockets of the already-super-rich.
I find it hilariously ironic that you will rant about how terrible it is that the rich are so much more rich than the middle class, and yet you staunchly defend handing over huge wads of your tax dollars to some of those very same people!!
Sure, it's good to see a company doing well. But it doesn't validate anything.
I'll grant that my examples are not the greatest -- I just came up with them off the top of my head -- but it nonetheless remains a fact that when companies fall -- even if only by losing market share, rather than completely failing outright, as IBM and Atari show -- others will swoop in to pick up the pieces. It happens all the time, and it's the most fundamental principle of the market and capitalism.
Were GM and Chrysler to fail, a huge ecosystem of supporting businesses would also fail.
Who's making assumptions now? You're assuming that there's all of two possibilities: give them huge wads of free cash, or let them close their doors forever.
That's a false dichotomy.
For starters, bankruptcy law is all but designed to keep a failing company from actually failing -- going through the process allows a company to dramatically restructure itself and frees it from potentially toxic contractual obligations (while still leaving it free to try to retain beneficial ones, or get new ones).
Further, even during their worst periods, all 3 of the Big Three were still selling cars. Take Chrysler for example, since you brought them up: They have at least 4 factories (3 in the US and 1 in Mexico; they may have others, these are just the ones I know about). If they're only selling, say, a third of the cars they need to maintain costs, they could shut down 3 of those to cut their operating expenses to 1/4 and again be profitable! Or in a really tight bind, they could sell off one or more of those factories to another company -- even a foreign one, which would still mean jobs for Americans to work those US factories.
Or, they could cut the salaries and bonuses of their executives -- interesting that that wasn't on the table, no? Why wasn't it? Because the government was there to coddle them and ensure it wasn't necessary! Ditto all of the other cost-cutting measures -- why cut costs when the government is there to swoop in and bail them out, no matter how badly they've fucked up?
Why make good business decisions when the bad ones carry no risk whatsoever and let you pay for that glitzy new gold inlay on your private jet? (Obviously these last two paragraphs are more hyperbole than fact -- just so we're clear that I'm not, in fact, saying that this is exactly how it went down.)
Meanwhile, how many Americans lost their jobs because their companies weren't given ginormous sums of cash? How many mom&pop stores -- supposedly the American Dream -- had to shut their doors forever because the government was too busy propping up obscene executive salaries to help the rest of us out?
You say there are 2-3 million jobs tied to the US auto industry? Putting aside the fact that not all of those would have disappeared had the Big Three not been handed huge wads of cash (for starters, Ford didn't even need it at all, apparently -- something you're conveniently ignoring, it seems), many millions of Americans did lose their jobs despite the government handing out money like it's free candy!
And you know what? Sure, it did hurt, but we've survived. Millions of jobs evaporated into thin air, and yet we're still here. We could have weathered the loss of many millions more without much more hurt to the nation at large, especially if those bailout funds had gone toward unemployment benefits instead, or gone to the people who were actually hurt by the recession instead of helping to line the pockets of the already-super-rich.
I find it hilariously ironic that you will rant about how terrible it is that the rich are so much more rich than the middle class, and yet you staunchly defend handing over huge wads of your tax dollars to some of those very same people!!
Sure, it's good to see a company doing well. But it doesn't validate anything.
I'm making very few assumptions, actually - Kromey