Tuesday, November 18, 2008

U. S. Auto Industry - FIXED!

This is tougher than SS.

After all, the US auto industry is older than Social Security, and people unused to any lifestyle other than that of the rich and famous stand to lose with the collapse of the auto industry.

First, go Total Commie. Sit down hard on the Medium Three. Tell the bourgeoisie and the proletariat that until they fix their problems, they all earn the same wage. To bring wage expenditures down to the point where they don't threaten to destabilize the company, industry, and nation, a few janitors might get a raise but everyone else might get a cut. Mandate this for three years. Go ahead, I dare you.

Few employees would be able to afford the very product that they labor to make - this would be good experience, especially for management.

Few employees would be able to afford reasonable health care. Who pays for that? We do! If Hillary Clinton would have had her way in 1993 (and Newt "He's not my president" Gingrich would have been righteously called out as a treasonist), the US auto industry might very well not be in its present predicament (although I won't underestimate such an industry's ability to shit their own bed). What's the number - $1,500 per US car is in health care benefits? This is a major component of our cars' lack of competitiveness with foreign cars.

Few employees would be able to contribute much to the faltering consumer economy. Good - maybe some enterprising individuals will jump right in and lead us out of the Consumer Spending Wasteland created by the faux-conservative neocons in Government until January 20, 2009. As far back as Prop 13 in California - on the surface a populist tax revolt to protect grannies from being property-taxed out of their homes, but in reality a power-and-money grab by Sacramento that led smart localities to replace their manufacturing industry with big-box retailers - as a nation we've been relying on more and more purchases of cheap shiny Chinese trinkets and more and more McJobs created to support the consumerist economy. The grand shining centerpiece of this, presented with bipartisan support, is our current real estate bust, formerly a boom. Perhaps the upper-management class at our car companies doesn't need that second home, perhaps they can drink Two Buck Chuck, perhaps they can keep their American Made care for eleven years instead of trading it in every three years. As the economy rights itself, perhaps more of us could get by with less, and maybe save more and more.

Renegotiate a few mortgages so that the middle-class employees could keep their homes. Make the C-level execs sell theirs and downsize until the economy right-sizes.

Suspend board member compensation.

Suspend stock dividends.

What do these car companies do with their leaner, more stable structures? Build more McEighteenWheelers? The whole SUV thing should never have happened - the tax break for 3-ton vehicles was just plain evil. Going Total Commie means that for the duration, we tell these companies what to build. California got it wrong when they mandated a certain percentage of sales be of electric cars, but not much wrong; you can't dictate what consumers will buy. We can tell the car companies to junk their entire lineup for one that provides a variety of sizes, prices, and luxury levels, but with a few new things in common: they all use half the gasoline, and they all are made of largely recyclable components. We have already pledged $25B to the car companies to help them go in this direction - increase this to a $100B pot to be split evenly between the Medium Three at the end of three years when they have reached this goal. Give them a total, 100% tax write-off for all Research and Development costs. Put a similar pot on the stove for non-Medium-Three entrepreneurs who come up with viable technologies and practices.

What do we get in three years? A viable US auto industry. As many as 1-in-10 of all US jobs would have been stable through the worst time of this economic downturn. Each of the Medium Three will have a viable lineup of cars, and can compete freely with each other, and most importantly with foreign manufacturers. We hopefully will have technology then that is unique to the US, with us having a limited exclusive right to use it and then license it to any foreign manufacturers who want it.

If we do not do something as drastic as this, or if we simply bail them out and keep throwing good money after bad, this economic downturn stands a much better chance of careening from recession to depression.

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