Should Detroit receive a bailout?

[Mr Skeptic]

I feel the same way, but since I heard it I've wondered if it was just my general, long-held distrust of the mega-corporation concept or not. It makes a lot of sense to keep corporations manageable so it doesn't topple everything if one should be allowed to fail.

 

I've seen how powerful and overwhelming some of these giants have become, especially when they were given the power to own the media that supposedly informs us. I just don't trust them with that kind of power so I was a bit worried that my bias was making the "too big to exist" concept too easy to swallow. These things are rarely fixed with simple maxims, unfortunately.

 

No, it seems very reasonable what you said. There aren't supposed to be any companies that are too big to fail. Why? If a company knew that it was too big to fail, it would go for the more risky, profitable business, since if it were to fail we would bail them out. Thus, any risk they have is placed on the public instead of on the company. No good can come of that.

 

There's no such thing... there is no corporation that is too big to fail,

 

No? Perhaps there is none now, but it is easy to imagine a corporation that is too big to fail. For example if a corporation single-handedly controlled half of the world market. It is not so much that such a corporation cannot fail, rather that the effects of them failing might be so bad that it is better to prop them up, at least for a while.

 

nor should government be in the business of breaking up corporations that are perceived as too big.

 

What is the alternative? You can't just imagine them out of existence. The free market model assumes that there are infinite businesses and no monopolies, so don't go saying the free market will fix it.

 

I don't buy into the whole 'anti-trust' fallacy either. If corporations are big and are able to operate efficiently, then consumers benefit from lower prices (and there's no need for them to be broken up). If a corporation is too big to operate efficiently, it'll collapse under it's own weight and get eaten up by competitors. This is a good market corrective force and should be allowed to happen.

 

For someone who is so fond of free market ideas, you seem surprisingly ignorant about its failings. The reason that monopolies, even "efficient" ones, are bad, is because they get to set prices, and their goal is to maximize profits. Therefore, they raise prices to the point that their profit is maximized. Rather than going with razor-thin margins, they increase the profit margin until they start to loose money. So what if the poor people can't afford it? They would happily double their profit margins if it meant that 1/3 of their customers could no longer afford the product, since that way they would make more profit. (This is for a pure monopoly; a monopoly with some competition behaves a little better to avoid losing market share.)

[Phi for All]

No, it seems very reasonable what you said.

Thanks for that.

There aren't supposed to be any companies that are too big to fail. Why? If a company knew that it was too big to fail, it would go for the more risky, profitable business, since if it were to fail we would bail them out. Thus, any risk they have is placed on the public instead of on the company. No good can come of that.

Exactly. And I think these mega-corps are savvy enough to see this, profit-driven enough to exploit it, and powerful enough to sway the government and the people into believing they can't be allowed to fail. Do you believe they *aren't* pushing the stories about how many millions will lose their jobs if the bailout doesn't happen?

 

As Pangloss mentioned, if you're Honda or BMW or Toyota, the companies that have supplied the best quality most cost-effectively in completely domestic facilities, and seem to put their customers a few rungs above where the US auto makers put them, you've got to be wondering why you aren't more highly thought of. And whether it's worth trying to compete in a market that's stacked against you for some reason.

[ecoli]

No? Perhaps there is none now, but it is easy to imagine a corporation that is too big to fail. For example if a corporation single-handedly controlled half of the world market. It is not so much that such a corporation cannot fail, rather that the effects of them failing might be so bad that it is better to prop them up, at least for a while.

I contend that propping up this business would cause far more long term problems... the economy can stabilize from a big corporation failing, but expanding the credit base/inflating the currency to prop us businesses just produces worse bubbles later on.

 

If a corporation operates efficiently enough to (somehow) take control over half the world market, and then magically becomes inefficient at some point, that corporation SHOULD fail, and it's not benefiting consumers or employers to prop up this business. Consumers won't be getting quality goods at low prices.

 

 

What is the alternative? You can't just imagine them out of existence. The free market model assumes that there are infinite businesses and no monopolies, so don't go saying the free market will fix it.

The free market model doesn't assume infinte businesses/no monopolies. It predicts (accurately) that any business that becomes too large and inefficient will fail and be replaced by more competitive/efficient businesses. This is to the benefit of economic growth for the obvious reasons.

 

 

For someone who is so fond of free market ideas, you seem surprisingly ignorant about its failings. The reason that monopolies, even "efficient" ones, are bad, is because they get to set prices, and their goal is to maximize profits. Therefore, they raise prices to the point that their profit is maximized. Rather than going with razor-thin margins, they increase the profit margin until they start to loose money. So what if the poor people can't afford it? They would happily double their profit margins if it meant that 1/3 of their customers could no longer afford the product, since that way they would make more profit. (This is for a pure monopoly; a monopoly with some competition behaves a little better to avoid losing market share.)

 

I'm not ignorant of this... but the free market models predict that this type of monopoly cannot exist (and I can't think of an example of this ever happening in a free market model...) as long as entrepreneurs are free to enter the market.

 

Even Monopolies cannot set any price they want, because there are always alternatives (even if it's going without). In reality, if one company increases their profit margin by supplying only 1/3 the population, a competitor will always see the other 2/3 as a great potential revenue source. This is how luxury items become common place (cars and computers) -> through free market competition, not government price controls or breaking up monopolies.

 

The goal of any business is the increase profit margins, yes, but if a hypothetical monopoly were to increase the profit margin by sacrificing it's consumer base (by jacking up prices) there will always be another choice for those consumers. That may mean not having the desired product for a while, but only until another entrepreneur steps in (which may accept a lower profit margin to compete against the established monopoly).

 

The free market model assumes that there will be competition, if anyone is allowed to enter the market. If some monopoly is able to "outcompete" all the other players, then it's because that business can offer products efficiently at prices which is acceptable to consumers. If that monopoly is able to continue to offer acceptable prices to consumers (while keeping it's profit margin high) then there is no problem, because consumers will not need to seek alternatives (a benign monopoly).

 

Monopolies cannot exist in a market, however, when consumers have cheaper alternatives to turn to... the new business will be able to undercut the competition by providing lower prices on higher quality goods. This is what happens in reality (as you have noted). This makes anti-monopoly legislation meaningless. If government breaks up an efficient monopoly, it hurts consumers who benefit from the low prices the monopoly has to offer (esp. if the broken monopoly operates less efficiently b/c of the break up). There's no need to for government to break up inefficient monopolies, because these will break up on their own due to more efficient competition entering the market. So really, the only job for government is to make sure businesses in the market don't physically/illegal threaten other entrepreneurs from entering the market.

 

Government isn't doing consumers any favors by propping up these businesses... it ensures an inefficient business survives and more efficient competitors (which would normally offer lower prices and more employment opportunities for laid off employees) get outcompeted from the subsidized businesses.

 

We propping up these businesses which the market has rejected, at an oppurtunity cost of long-term growth.

 

As Pangloss mentioned, if you're Honda or BMW or Toyota, the companies that have supplied the best quality most cost-effectively in completely domestic facilities, and seem to put their customers a few rungs above where the US auto makers put them, you've got to be wondering why you aren't more highly thought of. And whether it's worth trying to compete in a market that's stacked against you for some reason.

this is one point that I made in the above... Government fiddles with the market, and less efficient businesses survive (whether this is breaking up or propping up monopolies, contrary to market corrections). This doesn't help consumers, who want lower prices, it doesn't help create longterm employment opportunities (b/c the businesses might go ahead and fail anyway) and it's just a waste of tax payer dollars.

 

Creating inflation to prop up these businesses doesn't help create long term economic growth either, because that just encourages further malinvestment, creating harsher business cycles.

Edited December 1, 2008 by ecoli
multiple post merged

[Mr Skeptic]

as long as entrepreneurs are free to enter the market.

 

The trouble is that that is not always true. There are some businesses with huge startup costs, market inertia, deals with retailers, and anti-competitive behavior from established monopolies. We do need the government to prevent anti-competitive behavior (eg when retailers are bribed not to carry a competitor's products, which is how you get for example Coke only or Pepsi only restaurants). Another example is how Microsoft tries to cram the crappy Windows Media Player down our throats.

 

Even Monopolies cannot set any price they want, because there are always alternatives (even if it's going without).

 

If they have a complete monopoly they can. But of course, there is no guarantee that the consumers will buy the product at the price they set. They will stop raising the profit margins when it costs them too many customers, because at some point increasing the profit margin would reduce their profits.

 

In reality, if one company increases their profit margin by supplying only 1/3 the population, a competitor will always see the other 2/3 as a great potential revenue source.

 

In the example I gave, the monopoly was supplying 2/3 of the consumers, not 1/3. It would have to more than triple the profit margins if that would reduce them to 1/3 of their customers.

 

The goal of any business is the increase profit margins,

 

No, the goal of the business is to increase profits, not profit margins.

[npts2020]

My bet is that we don't get the almost 30 years from any current bailout of Detroit that we got from the last car manufacturer bailout (Chrysler in 1979) before it is having to be done all over again.

[Phi for All]

I agree that these businesses should fail if they can't manage themselves properly. As long as worker's pensions are safe, some unemployment can be tolerated. Smaller corporations will be formed and employment will rise again.

 

But I still contend that the free market model can't function properly when corporations get so big they can affect regulations through their lobbyists *and* influence public perception with their media ownership. The right to petition is unfairly augmented when a corporation has that much leverage. It is certainly the fault of the citizens that they don't exercise their right to petition more than the PACs and lobbyists, but what chance do we stand against the kind of spin and clout that can be brought to bear by a huge conglomerate driven only by becoming even bigger?

[ecoli]

The trouble is that that is not always true. There are some businesses with huge startup costs, market inertia, deals with retailers, and anti-competitive behavior from established monopolies. We do need the government to prevent anti-competitive behavior (eg when retailers are bribed not to carry a competitor's products, which is how you get for example Coke only or Pepsi only restaurants). Another example is how Microsoft tries to cram the crappy Windows Media Player down our throats

 

I honestly think we're splitting hairs in this particular debate, and I have homework to do, so I'm not going to drag this out any longer than its gone already.

 

I think we're going to just have to agree to disagree here. I still contend that monopoly-like behaviors are not bad, because they will survive only if they're beneficial to consumers, regardless of the realities of start up costs and initial capital investments. These things slow down entrepreneurial entrance into the market, but they don't prevent it.

 

At any rate, I do understand and respect your position. I think we'll need better economic theories to settle this kind of debate though, but that's not my job

 

But I still contend that the free market model can't function properly when corporations get so big they can affect regulations through their lobbyists *and* influence public perception with their media ownership. The right to petition is unfairly augmented when a corporation has that much leverage. It is certainly the fault of the citizens that they don't exercise their right to petition more than the PACs and lobbyists, but what chance do we stand against the kind of spin and clout that can be brought to bear by a huge conglomerate driven only by becoming even bigger?

Well this sort of thing didn't work out long term for the auto industry, did it? I think lobbying will only take you so far, because there is still other competition out there.

 

Government bailouts, therefore, serve to make businesses that can't stand up on their own less competitive, not moreso.

 

And, as long as we're on the subject of employee pensions, to what extend do you think that expensive pension plans for employees lead to these corporations failing? I'm thinking it probably contributed, but I think that answer is too easy. The american automakers overestimation for American's thirst for gas guzzling SUVs (accompanied by lobbying Washington to let them do this). Was this an example of washington doing too much, too little or is it unrelated?

Edited December 2, 2008 by ecoli
multiple post merged

[Phi for All]

And, as long as we're on the subject of employee pensions, to what extend do you think that expensive pension plans for employees lead to these corporations failing?

Definitely part of the problem, but as you say it's not the simple answer. The labor unions were the inspiration for PACs and the type of lobbying we see in DC today.

 

I think too many old policies are colliding with new processes and the ambivalence of the convenience-minded public is allowing too many profit driven managers free reign when it comes to business practices. Changes are happening too rapidly for huge corporations to cope with. Lets let them fail and see what innovative new models can do for us.

[npts2020]

Definitely part of the problem, but as you say it's not the simple answer. The labor unions were the inspiration for PACs and the type of lobbying we see in DC today.

 

I think too many old policies are colliding with new processes and the ambivalence of the convenience-minded public is allowing too many profit driven managers free reign when it comes to business practices. Changes are happening too rapidly for huge corporations to cope with. Lets let them fail and see what innovative new models can do for us.

 

Well, labor unions are only a response to the original problem of corporations screwing the little guy to the maximum possible extent and if they are the problem, then there is something intrinsically wrong with the way businesses relate to their employees. (this is only a generalization of large, especially in modern times, multinational corporations) IMO the government should have guidelines for acceptable corporate behavior which could even be optional but required for certification of your product by the government to avoid carrying a label explaining why it isn't. Included could be binding third party arbitration for labor disputes, acceptable minimal wage and pay disparity from top to bottom, safety rules, environmental guidelines, etc.....that is a whole other discussion, however.

[jackson33]

Well, labor unions are only a response to the original problem of corporations screwing the little guy to the maximum possible extent and if they are the problem, then there is something intrinsically wrong with the way businesses relate to their employees. (this is only a generalization of large, especially in modern times, multinational corporations) IMO the government should have guidelines for acceptable corporate behavior which could even be optional but required for certification of your product by the government to avoid carrying a label explaining why it isn't. Included could be binding third party arbitration for labor disputes, acceptable minimal wage and pay disparity from top to bottom, safety rules, environmental guidelines, etc.....that is a whole other discussion, however.

 

So if you save a few dollars, open some (7-11) type corner grocery, you want government to set the pay scale, tell you then what you can earn, probably what percentage of profit allowable. Your money and your ideas are 100% at risk, government risking nothing and your employees I hope you think should be your choice, could very well be the single factor in going broke.

 

How can any person, especially in Government, possibly understand the differences for 'required minimal wage in one much less one States to another, but one town to another. If you make it universal, that little store in LA, where cost of living is five times higher than Hutto, Texas would receive the same wage and that Hutto business would be gone with the first pay check.

[ecoli]

Well, labor unions are only a response to the original problem of corporations screwing the little guy to the maximum possible extent and if they are the problem, then there is something intrinsically wrong with the way businesses relate to their employees. (this is only a generalization of large, especially in modern times, multinational corporations) IMO the government should have guidelines for acceptable corporate behavior which could even be optional but required for certification of your product by the government to avoid carrying a label explaining why it isn't. Included could be binding third party arbitration for labor disputes, acceptable minimal wage and pay disparity from top to bottom, safety rules, environmental guidelines, etc.....that is a whole other discussion, however.

In addition to what Jackson33 says... how come pensions aren't a problem from other companies (including the japanese automakers) which (I assume) don't treat their laborers like crap, but still make efficient products?

 

In other words, do employees really need expensive pensions? Why can't they save their own money in private retirement accounts like everyone else?

[npts2020]

So if you save a few dollars, open some (7-11) type corner grocery, you want government to set the pay scale, tell you then what you can earn, probably what percentage of profit allowable. Your money and your ideas are 100% at risk, government risking nothing and your employees I hope you think should be your choice, could very well be the single factor in going broke.

 

How can any person, especially in Government, possibly understand the differences for 'required minimal wage in one much less one States to another, but one town to another. If you make it universal, that little store in LA, where cost of living is five times higher than Hutto, Texas would receive the same wage and that Hutto business would be gone with the first pay check.

 

Unfortunately it IS more expensive on some levels to do things in an ethical manner. It costs more to pay for my trash to be hauled away than if I were to toss it out of the car window on a road somewhere. Likewise it costs more to pay employees a reasonable living wage rather than pay as little as you can get away with and let someone else worry about any negative consequences. I completely disagree with your notion that nobody can possibly understand what a "required minimal wage" is, which also implies that no attempt should be made to do so. As much logical reasoning as I have seen you bring to bear on this forum, I find such an attitude astounding in that you should know as well as anyone here that few solutions will be perfect, anyway. As stated previously, it is just my opinion that some attempt at defining acceptable business practices should be made.

 

In addition to what Jackson33 says... how come pensions aren't a problem from other companies (including the japanese automakers) which (I assume) don't treat their laborers like crap, but still make efficient products?

 

In other words, do employees really need expensive pensions? Why can't they save their own money in private retirement accounts like everyone else?

 

To begin with, most of the other auto companies haven't been operating in America long enough to have large numbers of retired employees. Secondly, they built factories in relatively depressed areas of the country where wages are much lower. Thirdly, unions have been ruthlessly kept out by any means possible, reducing any ability the workers have for bargaining for themselves.

 

Finally, why even allow retirement if nobody is going to pay for it anyway?

[john5746]

http://bigthreeauto.procon.org/

 

This is a supposedly non-partisan website devoted to this question. Not sure if anyone has mentioned it yet. Looks like it has been done in a short time, so the site may not function well.

[CaptainPanic]

In addition to what Jackson33 says... how come pensions aren't a problem from other companies (including the japanese automakers) which (I assume) don't treat their laborers like crap, but still make efficient products?

 

In other words, do employees really need expensive pensions? Why can't they save their own money in private retirement accounts like everyone else?

 

In a simplified representation of reality (call it a model), there are 2 systems:

 

1. Companies pay less salary, but keep some apart for a pension

2. Companies pay more salary, employee is responsible for his own pension

 

In both cases, the amount of money spent on employees is should be similar.

 

However, what has happened in many (too many) cases is that the companies that kept the money that was intended for a pension have lost that money in some way (credit crunch or sometimes they've just invested it into the company again). Now new funds have to be found for pensions. That is not something you should blame on the pensioners!

 

I'm probably talking about the general case, while ecoli must be talking about the ridiculous situations in the US car industry. By now I have learned that those car companies basically deserve to go bankrupt, whether due to bad management, bad unions, bad products or the credit crunch... I don't know. But they're no healthy industry.

[jackson33]

Unfortunately it IS more expensive on some levels to do things in an ethical manner. It costs more to pay for my trash to be hauled away than if I were to toss it out of the car window on a road somewhere. Likewise it costs more to pay employees a reasonable living wage rather than pay as little as you can get away with and let someone else worry about any negative consequences. I completely disagree with your notion that nobody can possibly understand what a "required minimal wage" is, which also implies that no attempt should be made to do so. As much logical reasoning as I have seen you bring to bear on this forum, I find such an attitude astounding in that you should know as well as anyone here that few solutions will be perfect, anyway. As stated previously, it is just my opinion that some attempt at defining acceptable business practices should be made.

 

To begin with, most of the other auto companies haven't been operating in America long enough to have large numbers of retired employees. Secondly, they built factories in relatively depressed areas of the country where wages are much lower. Thirdly, unions have been ruthlessly kept out by any means possible, reducing any ability the workers have for bargaining for themselves.

 

Finally, why even allow retirement if nobody is going to pay for it anyway?

 

Acceptable business practice is set by the people who chose to work for that operation. I wouldn't disagree with workers in any operation, having a spokesperson for them, with managements approval, to talk over issues as needed.

 

As for throwing trash out your window, long before government intervention, folks decided it just looked bad and changed their attitude. Business people, over the years have changed many policy to encourage longevity with some company and protect the investments in their employees.

 

You are correct, the Foreign Auto Makers didn't bother to build vehicles in the US (always could have) until our labor laws and their home country laws equalized the cost. It was simply cheaper to build outside the US labor jurisdiction, pay the tariffs/shipping cost and maintain a nice profit margin.

As States made Union affiliation a choice, shipping cost increased and incentives of many communities became the rule, they moved to where the markets actually existed.

 

Minimum wage, set by the Federal, is simply a minimum in the first place. I see no reason, why they exist in the first place or many laws that restrict entry level into any type business. States, if they wish to discourage hiring the young or inexperienced folks, can set any limit they want, but here again as a minimum. Many companies, farms or folks just wanting to get around these laws, can very easily offer piece work wages, voiding those minimal wage laws.

 

GM/Ford/Chrysler and other long gone US Auto Makers (about a thousand) have/had worked with Unions for years. Do you understand that in ALL cases, it has been Management that negotiated with Unions for perks/wages/conditions and so on, which in the end THEIR pay/perks and so on ALSO increased. The Boards of Directors and Stock Holders (investors) who are the owners in any publicly traded company, have been left out of this process and much of the current problem.

 

Having said all this; I do favor the current 'bailout' programs but for entirely different reasons than have been suggested. Unions are not going to give in much and the retiree's are not going to accept cuts demanded by government or are their communities going to be able to absorb the loss. I also am concerned about the perception of buying a 20-50k dollars item from a company under any chapter of bankruptcy, when nearly the same vehicle can be bought from a profitable firm. Lastly, its my opinion, many of the mandates made on this one industry, by government in the first place and over many years have added to the current problems. Autos sold in California have to have this and if sold in Florida have to have that and so on into what the Federal has demanded...

 

In a simplified representation of reality (call it a model), there are 2 systems:

 

1. Companies pay less salary, but keep some apart for a pension

2. Companies pay more salary, employee is responsible for his own pension

 

In both cases, the amount of money spent on employees is should be similar.

 

However, what has happened in many (too many) cases is that the companies that kept the money that was intended for a pension have lost that money in some way (credit crunch or sometimes they've just invested it into the company again). Now new funds have to be found for pensions. That is not something you should blame on the pensioners!

 

I'm probably talking about the general case, while ecoli must be talking about the ridiculous situations in the US car industry. By now I have learned that those car companies basically deserve to go bankrupt, whether due to bad management, bad unions, bad products or the credit crunch... I don't know. But they're no healthy industry.

 

Its not just the Auto Industry, but was in the many other industry now long gone or currently effecting others. Government Employees and Teachers Unions the obvious. It boils down to a pyramid scheme mentality to satisfy the few for the detriment of the majority. Could add Social Security, Medicaid, Medicare and some forms of Welfare, where inevitably more is required to cover each generation and the society populations have stagnated or decreased.

 

An additional stumbling block has been average life expectancy and if you have noticed the cost of medical care. Their are a good many people in this country, that are now receiving twice (possibly more) their working Career wages, having aged medical expense averages 10-20 times what was when they worked. IMO it was as SS has become, a means to uneducate the public on PERSONAL RESPONSIBILITY, depend on Government. Guess what, time is running out and in 20/30 years, in some manner 2 working people will be supporting another person in every aspect of life. NO, employer has ever figured these kinds of problems, when hiring a person, however the wage/benefits broke down.

[npts2020]

Jackson33: So I take it that you feel that those being beaten and shot at by Pinkerton thugs a century ago or working under the conditions at a meat packing plant as described by Upton Sinclair in "The Jungle" were at fault for their own predicaments and the Peabody's, Carnegie's, and Harriman's of the day are blameless?

[CaptainPanic]

I found a nice article in which Michael Moore suggests that in stead of spending 34 billion dollars to bail out the car industry, the US government can also buy the entire car industry and hire a "transportation genius" to run the companies and ... well... read for yourself:

 

1. Transporting Americans is and should be one of the most important functions our government must address. And because we are facing a massive economic, energy, and environmental crisis, the new president and Congress must do what Franklin Roosevelt did when he was faced with a crisis (and ordered the auto industry to stop building cars and instead build tanks and planes): The Big 3 [3 largest car companies] are, from this point forward, to build only cars that are not primarily dependent on oil and, more important, to build trains, buses, subways, and light rail (a corresponding public works project across the country will build the rail lines and tracks). This will not only save jobs, but create millions of new ones.

 

2. You could buy all the common shares of stock in General Motors for less than $3 billion. Why should we give GM $18 billion or $25 billion or anything? Take the money and buy the company! (You're going to demand collateral anyway if you give them the "loan," and because we know they will default on that loan, you're going to own the company in the end as it is. So why wait? Just buy them out now.)

 

3. None of us want government officials running a car company, but there are some very smart transportation geniuses who could be hired to do this. We need a Marshall Plan to switch us off oil-dependent vehicles and get us into the 21st century.

Source: http://www1.thedailybeast.com/blogs-and-stories/2008-12-03/lets-buy-the-big-three/2/ (article is longer than the quoted text).

 

I sure hope that the US is going for some Marshall plan. Too long have they delayed progress.

[Phi for All]

Ooooh, maglev trains. This is the 21st century, after all. Elevated maglev train systems are available now.

[ParanoiA]

Artificially propping up autos that people don't want is no business solution. That's even more ridiculous than the apathy that probably got these companies in this mess to begin with.

 

The demand is there for alternative fuel driven cars, get out of the way and let the market answer the demand. You'll get far more diversity and enginuity by letting capitalism work. Part of that is letting these companies fail, mind you. But no, we're going to artificially reward them for their poor performance and failure to answer the demand from the market (which is for alternative fuels) by bailing them out and then repeating the same mistake and forcing them to behave a certain way - STILL not pandering to the market like they should.

 

I don't give a rat's ass what the government wants them to build. And that's not how capitalism works. Let them compete and fight for my business and meet MY standards - the market's standards, which could very well be far more demanding than the piddly requirements government comes up with.

 

Look at Tesla motors and the Zap cars. Those aren't "hybrids" - which STILL use fossil fuels, just "trimmed back". Gee...way to set the bar. These opportunistic companies are going for 100% electric - no hybrid, no slow phase out of gas guzzlers over a 10 year period or some nonsense. No "public transportation" solution that asks the public to sacrifice their lifestyles for the collective.

 

That's how adventurous profiteers approach things, the american way. Let the big three fail, fend for themselves, get bought out by some other company and be forced to reconcile their product to market demand. Allow it to work and enjoy watching the industry change on its own. It's not the end of the world people. We're not going to be without cars anymore if we don't bail them out. Our precious empire is not going to fall because automobile businesses screwed up.

[npts2020]

We could buy all of the former Big 3 for less than $34 billion and have them build our automated national personal transit system. This way we would at least get something for our money. What I want to know, is why aren't the financial institutions, who just recieved hundreds of billions of dollars, "loaning" detroit the money?

 

ParanoiA: The market will never adequately address the transportation needs of this country on its own. Look where we are now, trying to run 20th century machines on roadways basically designed for pedestrians and draft animals. We have for decades needed to put those machines on their own grid, the interstate system in America, autobahn in Deutcshland, etc. are attempts to do this, of debateable effectiveness. In America over 40,000 people die on the roads every year because of this situation. If we enclosed the roadways and automated them, there is no reason the vehicles couldn't safely travel at 350 kph or more. The way the car manufacturers are trying to automate is the more difficult way of doing it i.e. each vehicle responsible for all of its own navigation and control rather than a central computer controlling all vehicles. The centralized control has only recently become feasible because of computer limitations. Now we have powerful enough processors to enable the kind of control required, the only thing not yet done is writing the algorithms required and testing and debugging them. The problem is that there is unlikely to ever be a private entity large enough to undertake such a project. We should buy the automakers, merge management, consolidate, and form them into a single government owned utility to build and operate the new system. At least that way we would have a chance at getting something for our money.

[john5746]

Look at Tesla motors and the Zap cars. Those aren't "hybrids" - which STILL use fossil fuels, just "trimmed back". Gee...way to set the bar. These opportunistic companies are going for 100% electric - no hybrid, no slow phase out of gas guzzlers over a 10 year period or some nonsense. No "public transportation" solution that asks the public to sacrifice their lifestyles for the collective.

 

People will continue to buy Toyota, just like they continue to buy Microsoft. GM tried to hit a home run with an all electric vehicle, while Toyota continued with base hits. People will not switch to all electric until it is cost effective, convenient, reliable and safe. I don't see a private start-up having any chance.

 

 

That's how adventurous profiteers approach things, the american way. Let the big three fail, fend for themselves, get bought out by some other company and be forced to reconcile their product to market demand. Allow it to work and enjoy watching the industry change on its own. It's not the end of the world people. We're not going to be without cars anymore if we don't bail them out. Our precious empire is not going to fall because automobile businesses screwed up.

 

It's the beginning of the end of America as a manufacturing powerhouse, IMO. Many have been perplexed at the willingness of people to disregard the importance of manufacturing to a nation's wealth. The claim has been that the consumer gets cheaper goods - yet they just buy more and save less. Letting them go bankrupt probably is the best long term solution - but only if it results in saving our manufacturing base. Incentives to buy American would help smooth things, instead of bread lines.

[ParanoiA]

ParanoiA: The market will never adequately address the transportation needs of this country on its own....

 

I think you're wrong. A centralized system sounds synchronous and archaic. Autonomy is the grail, analogous with demanding zero polutant fuel solutions. Insisting on centralized grid systems is incredibly expensive, not very imaginative, and doesn't allow the evolution of autonomous travel. Every inch of every possible surface has to be processed in order to enable navigation over it. Building vehicles with their own navigation systems that do not depend on expensive infrastructures that inhibit change with their inherent permanence, is the way to go.

 

Just like humans. We can navigate over any surface our limbs will allow, without worry about whether or not we've recorded it in our database, without worry about whether or not the local router will enable us to walk over it - we're autonomous. A freakin disaster could happen and we can freely figure out how to work our way around it - but if I'm dependent on a central hub, a central control, then I'm eliminated from initiative and corrective risk.

 

No, that's not the future. I demand better. So does most of the market and that's why they're doing it that way. Centralized infrastructure has a static nature, and any break through technology becomes worthless when the expense for that archaic infrastructure precludes the will to advance.

 

Autonomous navigation provides the dynamics necessary to evolve and advance since nothing is built permanent. Next up: elimination of roads and highways, yet another infrastructure expense that restricts the evolution of advanced transportation. Keeps us building things with wheels, that roll. Gee, how long are we going to keep on milking this "wheel" invention anyway...?

 

People will continue to buy Toyota, just like they continue to buy Microsoft. GM tried to hit a home run with an all electric vehicle, while Toyota continued with base hits. People will not switch to all electric until it is cost effective, convenient, reliable and safe. I don't see a private start-up having any chance.

 

And Toyota has been rewarded by the public as "responsible". Nothing you've said here translates to americans wanting what you're selling when you force the big three to build "green" cars. The people have to want it - it's that simple. Making them want it doesn't seem realistic. You can't change nature and people are going to demand the things you outlined above, and I can't come up with a single reason why that's bad.

 

I think start-ups have a chance. For one, they don't have that previous investment in manufacturing infrastructure that locks in the nature of design. For two, it's trendy. Look at all the green talk going on nowadays - they have a green channel on cable for crying out loud. Green start ups have their demand, and that's why their putting money behind it now. I don't care how cheap gas is selling, I'm excited about electric and more and more people are jumping on board.

 

It's the beginning of the end of America as a manufacturing powerhouse, IMO. Many have been perplexed at the willingness of people to disregard the importance of manufacturing to a nation's wealth. The claim has been that the consumer gets cheaper goods - yet they just buy more and save less. Letting them go bankrupt probably is the best long term solution - but only if it results in saving our manufacturing base. Incentives to buy American would help smooth things, instead of bread lines.

 

Maybe it's not though. Maybe this new push for alternative fuels, that isn't being answered by the foreigners any more than the big three, is the door the startups need. Maybe we'll see the manufacturing side of our country come back on line. Part of the problem is taxation and over regulation. Once we become a tax haven for manufacturing, we'll get the manufacturing.

 

The global economy is a natural selection economy - they're going to manufacture where it's cheapest to manufacture. So, cheap wages or cheap taxes / regulation? Pick one and we'll see an increase. Pick neither and they'll continue to leave while we pretend as if we're saving the planet by driving climate killers to other countries to kill the climate from a different origination point.

Edited December 5, 2008 by ParanoiA
multiple post merged

[iNow]

Moore raises a good point, though. We can buy all the shares for $3B. Why not do that instead? Seems much smarter, and would allow us more control ta boot.

[ParanoiA]

Because I don't want you to have "control ta boot". You won't make cars I want to buy. And you don't care about pandering to market demand, so by design, your product will fail by some measure to meet my demand. From what I've read here, most seem to want to get into the goverment-automobile business where they make laws to prop up their product. Talk about monopolies - that's worse than ANY monopoly. The potential is there to mandate the sale of your product.

 

Those of you into this "control" stuff seem to place higher interest in your ideals than business pragmatics. What's going on now will pale in comparison to what you do when "green" implementation forges ahead without regard to price. "Hey, we'll just subsidize and get our money that way. We'll pass laws that will make them buy our stuff!"

 

No, I'd rather see innovation and individual enginuity. Much more impressive, and more likely to break through. Diversity, not centralization, in my opinion, is the key.

 

On the other hand, it would be so much fun to watch the debacle. Either way, I'll be happy. Watching them make up excuses for their failing government-auto business, dreaming up reasons for taxes that hide the high price, listening to presidential candidates talk about the kinds of cars they're going to demand next as democrats competing with republicans fabricate complicated laws to create their market share.

[iNow]

Yes, I'd waste all of the money on candy and baseball cards.