I am shocked – shocked! – to learn this morning that $25 billion isn’t enough to bail out Detroit. Basically they are admitting that they are lost causes. I’ve never seen anyone have the gall to ask for public help in the face of such a rapid deterioration in their financial position. Well, unless you count AIG. And Citigroup…
Nevertheless, Saving the American Autoworker will now take $34 billion. And I suppose that if Congress makes them come back in another week it will be $43 billion. This is clearly a bottomless pit, and the more I look at it, the more I think that our choices are either A) to lose two or more of the Big Three, or B) lose two or more of the Big Three after squandering any money that we might conceivably use to deal with the impacts of such a loss.
As we face this downturn/recession/depression/collapse, we have to keep in mind that we could have a significant overall decrease in GDP without any increase in human suffering (unless you count having to fly commercial as suffering, which I don’t, even though it sucks). The main issue is concentration of wealth and power, which has been causing trouble since at least biblical times.
In my last post I was mentioning Louis Kelso, and while I still haven’t gotten the chance to read any of his work, I am intrigued by the way that his ideas were described. In particular, the Fed is in the business of creating wealth, and does this all the time; therefore, it should create wealth for people who actually need wealth (as opposed to those who just want it so they can impress other wealthy people by squandering it in ever-more obscene ways). There would be no need to take existing wealth, but the Fed should stop giving more where it is not needed, and focus its activities where it is needed: building workers’ stakes in their jobs.
If we don’t, there are all sorts of nasty things that could happen. Exhibit A would be the Argentine collapse of 2001, in which there were five presidents in two weeks due to a mass uprising. On the bright side of the Argentine example, we might learn from the wave of worker takeovers that occurred after many factories were abandoned by their absentee owners. As described in the film The Take, the government actually handed over many businesses to the employees if they could produce evidence that the owners had given up (i.e. removal of inventory and machinery).
I am really, seriously, torn here. On the one hand, I think that some level of employee ownership might make a difference in saving Ford. But on the other hand, I’m very worried about what it might mean if the workers got stuck with the really bad investment that is our domestic auto industry. A lot of damage was done when steelworkers got stuck with failing businesses over the past couple of decades. Perhaps a compromise would be to cut our losses and start work now on converting all of the subcontractors for GM and Chrysler into employee owned enterprises, retooled to produce things like solar panels and wind turbines and the green infrastructure that seems to be a centerpiece of Obama’s planned economic stimulus plan.