Tuesday, June 9, 2009

Put An End To The Bailouts! GM Should Just Make Cars People Want To Buy

I recently came across an article written by Felicia Davis entitled “Why Blacks Should Support GM.” In the article, Ms. Davis argues rather passionately that more US taxpayer dollars should be used to bailout General Motors (GM) and that the company should not be allowed to fail. She also goes on to say that African-Americans should be loyal to GM for all it’s done for them. I couldn’t disagree more. The taxpayers are not responsible for GM’s solvency—their management is. GM should focus on making cars people want to buy. But this is so obvious, why would Ms. Davis make such an assertion?

According to Ms. Davis, “…One in 10 jobs are connected to the auto industry and for Blacks, especially Northern Blacks, there are deeper and more extensive connections to UAW and our mighty automobile industry. Union jobs still offer the best opportunity for supporting a family for men and women lacking a college education.”

To this I say, Poppycock! African-Americans need to change their focus and not let the Government change the system of Capitalism as we know it. Face it—manufacturing is out! Ever since John Nesbitt wrote Megatrends 2000, anyone in the know realized that the US was moving from a manufacturing economy to an information economy. They also knew the important role a college education would play in being qualified for these jobs. African-Americans, like all others, must re-think and re-tool to stay competitive. That means staying in school and getting a good education and/or marketable skill. You know, most trades today are requiring more than just a high school education. I always tell folks you should have a college degree and know a trade just to be safe.

And what about Unions and job opportunity? According to the Heritage Foundation, “Economic research finds that unions benefit their members but hurt consumers generally, and especially workers who are denied job opportunities. The average union member earns more than the average non-union worker. However, that does not mean that expanding union membership will raise wages: Few workers who join a union today get a pay raise. What explains these apparently contradictory findings? The economy has become more competitive over the past generation. Companies have less power to pass price increases on to consumers without going out of business. Consequently, unions do not negotiate higher wages for many newly organized workers. These days, unions win higher wages for employees only at companies with competitive advantages that allow them to pay higher wages…”

Ms. Davis then says that the automobile industry might be needed for war mobilization—saving it would protect the country’s manufacturing capability. Being a former logistician in the military, yes, some capacity is needed just in case of war. But what one has to remember is there are other manufacturers out there besides GM. There are also manufacturers of other things such as tractors and heavy trucks. The simple fact is if GM folds, the US wartime manufacturing capability would still remain strong.

Finally, in her most emotional argument yet, Ms. Davis says that GM monetary contributions helped move black folk forward. “It was GM that provided buses to transport people to the Poor Peoples’ March on Washington not to mention supporting national organizations in significant ways for decades.” Again, I applaud GM’s efforts. However, I don’t see anyone giving black folk reparations because of all the pain and suffering done to them during slavery. So why should black folk repay GM with unconditional loyalty to a poor product?

Why should more taxpayer dollars go to a company that pays executives millions of dollars just to drive the company in the ground? And when the company fails, they still get all this money while they are laying laborers off. GM’s
Chief Executive Officer is getting paid to ensure their financial solvency, not the taxpayer.

Let me finish by saying I am pro-labor, pro-union and pro-US business. I also believe given the current economic crisis the Government had to do something. But, as TD Jakes says, “sometimes you have to know when to let go.” I think when you approach this issue from a demagogic point of view you miss the point: GM should make a product people want to buy.

Here’s an example of what I’m talking about. Perhaps you remember this clunker?