Detroit Bailout – an Ethical Conundrum

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Ohg Rea Tone is all or nothing. He is educated and opinionated, more clever than smart, sarcastic and forthright. He writes intuitively - often disregarding rules of composition. Comment on his posts - he will likely respond with characteristic humor or genuine empathy. He is the real-deal.

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Detroit Bailout – an Ethical Conundrum

This writer has often defined self as being an economic conservative and a social liberal.  Normally there is not much conflict in that ideology.  I will help my neighbor as long as I don’t have to borrow money in the endeavor.  I will not enable my neighbor to continue poor behavior by bailing him out – in that case no one wins.  Pretty straight forward logic.  But we in America are faced today with the conundrum of bailing out the Automobile companies.

On the surface it would appear that my logic would lead to the conclusion that the auto makers should suffer the consequences of their poor choices.  Our country is running record deficits – so there are two solid reasons to let General Motors fall.  If we borrow money to bail them out then we are violating the central principles of responsibility.

But the issues is more complex.  No bailout means the companies go into a restructuring bankruptcy.  This is not unfamiliar territory.  We witnessed the airlines restructuring several years ago – they took their lumps and are now better for the trials of responsibility.  But the auto companies are saying that their financial difficulties are the result of larger economic woes (a tight credit market) – not because of their poor decision making.  If this is true then we have already addressed the problem by injecting hundreds of billions of dollars in the credit market.  The idea is that money will begin flowing and people will buy American made cars and everyone will be happy.

One of the benefits of bankruptcy restructuring would be a voiding of union contracts.  The CEO’s of the auto industry do not want to go this route – but the Republicans in Congress see an opportunity to degrade the lifestyles of the middle class by busting the Automobile Industry Unions.

This is the conundrum – If the CEO’s are telling the truth – then we would not be rewarding poor decisions – only helping a good neighbor.  Ford, Chrysler, and General Motors have been great neighbors in the community of America.  This is a case where helping the company has a tremendous trickle down effect by maintaining union contracts.  Auto industry suppliers who run efficient business would be dramatically damaged by bankruptcy proceedings with the Auto makers – through no fault of their own.

Some say the auto unions should be busted – their contracts are too lucrative and drive up the price of American made autos.  The Republicans argue that American Auto makers cannot compete with foreign auto makers because of steep union contracts in Detroit.  They are being deceptive.

These are people who claim conservative family values, who cater to the cultural right religious fundamentalists, who believe that $10 or $12 an hour is a decent wage.  At that wage, in contemporary America, both parents working would make less than $50,000 per year.  With both parents working the family would live below the middle class level.

This writer believes that Unions are necessary evils – that is to say – companies with good management do not have unions.  Good management recognizes the need to take care of their employees – and they do. Because of the greed of corporate CEO’s Unions are necessary to protect the workers.

We should bail out the auto industry to protect America in general – it not just about rewarding poor business decision making.

Check out Shepard Smith ranting about an Email. He makes some good points – but does not consider the complexity of the Auto Industry:

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There Is 1 Response So Far. »

  1. “Good management recognizes the need to take care of their employees – and they do.” – This is completely true.

    “believe that $10 or $12 an hour is a decent wage” – This is not a decent wage for anybody to support a family on, however, including benefits, the average for the big 3 is over $70. surely the is some middle ground that might be reasonable.

    Finally, unions as a general rule hold back good employees and lift up bad employees. They protect mediocre employees while overpaying them, and they hold back the good employees that don’t need protecting. Why does the guy that makes 750 parts an hour make the same amount as the guy who makes 1000 parts an hour? Surely the second is more valuable.

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