Now here's a contentious proposal: Let GM go Bankrupt

[Woodsman]

Quote: Originally Posted by roncross@cox.net I tell my wife that people on the East Coast are very rude drivers as they don't even wait for the light to turn green before they start honking at me.

I've often wondered what New Yorkers would make of something I've seen once or twice in my own city. The front car at the lights doesn't drive on green, and no one honks. The lights cycle through red and back to green, and only on his second failure to drive on green does someone honk at him. According to the theory, it ought to have been a Rolls; but it's more likely that we're just a bunch of hayseeds.

I've been thinking about this lately. I've also been thinking that cwtnospam should call me, my numbers haven't changed.

We as a country cannot afford to loose the 3 million jobs nor can we afford to loose the manufacturing capability just in case China continues to get aggressive. Especially if the decide to overrun Japan and Korea in an imperialistic expansion now that the US is no longer able to react. Having a manufacturing base is a matter of national security both militarily and especially economically. There is no reason the US people cannot compete except for the greed and short sighted stupidity of the idiots that have run the US automakers, and other US companies.

We should nationalize any automaker that fails, just buy up a controlling interest in their stock, or better yet let them bankrupt then buy the company wholesale for pennies on the dollar and then run the company for the good of the country. Letting it bankrupt would ensure that investors take the hit they should for not forcing the company to operate effectively in the past, after all that is their job.

Hire the best people we can find to run the company, many talented business people would probably love to have a chance to run a large company for the good of the American people as an act of Public service. Probably not too many hard right republicans but possibly some centrists and even some left leaning business people. Pay them fair but realistic salaries tied to 5 or 10 year performance tied not to quarterly profits but rather to a number of benchmarks such as improvements in fuel efficiency, recycleability, environmental production and emissions.

Really take on the Japanese and European automakers and bring the company(ies) back to profitability. Many US consumers would purchase an automobile made by Americans for the benefit of Americans, especially if they knew it was backed by the. Make intelligent, well made, fuel efficient autos.

The automaker could be sold back to the private sector at any time that a bidder came along that was willing to pay a fair market value for the company all the profits from teh operation of or the sale of the automaker would be returned to the US treasury (US people).

Hell one way or another GM and Chrysler's failure is going to cost the US taxpayer billions. This could be a way to encourage future business leaders to run their companies well.

Quote: Originally Posted by NovaScotian Styrafome makes a good point about pension and union obligations the "big" three are saddled with relative to others. Perhaps the government ought to consider taking on the pension obligations and extending those to an earlier age -- full stop. In the long run bailing out a faltering industry is a short-term fix to a long-term problem that doesn't go away after the bailout.

The reason the pension obligations are so large is that over the years the automakers have opted to offer higher future pension benefits which are either unfunded or funded at pennies on the dollar due to lack of rigor in accounting requirements for these future benefits (read lobbying) rather than to pay higher current wages. They kept deferring current operating costs using promised future benefits. However eventually the chickens come home to roost, which they have now done. After years of deferring the compensation to artificially inflate their past annual profits these companies are now saddled with the need to pay for their past poor management.

We as a country need to stop allowing our companies to play these games ongoingly. Two, three or five years maybe as a short/medium term tactic, long term games however mean certain future problems.

We need to stop dolling out executive/management compensation based on easy to measure and shortsighted targets like quarterly profit and focus also on long term profitability and growth.

[aehurst]

Quote: Originally Posted by Sike ...We as a country cannot afford to loose the 3 million jobs nor can we afford to loose the manufacturing capability just in case China continues to get aggressive...

Hopefully, China is now tied economically enough to the rest of us that it would not be in their best interest to embark on an aggressive, expansionist course. Not sure that's what China wants. In any case, the world can respond. It just won't be with infantry to fight a ground war in Asia. We have other options.

[/QUOTE]Many US consumers would purchase an automobile made by Americans for the benefit of Americans, especially if they knew it was backed by the. Make intelligent, well made, fuel efficient autos.[/QUOTE]

Most US consumers DO buy US cars. Big 3 made SUVs because that's what their market wanted.... it is the market that changed with the gas crunch. But since the market has changed, the Big 3 cannot (as yet) compete in the high fuel efficiency world. Agree they can with some major restructuring.

[/QUOTE]Hell one way or another GM and Chrysler's failure is going to cost the US taxpayer billions. This could be a way to encourage future business leaders to run their companies well.[/QUOTE]

Agree, we have to save them to maintain a large industrial capacity and for national defense. Weak economy = weak military and limited ability.

[NovaScotian]

One aspect of the global economy that is often ignored is that while the most prosperous countries, like the USA, lose jobs to cheaper labor elsewhere, the third world benefits. I read an estimate (can't find the cite) that 300 million people have been raised out of abject poverty by the globalization of the economy. Many millions of Chinese and Indians (for example) are benefiting from the jobs we've exported. Similarly, we benefit from lower prices for their goods than would be required to manufacture them in America or Europe.

[aehurst]

Quote: Originally Posted by NovaScotian One aspect of the global economy that is often ignored is that while the most prosperous countries, like the USA, lose jobs to cheaper labor elsewhere, the third world benefits. I read an estimate (can't find the cite) that 300 million people have been raised out of abject poverty by the globalization of the economy. Many millions of Chinese and Indians (for example) are benefiting from the jobs we've exported. Similarly, we benefit from lower prices for their goods than would be required to manufacture them in America or Europe.

And the competition for a job at Walmart grows more fierce every year.

[NovaScotian]

Indeed, AEH; but remember that consumers vote with their wallets -- Made in China (India, Indonesia, etc.) is visible on the package, after all. You love it that a hard drive (an incredibly high-tech device) is $100, but they are all made in Singapore -- designed in the US for sure, but manufactured elsewhere.

We shoot ourselves in the foot in other unintended ways too. For example, the very successful initiative to recycle paper and paper products has caused the closure of dozens of paper mills in the US and Canada because things like newsprint only require a small fraction of new wood fiber, the rest is recycled. Those closures have devastated mill towns everywhere. Millinocket, Maine, for example, once had six paper mills. Last time I spoke to a friend from there, there were only two operating. In the meantime the shortage of new pulp in the US opens up opportunities for softwood harvests in Costa Rica, Brazil, etc. where they don't recycle and need the jobs.

[aehurst]

Quote: Originally Posted by NovaScotian Indeed, AEH; but remember that consumers vote with their wallets -- Made in China (India, Indonesia, etc.) is visible on the package, after all. You love it that a hard drive (an incredibly high-tech device) is $100, but they are all made in Singapore.......

Exactly so. And the same thing goes for cars. But, Americans will not buy American when the price is too high and the quality too low. This is the challenge the big 3 have to overcome. In my view, the big 3 producing fuel efficient small cars is not the crisis nor the solution to the crisis.

Free trade will push our labor force's wages toward the international norm. But, not adjusting to the competition with lower wages and/or increased productivity will lower our standard of living just as quickly if not quicker.

It's really not about the rich and the poor, or about fair treatment of workers. It is about competing on the international stage.

[NovaScotian]

Agree absolutely with all three points. The big three have long lost the battle for reliable, long-lasting cars (particularly in the North where they rust out in no time, while Honda zinc dips a lot of rust-prone parts). My Pilot is 5 years old, has about 50,000 miles on it slogging through long Halifax winters (lots of road salt which is produced here), and has never had a major problem. My neighbor has a Dodge van that gives him grief all the time; some of it expensive to fix. Detroit seems to ignore the huge majority of folks who are not so enamored of the looks of their car as they are by "turn key, it always goes" reliability.

I think free trade doesn't have to push labor force's wages down if education and productivity levels for jobs go up. Guys who maintain robots make a damned sight more than guys who bolt a wheel on or stuff a trunk liner in a car. In too many ways our workforce has stagnated -- get job, do same thing for 25 years and expect that it will never change. In today's economy, every worker has to improve constantly and their pay scale should reflect that increase in knowledge and productivity. Somehow, merit has to get back into the picture.

It's very clear that this trend of "the rich get richer and the poor get poorer" has to be reversed. I get nailed every year for about 40% of my income in taxes. Guys who earn millions probably don't pay much more. Something wrong with that.

[aehurst]

Quote: Originally Posted by NovaScotian It's very clear that this trend of "the rich get richer and the poor get poorer" has to be reversed. I get nailed every year for about 40% of my income in taxes. Guys who earn millions probably don't pay much more. Something wrong with that.

40 percent.... OUCH!. Don't pay anything like that.... course, we don't get free health care either.

Given the recent calamity, it would be interesting to know if the rich really did get richer in 2008. We know the poor sure got poorer.

[cwtnospam]

Money doesn't evaporate. If the poor & the middle class got poorer, then the rich must have gotten richer.

Sike is right about corporate pay, but we as a country also need to recognize that they're not "our" companies and they don't care about our country or any other.

[ArcticStones]

Quote: Originally Posted by aehurst 40 percent... OUCH!. Don't pay anything like that...

I have heard it said that once you up income tax, sales tax, property tax and all the other federal, state and local taxes and fees, the sum is pretty darned close to that. I could be wrong...

[Woodsman]

Quote: Originally Posted by ArcticStones I have heard it said that once you up income tax, sales tax, property tax and all the other federal, state and local taxes and fees, the sum is pretty darned close to that. I could be wrong...

FWIW, I once saw an Ayn Randian (caveat emptor) claiming that Americans work more months of the year to pay their overall tax burden than Europeans. It is certainly true that most Americans fail to realise that, while European countries tax income heavily, they don't have much in the way of property or wealth taxes. I, too, pay 40%, but that's to a single authority, and that's it, apart from our sky-high rate of value-added tax. Oh, there's a TV licence fee, which I don't begrudge, since it gives us two commercial-free channels. (Watching Jon Stewart here is bizarre: the programme only lasts twenty minutes, but half of it is "See you after the break" SWOOSH "Welcome back".)

To Aehurst:
I wouldn't know about 2008 specifically, but between 1968 and 2006 your Gini Coefficient moved from 0.386 to 0.470. In Norway it was 0.258 as of 2000, Germany and Japan similar, France somewhere in between.

[aehurst]

Quote: Originally Posted by cwtnospam Money doesn't evaporate. If the poor & the middle class got poorer, then the rich must have gotten richer.

You are assuming the money actually existed in the first place. It didn't.

@ArticStones

Quote: I have heard it said that once you up income tax, sales tax, property tax and all the other federal, state and local taxes and fees, the sum is pretty darned close to that. I could be wrong...

Didn't mean to imply US taxes are low. They aren't, and as you point out we get hit from all sides with multiple taxes. With 50 different versions of state taxes, 1,000's of property tax rates and huge geographic differences in income & property values, I'm not sure how you would ever find a meaningful number. But I am guessing that in my case it would be closer to 25-30 percent of total income (not taxable income), which I consider high.

Lot of people been advocating a VAT for the US, while others champion a single rate income tax (called the Fair Tax). Both make more sense than our current system with all its loopholes. Neither has gained any traction.

Quote: I wouldn't know about 2008 specifically, but between 1968 and 2006 your Gini Coefficient moved from 0.386 to 0.470. In Norway it was 0.258 as of 2000, Germany and Japan similar, France somewhere in between.

Obviously, our Gini Coefficient is nothing to brag about, and I would guess it didn't change much in 2008. But wealth disparity, as opposed to income disparity, may be different with the rich taking a beating on Wall Street. Who knows.

[NovaScotian]

Here's a way to compare: it's called Tax Freedom Day, the day of the year on which your earnings have equalled your taxes. In Canada it's in June with an average true tax rate of 44%.

[Woodsman]

Quote: Originally Posted by NovaScotian Here's a way to compare: it's called Tax Freedom Day, the day of the year on which your earnings have equalled your taxes. In Canada it's in June with an average true tax rate of 44%.

I note that Norway's TFD falls on the feast-day of the country's patron saint........

[aehurst]

Quote: Originally Posted by NovaScotian Here's a way to compare: it's called Tax Freedom Day, the day of the year on which your earnings have equalled your taxes. In Canada it's in June with an average true tax rate of 44%.

Well, that was an eye opener. I stand corrected... our taxes are not high, it just seems that way. Guess, however, it's all relative based on what the government gives back by way of services.

The US tends to means test most services. For example, govt will pay for nursing home care for a senior citizen (Medicaid), but only after they have used all their personal resources, and then they take a lien on their house. Said another way, it's treated as a safety net.

[NovaScotian]

I knew the US Tax rate was substantially lower because I have two kids and a nephew living in the US (citizens all, now) and all of them have corporate health care perks. All of them say they couldn't afford to move back to Canada, primarily because all own expensive homes with long, deductible mortgage interest, and none pay much for health care benefits.

Basic health care in Canada is free with exemptions set by the Provinces so not quite equal. In Nova Scotia, seniors like me pay an additional $400/year for a drug plan that covers an approved list of drugs at rates set by the government (the difference between that and a prescription cost being the co-pay amount). Co-pay liability is limited to an additional $400/year, however, and after that, approved drugs are free with some exceptions, again.

The approved list and coverage is generally based on the least expensive treatment for a disease or condition, so if your physician prescribes something more expensive, the co-pay reflects the difference. Priority is given to life-saving drugs, while drugs like Celebrex (for arthritis pain) are hardly covered at all given the availability of much cheaper analgesic alternatives.

Throughout people's working lives, they pay a premium for Canada Pension (not unlike Social Security in the US), and receive a pension at 65. In addition, after a means test there's also a supplemental pension payment (I don't qualify so don't know the details).

Fundamentally, health care in Nova Scotia consumes 40% of the Provincial budget (which includes a per capita slug of money for health care from the feds to each Province). Otherwise, our governments are just as prone to pissing it away as anywhere else in the world.

[aehurst]

Does Canada's health care system include long term care, i.e. for nursing homes for the elderly/disabled and community services for the disabled? Nursing home costs run in the $4k a month range.

This is where we get nailed. Far too often, the life savings (including the home) go to long term care and not to the kids.

[cwtnospam]

Quote: Originally Posted by aehurst You are assuming the money actually existed in the first place. It didn't.

I'm not saying there wasn't large scale fraud. I'm saying that real wealth changes little over short time periods, and the share of that wealth controlled by the poor and the middle class has shrunk.

Edit: I'm also saying that talking about taxes, the cost of labor, or benefits misses the problem completely. This whole mess is a result of corporate fraud and incompetence at upper management levels.