Editor’s note: The following article was written by one of the newer additions to the Planet Waves blogging team: Shanna Philipson. –RA
Dear Friend and Reader,
Q: What’s bigger than a breadbox, but smaller than a house?
A: The SUV in your neighbor’s driveway that’s about to get repossessed.
Detroit is the latest to get in line for the $700 billion dollar government bailout package, and unlike Wall Street’s byzantine financial formulations and their equally confusing bailout proposals, this crisis is just the right size and shape for the average American to understand.
For the last fifteen years Detroit has enjoyed an illusion of endlessly profitable SUV sales. Consequently American automakers saw no reason to downsize or resize or rethink its monster car formula–or the way it did business, except to function in Jupiterian terms of escalating scale: Super-size me, baby! Now some domestic car makers are saddled with uncertain energy futures and super-sized debt in the form of unsold inventory and bad auto loans. If you believe their side of the tale, dismal truck and SUV sales are bleeding Detroit dry; at the current rate of loss, General Motors will be bankrupt sometime in 2009.
According to this MSNBC report, General Motors, who lost $18 billion in the first two quarters of 2008, is seeking help from Washington in the form of a $10 billion loan to buy the steadier Chrysler and merge the two companies in the hope that GM won’t go broke. And what’s in that for our folks in DC? Partial ownership in the new, merged entity.
Not surprisingly, the idea is controversial. Do we want the government owning a direct stake in our car manufacturers? Moreover, do we have the means to affect a rescue reminiscent of the 1980 salvaging of Chrysler? MSNBC suggests GM’s offer won’t get far.
Even though the Treasury Dept.’s decision to spend $250 billion to buy stakes in small banks and other financial institutions received general approval from members of Congress, the idea of the government owning a stake in GM is not popular. “I haven’t studied it,” says Representative Barney Frank [D-Mass.] who is chairman of the House Financial Services Committee, adding that, “We’d all be skeptical of taking equity.”
But some see that GMAC, the debt-ridden financing apparatus (read: bank) of General Motors, may yet get them through the government dole door. Even more frightening to others is the very real threat that the mighty consumer arm of our military-industrial complex would collapse, losing far more than the estimated 35,000 plus auto industry jobs expected to disappear in a GM-Chrysler merger. A government loan, they argue, would be the lesser of two evils.
What’s especially powerful about this news is its concreteness: complex financing schemes that even the financiers don’t understand is beyond most people, but the average American does understand cars. It’s the sort of problem scaled to a size the the average mortal can comprehend. And it doesn’t take much explanation for Americans to understand the implications of Detroit asking for government hand-outs after over a decade of pushing over-priced, over-bearing, over-eating monster cars on an equally greedy American public.
Detroit has had many opportunities to learn the lessons of past challenges, but have they been willing students? No. But, then nor are we. American love their oversized everything, and we gladly scramble for the latest, best and biggest anything our corporations shill because for many, shopping is a national pastime. We are addicted to novelty and we have rewarded Detroit with our short attention spans.
But the past few weeks seem to have curbed our national case of ADD. Bailing out insurance brokers and mortgage lenders may leave our heads spinning, but there’s nothing dizzy about what’s sitting on the curb of our street or adorning our driveway. No, that’s pretty solid. If you want to understand the new political-economic paradigm, consider our fifteen year addiction to the SUV and its multi-faceted consequences. You may have never owned one of those babies, but government bail-out or not, you’re surely going to pay as if you did.
For a full-length discussion of the GM-Chrysler debate, see NPR‘s story from Wednesday, Oct. 29.
Yours & truly,
Shanna Philipson
A lot of companies are still controlled by organized crime – from a safe distance. I met a young woman the first year I was married who lived in our apartment complex (1974). Her husband was an executive for one of the auto companies in Detroit. he was murdered by the mafia, but right now the reason escapes me. He wouldn’t do whatever it was they wanted – probably run a faulty part or something. I’m pretty darned sure this still goes on. Mafia and Unions tend to act like papa to all of us too, and they sure as heck punish those who fail to show allegiance.
You may be onto something JanesD. I’ve always thought that we were all still slaves, but we just get paid a bit for it. No-one is really free to just live, although a few homeless people try. Maybe that is what was so frightening about all of the work moving out of the country. It was like our parents deserted us.
Many of us have indentured servants for ancestors. That kind of anger and fear gets passed down.
:). Sorry awordedgewise. I did get your point, I was hopscotching. I figured since you’re from Detroit and know those issues you’d have likely seen the movie.
My snapshot of unions in this country is connected to the idea of the Massman, mass production, et. al. The reason unions were born was because a consolidation of power was aggregating from the legacy of the Industrial Revolution — starting in the early 1900’s the Worker ( previously known as the Peasant) was demanding he be valued and treated fairly as a unit of labor if not a human being.
In Russia, Peasants were known as serfs. In the 1400’s in Russia agricultural workers were free to leave their employer until a law was passed limiting the time they were allowed to find another job to one week. Then another law was passed demanding a tax be paid to the employer for his departure. Then lots and lots of laws went into effect involving the punishment of runaways. This went on until the late 1800’s, when Czar Alexander freed the (slaves) serfs. But he was too late. Generations of these people were real, real pissed off at his whole arrogant family. Plus it might not have been a good idea to give them any guns to fight WW1.
It’s this kind of crap that can start a revolution, you know?
Anyway I connect a whole deep history of the People of Earth to the labor laws that washed up on shore here in the 20’s. In the 1500’s Russian serfs were enslaved by an agricultural aristocracy; over here we’re enslaved by economies of scale and a really misguided trust in paternalistic power. I see the “healthcare crisis” as an echo of feudal oppression and student loans are starting to shape up to look that way too.
So what I was saying there about Michael Moore, completely jumping over your point about the unions that actually are working pretty well without war money was; unions operate as a counterpoint to massive consolidated power, against a machine that works exactly the way all aristocracies have worked since Roman times. Unions only exist because GM and the US government and the IMF and so forth, exist.
One response as an individual to massive consolidated power is to engage with it fully right away and act like firebreathing behemoths demanding all of your time energy and trust show up in your hometown every day. I admit it’s the natural response, especially if it promises to take care of you in your old age and throws good Christmas parties.
But there are other possible responses as long as we remain free people. One is to decide we want nothing to do with the dragon at all. The other is to engage in a limited, self-interested way and make very sure it stays away from our children. And if it starts trying to snack on the kids, well, just don’t waste your time with it anymore. Be glad it lost interest in you. It’s just going to eat you, and your picket sign.
~j
The marketing of the SUV was safety. If there was an accident the biggest hunk of metal would win (until they started tipping over). I considered this when men told me that is why they bought the SUV for the wife and tots because it showed concern. Then I heard a woman caller on public radio voice her concern that a reckless SUV driver plowed into her and her husband disabling both of them.
What I find even more ridiculous are the huge family trucks with a front and back seat and a scant bed for hauling. It seems anti pickup truck. It moved the pickup from function to status, resulting in higher prices for those of us who depend on a pickup to support our lifestyle.
I won’t even mention the hum v. The owner of a company that I worked at for a short while owned one. He kept it parked inside and moved it outside to the parking lot because onlookers would see that his company was doing well in that he could afford one.
The marketing of these things was brilliant. They sold consumers on these huge very expensive gas guzzlers and then raised the price of fuel.
It is all very sad. Maybe you don’t remember the Carter administration. He addressed the nation that the world’s oil supply was declining and asked for Americans support. He asked that we all turn off our Christmas lights that year. And everyone did. He budgeted money for alternative energy development. And of course the wondrous Ronald took office and axed all that. Where would we be now if we had taken action then? Do note that Carter worked his butt off to get the American hostages in the mideast released. They were released the day after Ronald took office.
We are so easily sold a bill of goods. And then it becomes the norm. And we don’t think twice.
I think you missed the point but that’s ok. I have to agree with the Nike company guy in that film by Michael Moore. I was an employment officer for years. Before 1992 people would line up for jobs, but by 1998 we had to bribe people to do manual labor with incentive packages and bonuses. It drove up the cost of doing business. Now that unemployment is climbing, I’m sure the employment lines would be long again, but my company did the same as everyone else – went to robotics and bar codes to replace the humans. It was a crisis of need, and it helped control costs.
http://www.hsus.org/search.jsp
Check the humane society if you want to see what happens to animals in China. They skin dogs and cats alive to make faux fur coats. At least rabbit girl killed the rabbit.
Hi awordedgewise:
I was just thinking about Michael Moore. Did you ever see Roger and Me? In this movie Michael Moore is purple with rage over GM’s abandonment of Flint. It’s a great movie; hilarious, upsetting, heartbreaking. He has a conversation with the CEO of Nike in which he tries to get the Nike guy to put up a factory in the US, and the Nike guy says look, Americans don’t want to make shoes. MM goes purple over that as well.
Anyway, I sympathized with Michael Moore’s viewpoint entirely then. What an asshole GM was to just check out like that. They *used* those people and then they just shut down and moved on when they were done: Etc.
But lately I’ve been thinking, I mean I just allowed myself to think: well, maybe the problem was that the American worker allowed himself to be this dependent on a huge corporation for his wellbeing. Instead of getting all depressed about it, the people of Flint could have thought, thank God they’re gone. No more getting exploited and compromised and fucked over and lied to. No more! Hooray! To me GM was to Flint what Saddam Hussein was to Iraq. There were benefits and stability but on the whole the population was getting raped every day and used up by the War.
There’s a disturbing scene in the movie where this rather inbred looking girl kills and skins a rabbit for the food and fur. Back then I was horrifed, there was something so primitive about it. But now I think, well, is that really morally worse than picking up a package of murdered, shrinkwrapped, factory-tortured unidentifiable fleshfood at the supermarket? Is mass production really more civilized if the product is death?
Suddenly it seems like Rabbit Girl was the most moral and self-reliant person in Flint Michigan.
~j
Janes,
Amen.
Having grown up in Detroit I have lived my adult life in wonder at the myths that grow on and on about the auto industry, unions and Detroit in general. Like any corporate town, the money came and went with a few – probably before any of us were alive or at least out of diapers – and everyone else was left to duke it out, yes, with union as spokesperson. Still, despite what they stood – and stand for – I reserve no god-like status for unions.
Plenty of strong, influential unions flourish elsewhere in America – and in growing or relatively stabilized industries that are not dependant on defense spending or other government money. Right here in Beautiful Downtown Burbank, for example are many entertainment industry unions that are part of or affiliated with AFL-CIO.
I wouldn’t put my money on GM developing the best all around answer for any eco-friendly technology unless our regulations change dramatically soon — and especially not if the contract is for vehicles for the US Goverment Postal Service.
(That’s a delivery service that should be re-evaluated anyway. But then, I’m off the subject of SUVs and what in the world we’re going to do with all those re-possessed non-eco-friendly boat-anchors.)
Gardner:
The reason this is one of the last great union jobs is because carmakers could not take their *entire* manufacturing concern out of the country. There’s no AFL-CIO in Indonesia, but there is a General Motors and this is why General Motors can pay employees over there nine cents a day. How do union jobs give General Motors the right to American Life Support?
The reason that the US has been able to brag that it has the safest currency in the world is because since 1929 and the invention of Economists it’s been of strong interest to the state for us to have a diverse economy.
A nondiverse economy is a place like Venezuela or Saudi, where there is only *one* real source of income for the entire nation. That makes the health and happiness of millions dependent on only one crop, which leads to instability economically but also socially and I suppose mentally. It also leads to an almost nonexistent middle class, since the only rich people are the ones who have the most ownership of that one resource; which in turn creates even more instability in the form of lots of pissed off, bored, hungry people.
So that’s one of the concepts that support a free market and economic competition. And while the US economy looks diverse it’s actually become centralized around just a few businesses that we we really should be getting away from anyway. Bomb building and carmaking would be two of those things. Add fossil fuels and all the disgusting landfill junk that can be fashioned out of extruded petroleum and you’ve almost drawn the whole elephant.
Keeping GM in business won’t help the unions. But supporting a strong, clean and diverse local manufacturing base might help. The long run has got to include a drawdown of the military industrial complex, including carmaking or we’ll just never get around to beating our swords into ploughshares. It *must* happen.
Happy Christmas, War is Over ( if you want it).
Hi Jere, you’re groovy too dude. 🙂
~j
Fuck off and Die? Thanks for the laugh JLO – this is starting to sound like guerilla warfare, or at least like the end of the horse harness era. Horse harness went under fast once the automobile became standard operating equipment – but guess what? There are more horses in the US now than ever – business related or pets. Problem is once a horse is no longer needed, it usually ends up at a dog food factory, or in Chinese cuisine, but that’s another story.
The Postal Service recently signed an agreement with General Motors to test the hydrogen cell vehicle in an effort to replace their 195,000 delivery vehicles. I’d say that once that system is perfected, we will all be driving them. Detroit has gone through downturns in the past and came back. I’d sure hate to see the last of the great union jobs bite the dust. The unions fought and died for rights that we now take for granted – safety, child protection, & overtime limits, to name a few.
http://www.reuters.com/article/pressRelease/idUS99440+21-Jul-2008+PRN20080721
Now Rolls Royce, on the other hand, really does do a lot of top secret military work – yet it is foreign owned. I doubt if they are short of R&D money.
J~
Lorax is an essential book, even cooler flick. Should be part of our “standardized” testing.
Good luck to you and yours, you’re groovy!
Jere
So, let’s “whack” ’em and let ’em fail. 35,000 jobs, shit, that’s a lot! Ouch, that fucking hurts but, fuck this shit, I’m tired of being reamed, you??? We need a “new” economy anyway…. Let’s let solar production “play” for a while. How about straight up human energy? Oh shit, will we all have to get our hands dirty?!? I honestly love you all but, when some bastard won’t “conform to decency” I’m at a personal loss…. I don’t know what to do.. WELCOME TO G.M. EXCEPT, CORPORATE ARE BASTARDS!!! I say FUCK THEM…. one more time, for posterity “FFFFFFFUUUUUUCCCCCCCKKKKKKKK YYYYYYYYYOOOOOOOOOUUUUUUU!!!!!!!!!!!! G.M. IIIIIII,
Wait, let me separate this comment….
I will have nothing to do with you because you lie and steal.
I will work against you because you “lie and steal”
I, (if not I, then those who come after) will KICK YOUR ASS!!!!
G.M., if you showed some respect we would ALL be there for you. You would be loved ’til no ends sight! But, you’re a piece of shit! You’re hated, and you’re evil!
FUCK OFF and DIE!!! (or change and be cool?!?!?!?!)
So hey, you either realize our human factor, (yes,we are the new), or you continue your path and we “exchange”. I’m hoping you have “half” a human clue…..
… but I doubt you have shit…
Fuck it all, Jere;)
Yeah. Have you ever read Dr. Seuss? The Lorax. See, there’s a guy named the Once-ler and he decides to start making this thing called a thneed, which is a product that everyone needs. Thneeds are made from Truffula trees and eventually there aren’t any more of them. The Lorax is the character that keeps telling the Once-ler that these thneeds are a terrible idea. It was obviously a book about preserving the natural world. Still, automobiles definitely, definitely qualify as thneedish.
This book was banned in from schools in Washington state once because somebody thought it was unfair to the logging industry, I just found out from Wikipedia.
So say the entire country had an economy based on the production of hats. Everyone would need a hat, a bigger, better hat, a hat for every occasion; hats stuffed in the closet, rusty old hats piled up in the backyard. Eventually the hatmakers would start to threaten us all, saying that if we did not continue to buy hats at an acceptable rate, our families would starve because hat workers would lose their jobs. If there were no hats, they’d say, we’d all die, and they would continue to come up with brilliant reasons that this was so.
I think we’ve all been pretty polilte about this. But sooner or later somebody has to say look, we don’t want any more hats.
~j
A thing no one seems to talk about is that many “small business” owners were able, under the Bush adminixtration, to write off the cost of SUVs when used for their businesses to some extent. The only reason I know this is that I’m related to one who bought an Expedition (the hugest of the huge) on advice from his accountant. At the time, I said, ah, so that’s why the cost of an SUV has doubled since the early 90’s. Of course, this same relative is now the one who won’t vote for Obama and is wailing “Obama’s gonna tax me!” while wondering why I have no sympathy for him. It’s true you can’t choose your relatives…I just keep trying to appeal to his better nature.
As far as any ownership in GM by We, the People, the only thing positive that comes to mind is the way the auto plants were re-tooled during WWII to manufacture for the war effort. I’m in no way advocating or saying that’s the way we should be thinking, but we are going to need a lot of manufacturing of machinery to support new energy production and conservation and I believe it would be best to do it in our own country as much as possible, considering both job growth and quality control. In our county we have had a surge in wind farms, but, less than a year from deployment, there is a problem with the blades cracking and breaking due to either inferior production &/or metal fatigue (still being studied). Success in new green technologies is the battle at hand, and some oversight might be not such a bad thing. Cars were a thing for which the US and GM were the gold standard for a long time. The planet needs change, the country needs change, and so does the auto industry. Maybe a good convergence?
Yep! The part of this picture I didn’t get into the post was a look at US automakers’ foreign production sites and their healthy overseas sales. Frankly, I don’t think we would even know a “Detroit” without either one. It’s the further loss of jobs in the US that will hurt us, economically and, more importantly, psychologically. Lots of smaller businesses (some of them having little to do with cars) do depend on this industry. There’s interdependency here, even if “Detroit” no longer dominates the American economy as it did 30 years ago.
I’m not making a case for a bail-out. Just thinking about its implications, both practical and theoretical.
This is an old, old inherited problem, and I’m not surprised (what with the astrology we’re looking at these days) about this news. The love-match between Detroit and the guv goes way back to WWII (its earliest beginnings to WWI): it’s as unhealthy a symbiosis as the worst whack-job, co-dependent marriage that ever walked into a family therapist’s office. My point (and you do agree) is that it’s the kids who always pay when the big people can’t be grown-ups.
I’m tired of rearing my parents.
oops – sorry for posting with typos.
” ..government bailout is not new to these companies either.”
Chrysler and GM both have history as huge US defense contractors. And government bail-out is not new to them company either.
A Wikipedia search on GM will quickly disclose some basic facts including the locations of their factories – which are mostly not in Detroit – and the scope of their global business. I have not researched their current military contracts – both have sold off defense related portions of their corporations over the years.
The idea that a couple of little Detroit auto-makers are thinkin’ about getting together to keep business going (oh! and with a little bit of ownership going to what! –THE GOVERNMENT? ) is romancing the notion of “Detroit”. These companies have been riding the same train as ‘BushCo’ since Nixon.
I believe that statistically, Detroit has not been the leading world’s auto-maker for decades and certainly the cities that were once supported by that industry have not thrived for decades. Consider the stories about economic desolation in places like Flint that were in the news in the 80s (and nothing’s gotten better since).
Those Monster Trucks are built and sold because people BUY them. It’s called Capitalism. I have NO empathy whatsoever for the owners of SUVs. Never should’a taken out the damn loan to buy ’em.
Smells to me like another ugly illusion wherein the Fall-guy is Us.