Chrysler Bailout is "capitalism at work"

Chrysler Bailout is "capitalism at work"
http://tinyurl.com/plrecl

The Chrysler Bailout is "capitalism at work," writes private equity
macher Scott Sperling in the WSJ. Here are some of the more questionable
sentences in his essay:

Without a drastic restructuring neither Chrysler nor GM would have
a chance for long-term success ...

These decisions include "right sizing" industry capacity by cutting
many union and white-collar jobs and closing numerous manufacturing
plants and dealerships; making the unions accept lower wages and
benefits so that these companies can compete ... [E.A]

The cuts current union members were forced to accept were not
impressive. Before the deal, Chrysler's UAW workers made $28 an hour.
After they deal, they'll make $28 an hour. They gave up a scheduled
increase in wages, plus a couple of scheduled bonuses. That explains
why Chrysler's Belvidere, Illinois workers told TV station WIFR that
"the plan is not nearly as drastic as they expected." ...

As for Chrysler's "chance for long-term success," it appears vanishingly
small. Italian manufacturer FIAT is supposed to save Chrysler with new
products, but according to a recent Automotive News article, "four of
the six new vehicles from Fiat will enter the small-car segment," which
is highly competitive but "covers only 14 percent of the entire U.S.
light-vehicle market."

"The volumes need to be big for Chrysler to survive," [market
analyst Tracy Handler] said. "Will they be? I have doubts about that."

See also this BBC article ("it's madness"). Pathetically, Chrysler
hopes that even if they don't save the company the new small cars will
"urnish the environmental image of Chrysler brands," says Automotive
News. Unfortunately, the pipeline for those brands' other, larger,
products--burnished or not--is pretty much empty.

If Chrysler workers were paid, say, not $28 an hour instead of
$24--still not bad--the firm might actually have a "chance for long term
success" through charging lower prices. But that wasn't a sacrifice
Obama was ready to ask (even if Belvidere workers were apparently
willing). ...

Final obvious point: I don't want to sound like Veronique de Rugy here,
but who will pay the price if when this half-baked "restructuring"
fails? In normal "capitalism at work," those who would pay the price
will be those who made the deal and put up their money--the capitalists.
(Query: Would Scott Sperling invest his firm's money in this dubious
proposition?) If When Obama's plan fails, the monetary loss will fall
not on Obama, but on the taxpayers. It will likely be made up somehow by
the taxpayers (via higher tax assessments or inflation). That's not
"capitalism at work." It's something else at work. But I'd be all for
it, if I thought it really would work. It won't, and it will be Obama's
fault. (He'd certainly get credit if it succeeded.) ... 6:05 P.M.

 

Wasn't Sperling the president of the "hair club for men" ?

The real problem for US automakers is that they have enormous costs
associated with paying the health care costs for their current and
retired employees. They contracted themselves into that corner years
ago and at the time they probably didn't know that US health care costs
would spiral out of control.

In most other countries (especially Japan) health care is delivered and
paid for differently and although we here in north america don't know a
lot about how Japan works, it's safe to say that Honda, Toyota, Nissan,
etc, aren't faced with crippling costs associated with their retired
auto workers. Probably same for Korean auto makers too.

European car makers too also enjoy the fact that health care is, more or
less, a public service, so they need not make special provisions to
provide health care services to their retired workers.

Also, it's probably the case that for the Japanese operations here in
north america, that again the jap companies are probably not facing huge
costs relating to their retired workers because of how they've
structured their employment contracts (and they probably don't have a
lot of retired workers in north america at this point anyways).

The US health care industry, costs and delivery structure will be looked
at years from now as one of the biggest reasons why many well
established US manufacturing companies went out of business during the
2000 - 2010 decade.

Curiously, that aspect is receiving little to no critical examination or
press coverage currently, most likely because the health care industry
is a powerful lobby and seems able to control and squash any bad press
coverage.

 

If you are curious here is a link to PBS Frontline for "Sick Around the
World", a summary of how several countries handle healthcare (a *lot*
better than we do).

Sick Around the World
http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/


If you want the whole shot then look at these:

Sick Around the World
http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/

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The World Health Organization's ranking of the world's health systems
http://www.photius.com/rankings/healthranks.html

"The world health report 2007 - A safer future: global public health
security in the 21st century"

Full report download as a .pdf file:
http://www.who.int/entity/whr/2007/whr07_en.pdf (4.15MB)

====================================================================

Healthcare For All: In Western Europe Its a Reality
http://www.npr.org/templates/story/story.php?storyId=91972152

France: Health Care for All
http://www.npr.org/templates/story/story.php?storyId=91970968

Germany: Health Care for All
http://www.npr.org/templates/story/story.php?storyId=91971170

Great Britain: Health Care for All
http://www.npr.org/templates/story/story.php?storyId=91971293

Netherlands: Health Care for All
http://www.npr.org/templates/story/story.php?storyId=91973552

Switzerland: Health Care for All
http://www.npr.org/templates/story/story.php?storyId=91974014

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Health Care: An International Comparison
http://www.npr.org/news/specials/healthcare/healthcare_profiles.html

Netherlands' Health Care Reflects National Values
http://www.npr.org/templates/story/story.php?storyId=92641635

Keeping German Doctors On A Budget Lowers Costs
http://www.npr.org/templates/story/story.php?storyId=91931036

France At Forefront Of Free, Innovative Cancer Care
http://www.npr.org/templates/story/story.php?storyId=92362918

While the U.S. Spends Heavily on Health Care, a Study Faults the Quality
http://www.nytimes.com/2008/07/17/business/17health.html

After-Hours Doctor Calls Save Holland Money
http://www.npr.org/templates/story/story.php?storyId=92606938

 

this stuff has been going on since the 80's the uaw was right many years
ago!look to the past to guide the future
don't believe me watch roger and me by mike moore and you will some of the
same issues then are present now
making money is one thing but the greed people have now is corrupting our
nation/politicians and add to that that no one wants to take responsibility
for their actions
Russia has even publicly stated we as a nation are done
japans companies don't worry about retirement the government pays it and
provides health care
like any good socialist country would companies just provide pay and a place
to live and that is were the difference is
Obama is socialism so get ready

 

I would not worry that much about what Russia might say. In the fifties
Khrushchev said "we will bury you" to the US and the West.

Obviously times have changed but still....

DAS

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