(It feels very strange to write “a miscellannia”. I keep thinking that it ought to be “a miscellaneum”, which now has me thinking about the satirical properties of a notional element named “miscellanium”. Anyway, on with the show.)
If you feel vaguely the same way about politics as I do, and if you read as many blogs as I do, you’ve probably read quite a bit of skeptical commentary on the auto bailout/”orderly bankruptcy” and the bank bailout/Troubled Asset Relief Program(me) before it. It’s always nice to have some depth of understanding of the problem, so I’ll direct the reader interested in specifics to just about every link under the “politics” heading to the right and drop a few background-ish links myself.
First of all, economics badass Greg Mankiw talks about the utility of stimulus plans in general. (Remember the $600 “stimulus cheque” from earlier this year? Ain’t it great how well that programme worked to keep the economy healthy and prevent a recession?)
It’s tough to resist a thought experiment like this:
Suppose that the federal government borrows some money and then…
Case A: uses the money to give a lump-sum payment (such as a tax rebate) to Joe Average, who chooses to spend his free time sitting at home watching Mork and Mindy reruns.
Case B: uses the money to hire Joe to sit at home and watch Mork and Mindy reruns.
Case C: uses the money to hire Joe to sit at home and watch Family Feud reruns, which Joe does not enjoy quite as much as Mork and Mindy.
There’s a bit of a problem with the analogy, since the feds would probably spend much less money per beneficiary on a tax rebate for Joe Average than on a shitty-sitcom employment package, but that really doesn’t matter for Mankiw’s point. (Incidentally, none of the above is acceptable fiscal policy.)
Next, there’s this masterpiece from Megan McArdle:
One of the annoying things about the auto bailout is pretty much isomorphic to something annoying about the bank bailout — the bog-standard generic Lefty and Righty arguments are both plenty wrong, but contain enough truth to make them irritating to refute. McArdle explains:
I will now attempt a fair rendition of how I think liberals think about this; if I fail, forgive me and explain my error.
The liberals who want to save the UAW think of it this way: Detroit is in trouble because of some combination of economic downturn and unfair competition from southern plants or abroad. There are a number of different ways to get back to profitability, but conservatives, who are ideologically opposed to unions, are only interested in making sure that the union bears as much of the cost as humanly possible, or in killing off the Big Three altogether so that the UAW will be destroyed.
The left-progressives with whom I’ve spoken about the bailout tend to blame mismanagement rather than “unfair competition” along with the recession, but otherwise I think this is a pretty fair description. The right end of the spectrum isn’t all that badly described above, either, though I think it’s unfair to suggest that they’re ideologically opposed to unions in general (I imagine some are, but by no means all) rather than unimpressed by the gold-plated contract provisions negotiated by the UAW in particular. (In the case of Democrats and Republicans in particular, I imagine that the UAW’s indefatigable support for the Democratic party is a major consideration.)
So far as I can tell, the Detroit Three were mismanaged, and the UAW did negotiate contracts with them that drive their labour costs far higher than, say, Toyota’s. But that’s by no means the whole story, and McArdle breaks it down rather lucidly. Among other things:
During those years of oligopoly, the Big Three’s first loyalty (after their loyalty to management) was loyalty to the union. The worst thing that could happen to a Big Three manager was a strike. Making a car that is reliable is only partly a matter of engineering; it’s mostly a matter of extremely tight control over the assembly process. That tight control is necessarily less pleasing to the workers than looser rules. The unions could severely hurt a company with a strike. Whereas the customers? The customers could only go to another company where the same union was negotiating the same loose work rules.
[...]
After the unions, for the Big Three, the government was the next most worrisome constituent, followed by the dealers, then the suppliers. The customers were somewhere down there with the mayor of Youngstown, Ohio, in emotional importance to Detroit managers. It’s not that the managers in Detroit had anything against their customers, and I’ve no doubt that they had lots of meetings in which they made moving testimonials to the gosh-darned swellness of Chevy or Buick or Mercury buyers. But the buyers had little power to punish them, and their other constituencies could make their lives miserable.
Read The Whole Thing.
I’ll leave you with a connection between the credit crisis and the Carpocalypse, from McArdle’s article:
Detroit didn’t make a big profit by selling you a Ford Taurus. It made money on financing your Ford Taurus; often, the car was sold at a loss in order to get the finance business. The Big Three were banks manufacturing cars as a loss leader.
I’m not opposed to unions in theory, but largely I am in practice. My major problem with unions is when they are joined to the power of government: closed shop states, etc. I have been compelled to pay union dues when I didn’t want to, by force of law. When the Unions get the ability to make you vote publicly, it will be even worse.
People have the right to freely associate, even form into unions. If they can persuade and convince enough people to do so that they get bargaining power through numbers, then great. But when they use the power of government, they are communists. When union thugs are threatening and assaulting people, and damaging property, they are simply criminals. Nothing gives the collective the right to violate other individual’s rights.