Robert Reich says Obama will let GM disappear

[dkf]

The only practical purpose I can imagine for the bail-out is to slow the decline of GM to create enough time for its workers, suppliers, dealers and communities to adjust to its eventual demise. Yet if this is the goal, surely there are better ways to allocate $60bn than to buy GM? The funds would be better spent helping the Midwest diversify away from cars. Cash could be used to retrain car workers, giving them extended unemployment insurance as they retrain.

But US politicians dare not talk openly about industrial adjustment because the public does not want to hear about it. A strong constituency wants to preserve jobs and communities as they are, regardless of the public cost. Another equally powerful group wants to let markets work their will, regardless of the short-term social costs. Polls show most Americans are against bailing out GM, but if their own jobs were at stake I am sure they would have a different view.

So the Obama administration is, in effect, paying $60bn to buy off both constituencies. It is telling the first group that jobs and communities dependent on GM will be better preserved because of the bail-out, and the second that taxpayers and creditors will be rewarded by it. But it is not telling anyone the complete truth: GM will disappear, eventually. The bail-out is designed to give the economy time to reduce the social costs of the blow.

http://www.ft.com/cms/s/0/528ba940-4e19-11de-a0a1-00144feabdc0.html

[Amonester]

1. retrain car workers? retrain them to do what?

operate cash-registers at mccornals? or hard-coders without jobs?

[dkf]

2. I was wondering that myself.

That's always been the free market mantra, but I'm not sure Obama's green jobs are going to materialize or be good paying. Other than energy, I don't see where we are going to see job growth. Maybe health care? Nursing/Care homes? That is tough work.

[cherokeeprogressive]

5. An assembly line is an assembly line. It doesn't matter what you're putting together.

n/t

[Selatius]

7. Ideally, public works programs would put them to use.

If a truly visionary president were around, they would be hired up and used to build a high-speed rail network crisscrossing the country connecting American cities and be used to manufacture wind turbines for wind power and solar power collectors. More could be used to manufacture trams and fleets of buses that would serve smaller towns and cities and would connect to the major backbones of the high-speed rail network. Then you would need a bunch of them to maintain and upgrade all this new infrastructure over the years.

These are all the musings of one individual, though, but God we used to have leaders who thought big like this.

[krawhitham]

8. high speed rail

[depakid]

10. Retooling and rebuilding the nations rail system would be a most rational thing to do

Once gas prices rise to $7, $10 and higher per gallon, a LOT of folks will be screaming about why this wasn't done yesterday- and why there's no public transportation to where THEY live, even though most of them were chronic complainers about government and mass transit throughout their adult lives.

[sandnsea]

13. There are already green job training programs

Hanford is training hundreds of people to do clean-up work. Others are being trained to work on windmills. Maybe Robert Reich could write about some of those programs.

[Beacool]

3. I think that our heyday as a nation is long gone.

"Behind all of this is a growing public fear, of which GM’s demise is a small but telling part. Half a century ago, the prosperity of America’s middle class was one of democratic capitalism’s greatest triumphs. By the time Wilson left GM, almost half of all US families fell within the middle range of income. Most were headed not by professionals or executives but by skilled and semi-skilled factory workers. Jobs were steady and health benefits secure. Americans were becoming more equal economically.

But starting three decades ago, these trends have been turned upside down. Middle-class jobs that do not need a college degree are disappearing. Job security is all but gone. And the nation is more unequal. GM in its heyday was the model of economic security and widening prosperity. Its decline has mirrored the disappearance of both."

All this is very depressing.

:(

[dkf]

4. I wonder if we can provide large profitable items that the world

wants and will pay for.

I'm not sure what that would be.

[TheBigotBasher]

6. You really do need universal health care to do this.

I had a post on DU about this but it was deleted (I do have it on my blog). US employment costs are too high because the direct cost of health care falls on the employer. This has to be picked up in prices. It is near impossible to squeeze employees more, you have fewer holidays and longer hours than almost any industrialised Nation, unless of course you want to start competing with Third World Nations.

Just as the New Deal saved capitalism, Universal Health Care (sod "single payer") can save it again. Congress, not just the President need to to wake up to that.

[kiranon]

15. But it was foreseeable. My economics professor told us this in the 60's.

GM and everyone else in big business knew this was going to happen. They chose to ignore it for short term gains - their own. The average person may not have realized this would happen and may not have believed it but the world has moved on and to get ahead one has to get a good education. It's time to treasurer those "pointed headed intellectuals" and hope your children and grandchildren will be one.

[AllentownJake]

9. Just like we allowed the US Steel Industry to disapear

I empathize with the communities that are being hit by this. My region, faced a similar circumstance 20 years ago, when Bethlehem Steel, once the icon of American industrial strength ceased operations here.

The fact is, that the elites, the people who control the wealth, no longer value the American worker. To be honest the only reason they ever did was after World War II the American worker was the only game in town as all other nations had their infrastructure bombed into oblivion. Right now they value the American military but we will see for how long that is.

[TheBigotBasher]

11. Margaret Thatcher broke the power of the Coal Miners

and Brown and Blair dug the last stake in. Many many communities were devastated, whether that was a good thing is highly debatable (we do not have power cuts now).

Industries die. Often their death is caused or encouraged by Government policy. What makes a good government is how they handle that death. Given where the Car building communities are, I am not sure it will be handled well.

I remember arguing taht £100s of millions that were to be spent on Wembley should have been given to its residents. Of course that never happened so the money has been spent on a new stadium and short term projects for the poor. At the start of the recession, unemployment levels remained the same. I still think giving everyone in that area a £20k kickstart would have been more productive.

I guess common sense rarely applies to public policy.

[AllentownJake]

12. You have to remember who these guys answer to.

It isn't the people. Democracy is really an illusion.

The money spent on the stadium can be funneled into the right pockets.

Give everyone 20k? Who the hell knows what the masses will do :shrug:

[ClarkUSA]

14. And how does he know this exactly? Does his crystal ball predict lottery outcomes, too?

[Jennicut]

16. The days of products made in the USA are over, it all about service industries

and technology and crap like that.
Sad but true. This was happening long before we voted in Obama as President.
Depressing...