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Let G.M. go bankrupt

blogs.law.harvard.edu

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Re: Let G.M. go bankrupt

#31

Post by nradov »

jbert wrote: post #10
Kilimanjaro wrote: post #6

Let * go bankrupt That's what capitalism stands for. Those who kept a well managed admin and saved for the worst should be rewarded, not those who failed.

> Those who kept a well managed admin and saved for the worst should be rewarded, not those who failed. There's an interesting issue there, though. Given: 1 - in general, higher risk => higher reward (if the risk comes off ok) 2 - fast growing competitors can dominate a market, wage a price war or buy slower-growing companies Isn't there a potential problem that companies which are sensibly prudent can be simply out-…

GM was not ruined by a low-probability devastating event. They made bad management decisions over and over again for decades. This was a train wreck that everyone could see coming from miles away.

Re: Let G.M. go bankrupt

#32

Post by sown »

Kilimanjaro wrote: post #6

Let * go bankrupt That's what capitalism stands for. Those who kept a well managed admin and saved for the worst should be rewarded, not those who failed.

"That's what capitalism stands for."

I think that is something we tell ourselves even though it is not really true. We live in some amalgamated economic system built on various rules of thumb, tradition and what ever else works to at least try to benefit real people and not perceptions. I guess the system also gets out of hand at times. ;)

Re: Let G.M. go bankrupt

#33

Post by timr »

mdasen wrote: post #2

I doubt this would happen. Of all the players involved, it's probably the UAW that has the most to loose in a Chapter 11 situation. What's killing GM (and the other American auto manufacturers) is the unreasonably high labor obligations they have accumulated back when the industry was an oligopoly. The question is, will a president who ran as union-friendly allow UAW workers to loose a ton? GM has a lot of people on…

I'm tired of reading posts by internet libertarians, blaming the GM employees for the sins of the company.

GM's labor costs are high because of pension costs. They promised an entire generation of workers old-age benefits if they gave their life to the company, and now the company wants to eliminate that deal, because they simply didn't plan for it correctly (oh yeah...they also made crappy, fuel-inefficient products that nobody wants).

My grandfather was one of those pensioners. He retired from GM after over 30 years -- having sacrificed his hearing and his back to the job -- and the pension gave him a modicum of comfort until he died. His widow still relies on it to survive. There are thousands of other people just like them, who made a deal with the company in good faith, that the company would just love to revoke.

I think GM should be allowed to go into bankruptcy, but if they do, the judge would do well to fire or eliminate the salary of every executive who failed to plan for pension costs, resisted fuel-efficiency standards, eliminated new product programs, and otherwise destroyed the company. Then, perhaps they can think about cutting the pension benefits of the blue-collar guys who gave their health to a corporate machine.

Re: Let G.M. go bankrupt

#34

Post by ojbyrne »

hugh wrote: post #29
thomasmallen wrote: post #27

Sure, do just that, but you'd better have a damn good safety net unless you want Detroit in flames. In spite of my libertarian views, this is why I voted for Obama: On the issue of labor. I figured that the economy was already screwed, and we needed somebody who could look out for the middle class that will be left to the wolves.

Auto workers are a pretty weird subspecies of the "middle class" though. As far as I can figure out, they're lower-class people with lower-class jobs who get upper-middle-class money.

I visited some auto manufacturing plants back in the 90s and the managers were very careful to point out that being an auto worker required a significant amount of math, computer programming and statistics because of Statistical Process Control, and Robotics, and they would point out that some of their foremen had masters degrees. High wages breed competition.

Re: Let G.M. go bankrupt

#35

Post by omouse »

thomasmallen wrote: post #27

Sure, do just that, but you'd better have a damn good safety net unless you want Detroit in flames. In spite of my libertarian views, this is why I voted for Obama: On the issue of labor. I figured that the economy was already screwed, and we needed somebody who could look out for the middle class that will be left to the wolves.

Detroit has been fucked for a long long time.

Re: Let G.M. go bankrupt

#36

Post by byrneseyeview »

Goladus wrote: post #23
modoc wrote: post #17

Earlier quoted context omitted.

Is there a reason to bail those companies out of bankruptcy with tax payer dollars? If you're simply pointing out the potential advantage that a large number of higher risk competitors may hold, remember that advantage is tempered by lacking the pole position and the resources that the large company typically enjoys. My startup is competing against some very large companies, and while we are faster, cheaper, better s…

> Is there a reason to bail those companies out of bankruptcy with tax payer dollars? If it's a company that would be almost certainly successful and profitable but is caught in a bind because of the freeze in capital, then it can be a good idea. The resulting economic slowdown can cost taxpayers significantly.

If it's a company that would be almost certainly successful and profitable but is caught in a bind because of the freeze in capital...

Then Warren Buffett will buy it out. If it's a company that is a bad, high-risk investment, its managers will skip asking big outside investors (there are plenty of hedge funds and private equity shops with spare cash on hand) and go straight to the government.

Re: Let G.M. go bankrupt

#37

Post by indiejade »

Good idea.

GM should accept the fallout resultant from their poor production choices.

American auto manufacturers, GM especially, kept rolling out massive gas-guzzling SUVs, trucks, etc when the rest of the conscientious world was switching to smaller, more fuel-efficient vehicles. GM's production decisions, coupled with their obliviousness to market economics and the shift of tastes in the _world_ economy is what hurt them. A governmental bail-out of GM would be devastating, really. Let the old, tired monolith die so that baby innovations can bloom.

Re: Let G.M. go bankrupt

#38

Post by byrneseyeview »

thomasmallen wrote: post #30
hugh wrote: post #29

Earlier quoted context omitted.

Auto workers are a pretty weird subspecies of the "middle class" though. As far as I can figure out, they're lower-class people with lower-class jobs who get upper-middle-class money.

What makes that a lower-class job? The fact that you're not at a desk? However, you make a good point: I maintain that the prevelant college degree requirement for most desk jobs is responsible for the declining middle class. We're barreling towards a two-class system with a college degree as the price of admission into the upper class.

What makes that a lower-class job?

If you can only get a high salary by joining a cartel, you are in a low-class job. If you join the cartel instead of earning what you're worth or finding a different line of work, you are a low-class person.

Re: Let G.M. go bankrupt

#39

Post by Dilpil »

ojbyrne wrote: post #34
hugh wrote: post #29

Earlier quoted context omitted.

Auto workers are a pretty weird subspecies of the "middle class" though. As far as I can figure out, they're lower-class people with lower-class jobs who get upper-middle-class money.

I visited some auto manufacturing plants back in the 90s and the managers were very careful to point out that being an auto worker required a significant amount of math, computer programming and statistics because of Statistical Process Control, and Robotics, and they would point out that some of their foremen had masters degrees. High wages breed competition.

Your confusing the engineers with grunts.

Re: Let G.M. go bankrupt

#40

Post by thomasmallen »

byrneseyeview wrote: post #38
thomasmallen wrote: post #30

Earlier quoted context omitted.

What makes that a lower-class job? The fact that you're not at a desk? However, you make a good point: I maintain that the prevelant college degree requirement for most desk jobs is responsible for the declining middle class. We're barreling towards a two-class system with a college degree as the price of admission into the upper class.

What makes that a lower-class job? If you can only get a high salary by joining a cartel, you are in a low-class job. If you join the cartel instead of earning what you're worth or finding a different line of work, you are a low-class person.

A union is a cartel now? Are you shitting me? It's amazing how anti-labor people are nowadays.
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