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Let G.M. go bankrupt

blogs.law.harvard.edu

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Re: Let G.M. go bankrupt

#61

Post by jbert »

steveplace wrote: post #60
jbert wrote: post #10

Earlier quoted context omitted.

> 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-…

1 - in general, higher risk => higher reward (if the risk comes off ok) That's why we look at risk-adjusted returns.

But if the risk pays off, the returns are there right? And give the risk-taking company an advantage over it's competitors?

It seems companies can't affored to account for low-probability, high-impact risks. If they do, they'll be out-competed by those who don't (unless/until such an event occurs).

Re: Let G.M. go bankrupt

#62

Post by timr »

benzim wrote: post #58
eru wrote: post #56

Earlier quoted context omitted.

Any sources for the 'sitting rooms'?

http://wsjclassroom.com/archive/06may/auto2_jobsbank.htm 15,000 workers are paid to do nothing.

From the linked article:

"While GM often blames "legacy costs" such as retiree health care and pensions for its troubles, its Jobs Bank SHOWS THAT THE COMPANY HAS INFLICTED SOME WOUNDS ON ITSELF. Documents show that GM itself helped originate the Jobs Bank idea in 1984 and agreed to expand it in 1990, seeing it as a stopgap until times got better and workers could go back to the factories. The idea was to help train or find jobs for senior UAW employees who would "otherwise be permanently laid off" because of better technology or higher productivity. Ford later matched the plan for its UAW employees."

(emphasis mine)

I couldn't have linked to a better article to help make my point -- the management is so incompetent that they would rather have senior employees sitting idle than simply giving them retirement or severance packages. That kind of goofy, short-sighted thinking wasn't imposed upon GM management by the UAW.

Re: Let G.M. go bankrupt

#64

Post by thwarted »

hugh wrote: post #54
thwarted wrote: post #50

Earlier quoted context omitted.

http://www.google.com/search?q=define:cartel s/(firm|enterprise|organization)s?/people/g In as much as UAW, for example, couldn't be considered a "firm" or an "enterprise" already. In some sense, UAW is a contracting firm whose service is its members' work product.

The main difference between the UAW and a regular contracting firm is that if I decide to stop buying labour from a regular contracting firm, that firm can't and won't wind up blockading my factory entrance and trying to stop my new labourers getting in. Whereas if GM tried firing all its union employees and hiring non-union labour instead... well, I'm sure you can guess what would happen. If the UAW were a regular f…

That's good point. However, the UAW's ability and tendency to blockade the factory entrance could be _worse_ than a regular firm or a cartel in some respects.

Re: Let G.M. go bankrupt

#65

Post by hugh »

thwarted wrote: post #64
hugh wrote: post #54

Earlier quoted context omitted.

The main difference between the UAW and a regular contracting firm is that if I decide to stop buying labour from a regular contracting firm, that firm can't and won't wind up blockading my factory entrance and trying to stop my new labourers getting in. Whereas if GM tried firing all its union employees and hiring non-union labour instead... well, I'm sure you can guess what would happen. If the UAW were a regular f…

That's good point. However, the UAW's ability and tendency to blockade the factory entrance could be _worse_ than a regular firm or a cartel in some respects.

Er, yes, well of course, that was my point.

Re: Let G.M. go bankrupt

#66

Post by jhancock »

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.

America is a Democracy or a Republic, not a "Capital-something". Capital is just a tool. A smart country reaches into its toolbox and chooses the best tool for the job. Extreme models; extreme capitalism, extreme free-market views, etc... will always get you into trouble. It pays to be agile.

Should we bail out GM? I don't want to, but if we do it won't crack my top 10 list of things the gov wasted money on over the last 20 years.

Re: Let G.M. go bankrupt

#68

Post by jbert »

gaius wrote: post #14
jbert wrote: post #10

Earlier quoted context omitted.

> 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-…

Economists call this the Dotcom Fallacy.

What's the fallacy? Why is it an incorrect strategy?

If your competitors are following it and you don't, aren't you at risk of being bought/losing a price war/losing market dominance?

Re: Let G.M. go bankrupt

#69

Post by davidw »

rw wrote: post #63

My family survives on G.M. salaries.

Wouldn't it make more sense to cut out the middleman and help out families in trouble, rather than bail out entire companies that have been declining for years?

Incidentally, this is yet another article that really is just politics/economics. Sigh.

Re: Let G.M. go bankrupt

#70

Post by dougp »

thomasmallen wrote: post #49
arockwell wrote: post #42

Earlier quoted context omitted.

Being an autoworker is not a skilled job anymore. Anyone can learn to do this.

Anyone can learn to be a computer programmer too. It's called a skill. Unskilled labor requires very little learning, if any.

Ask an intro to CS Teacher about that. Many would disagree.
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