Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Let Detroit Go Bankrupt

nytimes.com

Post reply on HN
Print view View original

161–170 of 193 posts

Re: Let Detroit Go Bankrupt

#161

Post by mdasen »

turkishrevenge wrote: post #153
mdasen wrote: post #82

Earlier quoted context omitted.

Interesting question: who deems what a job is worth to society? Many things: First, we all do. As a simplistic example, would you hire me at $50/hour to patrol the front of your house for squirrels? No. No matter how diligent or hard-working I was, that function is not worth $50/hr to you. In fact, it may be worth nothing at all. A little less simplistic: would you keep me on fulltime staff to clean your apartment or…

"If your company produces 1 car for every 50 hours of labor and another company produces 1 car for every 25 hours of labor, your labor isn't worth as much. If I can automate processes that save time, my labor becomes worth more and yours less." If you automate a process, your labor is worth less. That's the point of automating a manual process--it's necessary to produce competitive advantage. Simultaneously, it allow…

I should have been more clear: If I can automate a process that saves time, my labor becomes worth more with me as the automator.

Let's say you work at a University in Residence Life. Each year, 5,000 students all pick where they want to live by coming up in person to you and 4 other people who have to coordinate room availability, write everything down, etc. It takes a long time and requires 5 people. The next year, you write an awesome Web 2.0 app that students can log into and just deal with it in an automated fashion. The labor of the 5 of you hand-doing that process declines. However, you're now doing new labor: that web 2.0 app! That Web 2.0 app does the work of 5 people and only requires YOU! That means that your labor on the automation process makes your labor more valuable (roughly 5x more valuable) while the labor of those who don't automate the process becomes less valuable.

Likewise, let's say we both work at investment firms and we're told to get standard investing data on 10,000 stocks each off Google Finance. If I go through an manually type it in and write it down, that will take a long time. If you write a script that does it in minutes, your labor is more valuable than mine. Therefore, if you can automate a process, your labor becomes worth more since you're getting an inanimate object to do your work for you and being more productive because of it.

Re: Let Detroit Go Bankrupt

#162

Post by fallentimes »

LukeG wrote: post #157
DanielBMarkham wrote: post #121

Earlier quoted context omitted.

"it's pretty fucking difficult to find another job when after 20 years the only thing you're qualified to do is work in a general motors factory" I've always had a problem with this argument. If you work 40 hours a week, you've easily got time in 20 years to do anything you'd like to do -- including becoming a brain surgeon. I'm honestly not trying to be cold about it, but the rest of us live in a world, especially i…

Lots of great comments here, but not this one: you cannot work 40 hrs/week, have a family, and become a brain surgeon in your spare time. I have 5 doctors in my immediate family and know a bunch more in medical school, and you have no idea what you're talking about. That being said, I'm with you about needing to learn new skills. The days of the company man are over, and in our new world you need to have a set of ski…

We're all free agents. It's a lot of fun.

Re: Let Detroit Go Bankrupt

#163

Post by Retric »

LukeG wrote: post #157
DanielBMarkham wrote: post #121

Earlier quoted context omitted.

"it's pretty fucking difficult to find another job when after 20 years the only thing you're qualified to do is work in a general motors factory" I've always had a problem with this argument. If you work 40 hours a week, you've easily got time in 20 years to do anything you'd like to do -- including becoming a brain surgeon. I'm honestly not trying to be cold about it, but the rest of us live in a world, especially i…

Lots of great comments here, but not this one: you cannot work 40 hrs/week, have a family, and become a brain surgeon in your spare time. I have 5 doctors in my immediate family and know a bunch more in medical school, and you have no idea what you're talking about. That being said, I'm with you about needing to learn new skills. The days of the company man are over, and in our new world you need to have a set of ski…

I know someone who decided to became a Doctor at 30 (no kids or wife). He did not go to a top med school but he graduated without debt and works in the ER. Now he has a wife, but no kids and works part time so he could become a brain surgeon. It's cheep to live a lower middle class existence and working full time in the summer you can make a lot of money to live off of the rest of the year. The idea that you need to go to a top med school and then as soon as you become a doctor you start driving a BMW is why most of his coworkers are poor and he has a nice savings.

Re: Let Detroit Go Bankrupt

#164

Post by redrobot5050 »

mdasen wrote: post #80
jmtulloss wrote: post #74

Earlier quoted context omitted.

Can you site that $73/hour wage? A cursory glance around the internet indicated something around $30/hr as of last year. The only places I saw $73 were other forums, but maybe they all have a common, legit source.

I cannot say what the previous person was referencing, but NPR has a great comparison of GM and Toyota at http://www.npr.org/news/specials/gmvstoyota/ If you read the list, it looks like you're both (partially) correct. The average hourly salary for non-skilled assembly-line workers is a little over $31. However, GM's labor cost per hour exceeds $73/hour for those workers. So, in terms of GM's costs, it's over $73/ho…

No, see, people have the figure wrong. It costs GM $73/hour for labor because GM is still supporting retirees (that retire early, at age 50) with health care and a 70% salary pension. To cover those costs, for some reason, they cover it as "labor costs",

This makes the union look bad, while simultaneously ignoring the fact that GM made tons of crap vehicles nobody wanted and has never tried to innovate.

Re: Let Detroit Go Bankrupt

#165

Post by msluyter »

sethg wrote: post #107
crabapple wrote: post #64

Earlier quoted context omitted.

Because if the Big Three go under, a very large number of workers (folks working for the Big Three and for their suppliers) will suddenly be collecting unemployment insurance instead of paying taxes and they will also paid in taxes if bailed. so GM is going to become a giant money laundering operation for the IRS? cut out the middleman and put them on unemployment...then they can actually find PRODUCTIVE work

The unemployment would cost the government more than the bailout. One could argue that it would still be better off in the long term for the government to bite the bullet and pay that unemployment money than to keep the US auto industry afloat; I am partial to that argument myself. But I'm responding to the "why should a waitress at Denny's..." question.

Not sure why this has been modded down so much.

Assume all of the big three are liquidated. What would be the total cost be to the economy? First we'd lose income tax revenues from an estimated 3M people. Let's assume an average pre bankruptcy wage of 50k/yr (a little less than 30$/hr). And let's assume a conservative tax rate of 10%, or 5k/yr. That's 5k * 3M = 15B. Assuming each employee is unemployed (on average) for 6 months, we can assume 7.5B in lost income tax revenue alone. Add in 6 months of unemployment at 362/week = 8688/person * 3M = another 26B. That's 33.5B, and we haven't even factored in all sorts of intangible costs related to the massive unemployment and deflation that would result (crime, medicare, etc...)

There may be other factors I haven't counted, but on the face of it a 25B bailout is the cheaper option. I understand the argument that the same problem will just recur a year later or whatnot, and they'll need another bailout, but there are reasons to hope that at least some of these companies will have a better chance in the future: the Chevy Volt, the release of some of GM's pension obligations in 2010, Ford's 65mph diesel, etc...

I quite understand the "punish them for being stupid" sentiment (and share it), but I think it's somewhat reflexive and not always the most rational approach.

Re: Let Detroit Go Bankrupt

#166

Post by redrobot5050 »

Locke wrote: post #54
crabapple wrote: post #12

Earlier quoted context omitted.

As we save the companies that crippled the credit markets, we have no interest in spending a fraction of that same amount of money helping the companies most negatively effected by the condition of those same credit markets. are you trying to tell me that gm is simply a victim of the credit crisis??? why would a bank loan them money now?? aren't we all about responsible lending now?? lending money to gm is the corpor…

Yes. How do people buy cars? On credit. Harder to get credit means fewer people capable of buying cars. A bad economy means fewer people buying cars. GM et al, did not create the credit crisis. They did not create the bad economic conditions. But we want them, and more importantly, all the people working in that industry to suffer? Honestly, I can't imagine how letting them fail won't cause more than 25 billion in ec…

GM did create part of the credit crisis. DiTech.com. Its primary business was the variable-rate (aka "teaser rate") ARMs and home equity re-financing. In short, GM put a sizable amount of cash into the sub-prime loan market, and got burned just like everyone else.

Re: Let Detroit Go Bankrupt

#167

Post by Tichy »

antidaily wrote: post #139
Tichy wrote: post #129

Earlier quoted context omitted.

Then why do they have a problem?

Financial wing GMAC got killed by subprime, the credit crunch, gas prices... all that on top of lagging sales. Sure, some of that perfect storm is their own fault. But, it's not as simple as "their cars suck" and "the workers make too much money".

Well if gas prices and credit crunch lead to people shunning big cars, then GM builds the wrong type of cars. I don't think you can blame the gas price on an evil conspiracy.

Re: Let Detroit Go Bankrupt

#168

Post by ars »

sethg wrote: post #150
ars wrote: post #86

Earlier quoted context omitted.

You're talking like his job was an entitlement. Companies go bust and people lose jobs, it happens a lot. The reason people are talking UAW workers that way, is not because they begrudge the individual worker like your father - they don't. It's because the car companies were not allowed to fire or lay off people as they wished, which gives a very strong impression of entitlement and job guarantees amongst UAW workers…

Every contract has two sides, so I don't see why the UAW should be singled out for blame here. The management must have believed that their contract with the auto workers would still leave them enough cash to make a profit--otherwise they never would have signed the contract in the first place!

No, I'm quite sure they signed under duress - it was sign or a strike. Usually contracts made under duress are invalid, but not when it's a union.

What makes it worse is that even the employees were under duress - even if they wanted to work, and were not interested in a strike, they couldn't.

Re: Let Detroit Go Bankrupt

#170

Post by mattmaroon »

astine wrote: post #132
mattmaroon wrote: post #103

Earlier quoted context omitted.

Government cannot exist without redistributing wealth. You've been listening to too many Palin rallies. Every time a government changes tax rates, wealth gets redistributed. Every time it builds a school or a road, wealth is redistributed. Every economic policy redistributes wealth. I hope the I just redistributed your 2 cents :)

I think that he means explicit wealth redistribution. If government uses your tax money to to finance the police system, sure it is moving wealth around, but a healthy police is necessary for a free society and functioning economy, so in the end, everyone benefits. This is different from just taking from one group and giving to another.

Well, if the government takes some tax money and uses that to prop up an industry that directly or indirectly employs 6 million people, that too helps everyone. Those people while employed buy things, pay taxes, don't create an oversupply of workers that lowers wages for everyone, etc.

It's not as cut and dry as some Robinhoodesque vision of taking taxes from some and giving to another, which McCain and Palin wanted you to believe. It's quite possible that the $25 billion loaned will not only return the taxpayers more than $25 billion directly, but also create a net positive economic impact of more than that.

Post reply on HN