The 6 Pack Economist

One of the ads that google gave me when I was re-reading my post on the death of capitalism was on Socialism vs Communism.   I find it entertaining because the difference is simple.  Socialism is communism with sugar on top.  Its like argueing if its better to be stuck in the water with a bunch of tiger sharks or great white sharks. 

In socialism the incrediably rich don’t have to change their name.  In communism they have register as part of the communist party.  Anyone not part of the super rich get screwed in either system.  Socialism will legislate the small guy out of business while communism just take it.

And remember all big corporations started as small business.

So who is to blame at the UAW for this mess?  My last post talked about the corporations blame.  This one will go into the UAW blame.

 I never begrudge someone from making a good living and trying to become rich.  I hope to be there one day.  What I don’t like is when it gets abused.  And looking at the salaries of the UAW, I firmly believe that it was abused.  

 Unions can be just as short sighted as Corporations and this is definitely the case with the big 3.  Who signed these contracts?  147K a year (salary plus benefits) for an assembly-line worker?  Is there a special talent needed for this or perhaps many years of technical training?  Just a high school degree and a good work ethic (plus a connection I am sure) is all that is needed. 

 I think what we have here is a supply and demand problem.  I can’t believe that the supply of high school grads with a good work ethic is so low that these assembly line workers can demand such a high salary (I would love to get the salary by the way).  I will never begrudge someone from getting a good salary but this is just ridiculous.

 Was there a time when the big 3 controlled all and were so full of profits that they could pay these salaries? Sure there was, oddly enough it was when they were making some of their worst products.  The unions pushed to get ever little bit they could out of the corps with the idea that they were only going to get stronger and would be able to pay these benefits.  But alas like all things, this was soon to change. 

 Now Detroit can no longer pay these extravagant salaries (the upper management too).  Detroit needs to change and change fast.  They need to cut costs and make better cars.  Some people will have be cut or everyone will have to be cut.

 Figures, just when they make a car I am really excited about too.

 NOTE: Although the orginal salary was based on a shady number, the real number is closer to $55 an hour for pay and benefits or about 100,000 a year.  Still seems like their would be a larger supply of people willing to the do the job then the demand for the jobs but who knows.

So the Big 3 American Auto companies look like they are screwed.  I have mixed feelings about this.  First off I think they put themselves into this situation, from the CEOs to the UAW.  On the other hand I always like my Fords, Dodges, and Cadillac (I drive two GM products right now) so I would hate to think that they would be gone.

 I do believe that the big 3  treated their customers like a bunch of dumb hicks for way to long especially from 70’s to late 90’s.  In the late 90’s even GM realized they may have to put money into research and development.  In addition they had to at least compete with the imports (Japanese, the Germans have never been too much better then the domestics) on the issue of quality.  The Japanese put out a very reliable automobile in most segments.  By the time the 1990s came around the Japanese cars have established a reputation for reliable cars (sure the wheel wells rusted out, but it still ran).  Meanwhile GMs, Fords, and Chryslers were making a reputation for inferior quality.  The market began to change and the big 3 refused to recognize this.  Unfortunately once your reputation for long-term reliability is lost it takes a long time to get back. 

 The only thing that saved the big 3 or at least staved off this problem for a few more years was the low-gas prices, OJ Simpson making Ford Broncos famous, and a series of bad winters in the north east.  The SUV and Big Trucks ruled the road and the Big 3 were good at making them.  Even during the dark days of the “80’s crappy domestics” the American companies were good at rear wheel drive V8s. 

 In what has become typical of American corporations all emphasis was on short term profitability.  R&D and marketing went into SUVs while the lower profit cars languished.  The Japanese were able to make steady gains within in the car market which was virtually ceded to them by the domestics.  Other then ford, which had a few nice cars in the late 90’s, looking for a domestic car was pretty disappointing.  All of their money or profit was going to marketing SUVs.  These short sighted fools held onto a belief that gas prices will never rise or that the imports will not start making some fine SUVs to compete with the domestic golden goose.

 In late 2006 the weather forecast was in and a perfect storm was coming.  Gas prices were rising, imports were making better SUVs, and a recession was on the horizon.  The big 3 had all of their eggs in one basket and that basket was smashed.  The innovation and quality improvements that they made in their product came too late, the well they poisoned for so long was going to take a lot longer clean up. 

 
My next post will go into what the UAW did to help cause this.

What a freaking joke.  I can’t believe that every other actor’s agents besides vanilla ice allowed them to make this movie. 

Ok I have wasted enough time watching this crap movie.  But it really does make you appreciate the test pattern.