Dear Mr. President,
I recently purchased a new GM vehicle and was wondering when it would be delivered. I'm not sure if the vehicle I bought is an SUV, sedan, or sports car. I would really like a sports car but my wife will object, because we have two young children and it would simply be an impractical investment.
If my purchase doesn't ring a bell with you, I purchased the vehicle through a fantastic new government program where the federal government takes my money directly out of my paycheck and gives it directly to GM, skipping the whole retail process. Very clever really. No sleazy salesmen, or difficult choices.
I really don't need another vehicle, but I wasn't given a choice in the matter, so I will accept whatever you send me. After all, they say "you shouldn't look a gift horse in the mouth", though technically it's not a gift, since I will have to pay for it over the next 20 years or so.
A few weeks ago I noticed that you added some upgrades to my purchase. Does this mean I will be getting leather seats or a NAV system? My wife and kids are so excited. My little girl is only 4, but she already understands that someday this vehicle will be hers (she's too young to understand that she will be paying for it). Your clever financing program is sure to be a model for all types of businesses in the future. Good work!
This morning, I understand you are announcing that there will be some additional cost. If this is a requirement to buy the undercarriage anti-rust treatment in order to receive the premium package I'm not interested. I also understand that you are not offering any warranty on this vehicle. I must admit, I'm not happy about this.
When it was first announced that you would be taking away my money to buy a GM vehicle for my family, I thought WOW! This is so much easier than dealing with a salesman on the lot. Those shifty salespeople are always trying to nickel and dime customers for additional options. They agree on one price, but continuously return with additional costs, then they claim that they have to go "talk to their sales managers" to see if they can adjust the invoice. I hate that, and believe it is what killed GM over the years. I was hopeful "bait and switch" sales tactics wouldn't be the case here, but I am apparently wrong.
So, I guess I will play the game (don't really have a choice). Please go talk to your sales manager, and tell Mr. Axelrod that I demand a warranty if I am going to purchase the premium package.
Sincerely,
Scott Gaspar
Tulsa, Oklahoma
P.S. When will my vehicle be delivered?
Yeah yeah yeah.
All cutesy-ness aside, I'm inclined to believe GM is dead in the water. I don't know how many people GM employs, and I doubt the Administration wants them all on the unemployment line, but I have a feeling it's going to happen.
I like it!
But in all honesty, GM is a breath away from being dead in the water. I was really hoping I was wrong in that assessment, but they just dug too deep of a hole and their business model never adjusted for it. Sure, the last couple years they have made some moves in panic mode - too little too late:
GM Auditors: There is significant doubt that General Motors can continue to be classified as a going concern. (http://money.cnn.com/news/newsfeeds/articles/djf500/200903050842DOWJONESDJONLINE000649_FORTUNE5.htm")
Wait a minute. . . does this mean I'm not getting a car?
???
I kind of question whether or not "Nationalization" would be on the table in the case of GM. It might be.
The auto industry is in serious trouble. They were hit hard in 2002-2003, and just when it looked like they might come back, the floor drops out.
All of the big three are antiques. They refused to really even make a half-baked attempt at retooling. They were too busy trying to keep shareholders happy, and weren't willing to spend the money to insure future stability. GM and Ford are still technically years behind Toyota. Maybe a decade behind. Ford is in a little better shape.
I don't like GM's apparent thought processes. Sure, the hybrid Escalade gets near 50% better gas mileage than a non-hybrid Escalade. But 50% better than crap, is still crap. They don't seem to understand, or they don't seem to be technologically in the right place, to even be logically competitive with Toyota or Honda. GM still seems to think it's future is in building the same vehicles it had five or ten years ago.
GM seems to be trying a little harder lately. It's probably too late.
Quote from: Gaspar on March 05, 2009, 08:48:58 AM
Wait a minute. . . does this mean I'm not getting a car?
???
Maybe not. But if you send this post to 200 people Bill Gates will send you a voucher for a new car.
Quote from: Trogdor on March 05, 2009, 09:01:57 AM
Maybe not. But if you send this post to 200 people Bill Gates will send you a voucher for a new car.
Well, it was reported last week that Bill Gates told his wife she was not allowed to use her Apple or purchase a new iPhone, so as an Apple user, I am reluctant to rely on him.
I do need to point out that Ford is not in the same boat. They are not doing great (says the man that bought in at $8, and figuring it must be a great buy reinvested at $5, and now sees it at $2), but they took some pain years ago in restructuring and retooling that the other two did not. They have not taken Federal Money and are not in real danger of being insolvent.
If Ford lives and the other two fail, it pretty well proves that they COULD HAVE survived if they played their cards correctly well after they were on notice of the possibility of failure (clearly all could have survived if they had been prudent decades ago).
I wonder what makes it so hard for companies like our US automakers to keep up?
We have other industries that continue to advance technologically, and update production systems to compete world wide. Heck, Honda plants in the US retool every couple of years and pump out new models and technologies at an astounding rate.
The automation systems in the Toyota and Subaru plants are amazing, and the quality control is second to none. Why can't we install the tail pipes on a caddy straight or put the hood on a GMC Yukon level on both sides? Why is the hood ornament on every Doge Strata crooked? Why does the heater on all Doge Dakotas leak hot air through the center vents when the AC is on? These problems I mention have existed for 10 years or more and everyone seems to just accept them. When you drive up behind even a new $40,000 Cadillac you expect to see one tail pipe tip mounted crooked. If you were to pull up behind a Mercedes or Honda Accord and see this, you would assume it had been in a wreck or something.
The demand exists. Toyota is selling Tundras like wildfire. The Nissan pathfinder, Toyota Sequoya, and other SUVs built here by Japanese companies are rolling off the lots. In the smaller car categories the Accords and Civics and even the new Scion division of Toyota moving well.
Why can't we do the same? What EXACTLY is the obstacle, that holds back our ability to compete?
We used to claim that these companies used cheap labor and we couldn't compete with that, but today they are all built right here in the US by Americans. Perhaps it's the fact that they use components made cheaply in other countries, but we do that now, too, to an even larger extent than they do.
What could it be? I just don't know.
Quote from: cannon_fodder on March 05, 2009, 09:44:16 AM
I do need to point out that Ford is not in the same boat. They are not doing great (says the man that bought in at $8, and figuring it must be a great buy reinvested at $5, and now sees it at $2), but they took some pain years ago in restructuring and retooling that the other two did not. They have not taken Federal Money and are not in real danger of being insolvent.
If Ford lives and the other two fail, it pretty well proves that they COULD HAVE survived if they played their cards correctly well after they were on notice of the possibility of failure (clearly all could have survived if they had been prudent decades ago).
Chrysler already said they will be solvent this month.
I haven't noticed those issues recently. Of course, I never noticed assembly issues on older US cars, either, only that they were much more likely to be seen broken down on the side of the road.
Mmmmm solvent.
(http://www.vintageagainsoutheast.com/images/SVG_Solvent_300400.gif)
Quote from: nathanm on March 05, 2009, 10:14:30 AM
I haven't noticed those issues recently. Of course, I never noticed assembly issues on older US cars, either, only that they were much more likely to be seen broken down on the side of the road.
Now every time you get behind a Caddy you are going to see it. Sorry for that. ;)
Quote from: Gaspar on March 05, 2009, 10:09:31 AM
I wonder what makes it so hard for companies like our US automakers to keep up?
You ever seen the movie "Who Killed The Electric Car"?
http://en.wikipedia.org/wiki/Who_Killed_the_Electric_Car%3F
It's about the EV1 (GM's all electric car), and some other car industry stuff.
Something that really stuck with me out of that movie: The Clinton Administration spent a lot of money on the auto industry to help develop Hybrid autos. When Bush came in, Hybrids were dropped for Hydrogen, and the auto industry just "threw it's hands up" and walked away from Hybrids.
During the Clinton Administration, Japan's auto industry looked at the hybrid as a serious economic threat. They were afraid that the American auto industry would get ahead. So Japan went hardcore into research and development; and came out with all the necessary tech. And, just as Japan was coming out with it's first mass produced Hybrid lines, America's Auto Industry just walked away and forgot about it.
It really set the stage for the tech and tooling gap. America's auto companies are definitely behind, and it's pretty much all their fault. They were just too interested in big gas guzzlers; they were making too much money on them to worry about tomorrow.
Quote from: Neptune on March 05, 2009, 10:23:04 AM
You ever seen the movie "Who Killed The Electric Car"?
http://en.wikipedia.org/wiki/Who_Killed_the_Electric_Car%3F
It's about the EV1 (GM's all electric car), and some other car industry stuff.
Something that really stuck with me out of that movie: The Clinton Administration spent a lot of money on the auto industry to help develop Hybrid autos. When Bush came in, Hybrids were dropped for Hydrogen, and the auto industry just "threw it's hands up" and walked away from Hybrids.
During the Clinton Administration, Japan's auto industry looked at the hybrid as a serious economic threat. They were afraid that the American auto industry would get ahead. So Japan went hardcore into research and development; and came out with all the necessary tech. And, just as Japan was coming out with it's first mass produced Hybrid lines, America's Auto Industry just walked away and forgot about it.
It really set the stage for the tech and tooling gap. America's auto companies are definitely behind, and it's pretty much all their fault. They were just too interested in big gas guzzlers; they were making too much money on them to worry about tomorrow.
But that doesn't really explain it. Hybrids are a minimal sector of the market. They are just now growing in popularity, and the investment costs are coming down to where someday the initial investment will be overcome by the fuel savings. They got a huge bump when gas prices went up, but not so much now.
The big Toyotas and Nissans, and Hondas are still selling against their US counterparts. But I think most people who own foreign cars will tell you that the important factors that influenced their decision were quality & reliability over fuel efficiency.
Quality & Reliability are huge problems for US automakers. Even if they are only perceived problems they still influence buying decisions, and have a huge impact. Honda turns out efficient, powerful 4 cylinder engines that run for decades with minimal maintenance, and the American public knows it.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ailpRc0A.y1s&refer=home (http://www.bloomberg.com/apps/news?pid=20601087&sid=ailpRc0A.y1s&refer=home)
Bloomberg sez:
QuoteSales tumbled 48 percent for Ford Motor Co., 44 percent for Chrysler, 38 percent for Honda Motor Co. and 37 percent for Nissan Motor Co. GM said it plans to build 34 percent fewer vehicles in North America next quarter, and Ford announced a 38 percent reduction from a year earlier . . . .
. . . Sales of Toyota's Lexus fell 38 percent, Bayerische Motoren Werke AG's BMW dropped 38 percent and Daimler AG's Mercedes-Benz declined 24 percent last month as the sagging U.S. economy crimped demand for luxury autos.
That's a pretty awful market for just about everybody, Japanese (and German) producers included. So awful that the lion of the Japanese makers, Toyota, "may ask Japan's government for 200 billion yen ($2 billion) in loans for its credit unit as private financing has become too expensive, public broadcaster NHK reported yesterday, without naming its source."
Point being, no one's in recovery mode from this yet, especially as consumer spending has followed the trends of debt availability into the basement. While GM needs to be judged fairly (and harshly if need be), this isn't an environment that allows a fair judgment.
Quote from: Gaspar on March 05, 2009, 10:47:24 AM
Quality & Reliability are huge problems for US automakers. Even if they are only perceived problems they still influence buying decisions, and have a huge impact. Honda turns out efficient, powerful 4 cylinder engines that run for decades with minimal maintenance, and the American public knows it.
As you alluded to, it's generally more of a perception issue these days, but still quite the impediment to selling cars.
Quote from: Gaspar on March 05, 2009, 10:47:24 AM
But that doesn't really explain it. Hybrids are a minimal sector of the market. They are just now growing in popularity, and the investment costs are coming down to where someday the initial investment will be overcome by the fuel savings. They got a huge bump when gas prices went up, but not so much now.
The big Toyotas and Nissans, and Hondas are still selling against their US counterparts. But I think most people who own foreign cars will tell you that the important factors that influenced their decision were quality & reliability over fuel efficiency.
Quality & Reliability are huge problems for US automakers. Even if they are only perceived problems they still influence buying decisions, and have a huge impact. Honda turns out efficient, powerful 4 cylinder engines that run for decades with minimal maintenance, and the American public knows it.
That's another thing too. I have two American cars currently, both GM's. I've had Nissans and Toyotas. I've thought both were better made.
I think when fuel shot up, that's when the tooling gap really became noticeable in part because of Hybrids. But, back to EV1; that car was way ahead of its time, and GM simply destroyed all evidence of it. The tech is available, GM owns it, but they decided to scrap it. They don't have the ability to start producing cars like the EV1 on a mass scale. They just turned their back on it.
You're right, Hybrids don't fully explain GM's problems. I think you have to take into consideration GM's "mindset" in regards to most new technology. They were making gobs of money. R&D is expensive. Retooling is expensive. They wanted to make money, not spend it. Given that mindset, I'm also inclined to believe that they're only interested in a "relative" level of quality. Certainly they don't want their cars to burst into flames once it leaves the lot, but on the other hand, they want that car to come back for parts. Japan's auto industry is more inclined toward durability and fuel efficiency. As opposed to parts.
GM seems too interested in short-term health. Something that would show up in their stock sooner, rather than later.
Quote from: Neptune on March 05, 2009, 11:11:15 AM
GM seems too interested in short-term health. Something that would show up in their stock sooner, rather than later.
You've just described the entirety of the American business mindset. I blame CNBC, day traders, the idiotic stock analysts who can't see past next quarter, stock options as compensation, and the rise of 401(k) plans.
People are far too focused on current stock price and not on long term performance.
My father complained at least 25 years ago about the shortsighted products the businsess schools (MBA factories) were turning out. I guess he was right and now they are running ruining the place.
Red Arrow:
You realize that those same MBA factories are running companies that are very successful. That those MBA factories built many of the most successful companies around. Infallible? Of course not, but to pretend a basic business model is somehow a problem is naive. Particularly in this macro context where much of the competition uses the same pool of top level labor.
Gaspar:
Quality has been a problem. On the Consumer Reports most recent rankings GM and Chrysler are both at or near the bottom in most categories (Ford is now equal with Toyota, which gives further credence to their solvency). The decline of "American Car" quality through the late 1970's and continue to today has a persistent effect on the market.
Likewise, when the good times were rolling the Big 3 spent money like water. GM in particular bought all sorts of unrelated companies instead of diving in to their core products and improving them. They built duplicate brands and a dealer network that was too large to sustain itself (need to feed the beast). When they were in charge it was largely a supplier driven model - and they have struggled to get away from it (see: hybrids, SUVs, etc.).
Likewise, when they were making profits they made lavish promises. To labor, to white collar workers, to municipalities, building projects - all sorts of things that did not improve the competitiveness of the product but added to the long term cost. Today, they still have to write those checks.
More recently, they have been using automobiles as a loss leader for finance. Selling cares at a loss - worse than giving them away. And they did it for years. The model was upside down but they insisted on sustaining it. Thus, in our current economic downturn there has been a glut of new GM cars sold on 0% financing and at a loss over the last few years - so no one is really in "need" of a new vehicle. They flooded the market with loss-leader sales and now demand is suffering because of it in addition to the downturn in the economy.
Long term. Short term. They've failed in tons of ways.
Quote from: cannon_fodder on March 05, 2009, 12:28:12 PM
Red Arrow:
You realize that those same MBA factories are running companies that are very successful. That those MBA factories built many of the most successful companies around. Infallible? Of course not, but to pretend a basic business model is somehow a problem is naive. Particularly in this macro context where much of the competition uses the same pool of top level labor.
Gaspar:
Quality has been a problem. On the Consumer Reports most recent rankings GM and Chrysler are both at or near the bottom in most categories (Ford is now equal with Toyota, which gives further credence to their solvency). The decline of "American Car" quality through the late 1970's and continue to today has a persistent effect on the market.
Likewise, when the good times were rolling the Big 3 spent money like water. GM in particular bought all sorts of unrelated companies instead of diving in to their core products and improving them. They built duplicate brands and a dealer network that was too large to sustain itself (need to feed the beast). When they were in charge it was largely a supplier driven model - and they have struggled to get away from it (see: hybrids, SUVs, etc.).
Likewise, when they were making profits they made lavish promises. To labor, to white collar workers, to municipalities, building projects - all sorts of things that did not improve the competitiveness of the product but added to the long term cost. Today, they still have to write those checks.
More recently, they have been using automobiles as a loss leader for finance. Selling cares at a loss - worse than giving them away. And they did it for years. The model was upside down but they insisted on sustaining it. Thus, in our current economic downturn there has been a glut of new GM cars sold on 0% financing and at a loss over the last few years - so no one is really in "need" of a new vehicle. They flooded the market with loss-leader sales and now demand is suffering because of it in addition to the downturn in the economy.
Long term. Short term. They've failed in tons of ways.
Thanks, I was hoping someone would come through.
Why does a company spend so much time and energy developing horizontal profit centers, and give up on their core interests unless their is a flaw in the core business that prevents them from achieving innovation?
I understand businesses diversifying as a means to capture new market dimensions and using the leverage from their core business to do so, but GM and many of the others literally abandon the core for easy profits elsewhere. Could it be that every change, every innovation, every increase or decrease in production was met with outside scrutiny, resistance and months of negotiation and litigation?
If an improvement to your product costs an investment in a new jig for only $1,000, but you know that it will require a change in labor that will trigger millions of dollars of in negotiations do you make the change or do you focus on something else? After all your consumer has become numb to the crooked tail pipe.
Perhaps doing business as a manufacturer became too much of a burden for them. So they turned over the reigns to the very people who demanded control, suspended any effort to improve that would be met with resistance, and focused on other things.
The question is: "Is this behavior worthy of reward?"
Quote from: Gaspar on March 05, 2009, 01:19:54 PM
Thanks, I was hoping someone would come through.
Why does a company spend so much time and energy developing horizontal profit centers, and give up on their core interests unless their is a flaw in the core business that prevents them from achieving innovation?
I understand businesses diversifying as a means to capture new market dimensions and using the leverage from their core business to do so, but GM and many of the others literally abandon the core for easy profits elsewhere. Could it be that every change, every innovation, every increase or decrease in production was met with outside scrutiny, resistance and months of negotiation and litigation?
If an improvement to your product costs an investment in a new jig for only $1,000, but you know that it will require a change in labor that will trigger millions of dollars of in negotiations do you make the change or do you focus on something else? After all your consumer has become numb to the crooked tail pipe.
Perhaps doing business as a manufacturer became too much of a burden for them. So they turned over the reigns to the very people who demanded control, suspended any effort to improve that would be met with resistance, and focused on other things.
The question is: "Is this behavior worthy of reward?"
Much of GM's non-core businesses were company-owned suppliers that ended up branching out into other profitable fields. Hughes and Delphi are the two big ones I'm thinking of.
Vertical integration has been going on for a long time.
Quote from: nathanm on March 05, 2009, 01:30:12 PM
Much of GM's non-core businesses were company-owned suppliers that ended up branching out into other profitable fields. Hughes and Delphi are the two big ones I'm thinking of.
Vertical integration has been going on for a long time.
Great examples. Both were union shops that were held hostage by the Union until they were destroyed or bankrupt. Delphi is the worst example of how the power struggle can implode an organization.
I'm talking of the company's horizontal pursuits into the world of finance, insurance, and other profit centers as a means to escape dealing with the unions. They abandon their core, they abandon their vertical pursuits. By the time they reacted to what was going on in their own shops and on the floor at Delphi, it was too late.
I ask again, do we reward this behavior?
Quote from: Gaspar on March 05, 2009, 03:49:25 PM
Great examples. Both were union shops that were held hostage by the Union until they were destroyed or bankrupt. Delphi is the worst example of how the power struggle can implode an organization.
I'm talking of the company's horizontal pursuits into the world of finance, insurance, and other profit centers as a means to escape dealing with the unions. They abandon their core, they abandon their vertical pursuits. By the time they reacted to what was going on in their own shops and on the floor at Delphi, it was too late.
I ask again, do we reward this behavior?
Again, finance and insurance are arguably vertical integration of the automotive product. Why let somebody else make the money on the financing? Why let them make the money on the insurance?
Quote from: nathanm on March 05, 2009, 05:02:45 PM
Again, finance and insurance are arguably vertical integration of the automotive product. Why let somebody else make the money on the financing? Why let them make the money on the insurance?
I stand corrected. It would be considered vertical, just outside of the supply line (as it's related to the manufacture of vehicles).
Quote from: Gaspar on March 05, 2009, 06:03:13 PM
I stand corrected. It would be considered vertical, just outside of the supply line (as it's related to the manufacture of vehicles).
You are correct that it doesn't make much sense in this economic environment but as with so many things, "it seemed like a good idea at the time."
Well, we are finally in full facism mode. Our government is now telling the CEO of GM to resign:
http://www.politico.com/news/stories/0309/20625.html
Quote from: guido911 on March 29, 2009, 05:01:51 PM
Well, we are finally in full facism mode. Our government is now telling the CEO of GM to resign:
http://www.politico.com/news/stories/0309/20625.html
Let me fetch your fainting couch and some spirits of camphor! Lawdy, lawdy . . . Guido has the vapors!
On another note, I'm glad to see that the owners of GM are finally starting to flex a little muscle and hold management accountable. The owners, of course, being We the People.
Quote from: we vs us on March 29, 2009, 05:42:20 PM
Let me fetch your fainting couch and some spirits of camphor! Lawdy, lawdy . . . Guido has the vapors!
On another note, I'm glad to see that the owners of GM are finally starting to flex a little muscle and hold management accountable. The owners, of course, being We the People.
I was wondering how long it would take the first Obama waistbander to come to his defense.
Quote from: guido911 on March 29, 2009, 05:52:33 PM
I was wondering how long it would take the first Obama waistbander to come to his defense.
I'm not sure what a waistbander is. How can I be insulted when I don't understand your GOP l33tspeak?
I'm just saying that, if we're going to have bailouts (and both GOP and Democratic Presidents agree, we need to have bailouts), wouldn't we rather hold those who accept the bailouts responsible for what they do with it?
Quote from: we vs us on March 29, 2009, 06:24:33 PM
I'm not sure what a waistbander is. How can I be insulted when I don't understand your GOP l33tspeak?
I'm just saying that, if we're going to have bailouts (and both GOP and Democratic Presidents agree, we need to have bailouts), wouldn't we rather hold those who accept the bailouts responsible for what they do with it?
Since when does our President have the authority to demand private sector employees resign? Also, if we are going down this path with GM, then let's get the persons responsible for those outrageous UAW contracts fired as well.
As far as "waistbander" is, try thinking about how you are knee high to our President under any circumstance. That's where you and many in this forum worship at the altar (as soccerdoosh pens) of Obama.
Quote from: guido911 on March 29, 2009, 07:07:18 PM
As far as "waistbander" is, try thinking about how you are knee high to our President under any circumstance. That's where you and many in this forum worship at the altar (as soccerdoosh pens) of Obama.
Guido...stay away from the poster "shadows"...
Quote from: we vs us on March 29, 2009, 06:24:33 PM
I'm not sure what a waistbander is. How can I be insulted when I don't understand your GOP l33tspeak?
I'm just saying that, if we're going to have bailouts (and both GOP and Democratic Presidents agree, we need to have bailouts), wouldn't we rather hold those who accept the bailouts responsible for what they do with it?
guido got tired of using "spooner" -- just like he's tired of calling me a POS and comes up with creative name calling to bolster his case... it ain't working, and nobody's "worshipping" Obama here, you cheap hack....
I think maybe we should let the guy complete his first year in office before passing judgement... after that, let the high-tech lynchings begin... ::)
Quote from: guido911 on March 29, 2009, 07:07:18 PM
Since when does our President have the authority to demand private sector employees resign?
When they cashed that check for 16 billion dollars is when.
Quote from: USRufnex on March 29, 2009, 07:36:35 PM
guido got tired of using "spooner" -- just like he's tired of calling me a POS and comes up with creative name calling to bolster his case... it ain't working, and nobody's "worshipping" Obama here, you cheap hack....
I think maybe we should let the guy complete his first year in office before passing judgement... after that, let the high-tech lynchings begin... ::)
I'd love to hear him cross someone in court just once to see how long it would take him to call him a 'spooner' or a 'POS'. I bet he has hypertension issues bigtime. You'd start to see the little veins in his forehead distend.
Hey Gweed, are you on the list of defenders for the action that Spain is seeking against some of the Bush regime? Is it going to be
pro bono? You Freeper you!
http://www.nytimes.com/2009/03/29/world/europe/29spain.html?_r=1
Harhar!
;D
Quote from: guido911 on March 29, 2009, 07:07:18 PM
Also, if we are going down this path with GM, then let's get the persons responsible for those outrageous UAW contracts fired as well.
You are so quick to blame the actual workers who actually build the product. What about the Robber Barons at the top who steal millions of dollars in salary and bonuses as they are driving the companies into the ground for their own personal profit putting thousands of Americans out of work. What do those Robber Barons build, nothing but their own little nest eggs. They rape a company and move on to find another company to rape and pillage.
Quote from: joiei on March 29, 2009, 08:59:40 PM
You are so quick to blame the actual workers who actually build the product. What about the Robber Barons at the top who steal millions of dollars in salary and bonuses as they are driving the companies into the ground for their own personal profit putting thousands of Americans out of work. What do those Robber Barons build, nothing but their own little nest eggs. They rape a company and move on to find another company to rape and pillage.
You're right. Within the next couple of years all the Robber Barons will be punished. They will choose to move on, move out, or retire. GM and other large evil corporations will cease to exist without them. Of course thousands of workers will have to find jobs. Their skill set is limited, so I'm sure the government will create projects just for them. Perhaps a government built automobile. Who knows. But at least the fat cats will get their punishment. Yippee.
The singular mistake was the bailout. Companies must be allowed to succeed or fail on their own merit. Pain is always a possibility. No company we gave bailouts too will survive. We have simply made their demise prolonged and painful. Some may linger for the next 10 years pulling on the government breast like a hungry child. The great minds will move on, leaving a government supported circus of lackards and yes-men. A reward for failure encourages failure. Always.
Gault where are you?
Galt* Who is John Galt. Not Gault.
Literary references are much less impressive when the name is consistently spelled wrong. ;D
I don't understand why you blame the people who are just looking out for their own interest. They have a right to try and earn the best living they possibly can and support their families in the best possible manner. If the company thinks it is worth paying them $X for their services, then so be it. Plus, most of those guys work long hours and have put time in to building the skills that enable them to work their job. True, they probably wouldn't be able to make that much money at some other company with their skill set, but who are we to tell them how much money they can make and blame the collapse of the company on them looking out for their own best interest.
Now tell me if that argument applies to the overpaid union workers or the over paid executives. I say both. When a company is failing for over a decade - neither party deserves to earn near the top of the food chain. The executives clearly made bad decisions at the top and the workers productivity didn't justify their extravagant salaries. Both when viewed in line with other persons with similar skill sets.
The workers get more sympathy from me as they have less of a say. But collective bargaining is a two way street. You rise, and fall with the herd. I have trouble mustering any sympathy for the executives.
One has to wonder: if we would have let Chrysler die off in the 1980's would the American auto industry (executives and UAW) gone into panic mode and stopped the slide? Maybe even beat back the Japanese, Germans, and others a little bit to hold their market share? Certainly the billions we spent didn't help in the long run then . . . and probably won't now.
Quote from: cannon_fodder on March 30, 2009, 08:12:23 AM
Galt* Who is John Galt. Not Gault.
Literary references are much less impressive when the name is consistently spelled wrong. ;D
Um, he was referring to Willie Gault, former wide receiver of the Chicago Bears.
Quote from: guido911 on March 30, 2009, 08:34:28 AM
Um, he was referring to Willie Gault, former wide receiver of the Chicago Bears.
Where is Willie?
Spell check on my Mac has a problem with Galt. :o
Will he?
Remarkably enough, Obama is a half step away from letting GM and Chrysler enter Chapter 11: (http://www.politico.com/news/stories/0309/20642.html)
Quote
In surprising findings to be outlined at the White House on Monday, President Obama has concluded that neither GM nor Chrysler as they now exist deserve more bailouts. But the White House is sparing them for a month or two, and is promising American consumers that the government will stand behind warranties if the automakers fail.
Most remarkably, the administration demanded that GM CEO Rick Wagoner resign so the company could remake itself "with a clean sheet of paper." And he did, effective immediately. The administration also said GM has been given a "goal of replacing a majority of the board over the coming months."
The administration found that both carmakers had failed to prove their "viability" as required under the terms of the massive government loans they've already received, and determined that neither should receive another bailout.
"We have unfortunately concluded that neither plan submitted by either company represents viability, and therefore does not warrant the substantial additional investments that they requested," a senior administration official told reporters on a conference call Sunday night.
While there's always the chance that letting the automakers fail could constitute a "Lehman Bros. moment" for the markets at large, this at least shows that Obama's willing to draw the occasional line in the sand. And I think the pivotal element here is that the Administration is still willing to take an active role in shepherding the automakers through Chapter 11. When Paulson announced that Lehman Bros. was being allowed to fail, there were no such guarantees.
Found a Gault Chevy dealer:
http://www.gaultchevrolet.com/
"Home of Rock Bottom" then a new line, "Pricing."
/back on topic
Quote from: we vs us on March 30, 2009, 08:58:10 AM
Remarkably enough, Obama is a half step away from letting GM and Chrysler enter Chapter 11...
Good. Attention anyone, I am agreeing with Obama again.
Quote from: guido911 on March 30, 2009, 09:30:10 AM
Good. Attention anyone, I am agreeing with Obama again.
Gah. You are SUCH an Obama waistbander!
Quote from: guido911 on March 30, 2009, 09:30:10 AM
Good. Attention anyone, I am agreeing with Obama again.
I wonder how many times we are going to throw billions of dollars at things only to realize that the free market does not respond well to tampering? What a great lesson for the American people.
Again I am proud of our president. This is not a surrender, or a policy defeat. This is an honest evaluation of market conditions and an understanding that the right decision is the only decision worth making. I believe this may signal an end to the campaigning of President Obama, and the start of a real Presidency.
Judgement should be held until we know this is the case though.
If GM is allowed to file, it will be a painful, but from that pain, opportunity will sprout. The failing company will likely be split up into several auto groups with fresh competitive philosophies, products, and market offerings creating ground floor investment opportunities, and innovations.
Just saw the speech President Obama made about half an hour ago. Good decision for the most part. Unfortunatly he attached a "one more chance" caviot that is not necessary, and a guarentee that the companies (GM, and Christler) would not be split up into functioning pieces. I don't think the market will react well to that.
The smart rats have already jumped ship, and the unions will not bend any more, so the "one more chance" is a waste of time. The government making a promise that the companies will not be exposed to the free market "chopping block" is a dangerous statement. It implies that they will be propped up to continue as a whole. It's difficult to cut out the cancer without surgery.
President Obama was so close to saying the right thing. I'm glad he's at least getting closer. We'll see how this plays, but I believe it's going to require another policy change before the free market gets over the indigestion.
Could be a negative 400 day for the market today.
I think it's pretty obvious that Wagoner was told to step down because GM hadn't taken steps to streamline itself as Ford had several years ago.
Wagoner had been a GM bigwig for nearly a decade; he had a chance to steer the company in a new direction and didn't.
Quote from: rwarn17588 on March 30, 2009, 12:03:12 PM
I think it's pretty obvious that Wagoner was told to step down because GM hadn't taken steps to streamline itself as Ford had several years ago.
Wagoner had been a GM bigwig for nearly a decade; he had a chance to steer the company in a new direction and didn't.
I'm still not comfortable with the idea of the White House hiring and firing CEO's of companies, even if said company is presently on the government dole. I may be making more of it than it really is, but a headline like "GM's Wagoner Steps Down At Request of White House" sounds a bit like GM's been nationalized.
Quote from: rwarn17588 on March 30, 2009, 12:03:12 PM
I think it's pretty obvious that Wagoner was told to step down because GM hadn't taken steps to streamline itself as Ford had several years ago.
Wagoner had been a GM bigwig for nearly a decade; he had a chance to steer the company in a new direction and didn't.
I don't think he could have done anything to satisfy the wolves.
Basically he was told to do the following:
1. Make cars that politicians can support, not SUVs, sedans or sportscars.
2. Reduce expenses without cutting employee pay or benefits.
3. Increase fuel efficiency with new technologies without spending money on new technologies or re-tooling.
4. Make a profit.
I bet today he feels like he won the lottery. No one in their right mind will step up to that position now.
Quote from: Gaspar on March 30, 2009, 12:26:02 PM
1. Make cars that politicians can support, not SUVs, sedans or sportscars.
There is no guarantee that the public will buy vehicles that politicians will support.
Quote from: Red Arrow on March 30, 2009, 12:39:13 PM
There is no guarantee that the public will buy vehicles that politicians will support.
Exactly.
Quote from: Conan71 on March 30, 2009, 12:23:27 PM
I may be making more of it than it really is, but a headline like "GM's Wagoner Steps Down At Request of White House" sounds a bit like GM's been nationalized.
After billions of dollars in direct aid, what makes you think it hasn't? Taxpayers are essentially major stockholders now.
If GM didn't want oversight, it shouldn't have taken the money. It's not like it didn't know the possible downside of being on the dole of taxpayers.
Quote from: Gaspar on March 30, 2009, 12:26:02 PM
Basically he was told to do plan to do the following:
1. Make cars that politicians can support, not SUVs, sedans or sportscars.
2. Reduce expenses without cutting employee pay or benefits.
3. Increase fuel efficiency with new technologies without spending money on new technologies or re-tooling.
4. Make a profit.
Fixed that for you.
Gassy, have you ever heard of the Stockholm Syndrome? Sometimes I wonder if that's why you're so completely focused on the general well-being of the top-most of the top tier.
You know, occasionally they screw up too.
This is hilarious:
http://www.wjno.com/cc-common/news/sections/newsarticle.html?feed=244038&article=5233983
Gotta love it when GM's chickens come home to roost.
A nationalized auto industry brings British Leyland to mind.
Quote from: Red Arrow on March 30, 2009, 05:51:49 PM
A nationalized auto industry brings British Leyland to mind.
EEGAAD!!! I hadn't thought of that!!!!! If thats the case Lucas electrics and warm beer come to mind! ;D
Quote from: dbacks fan on March 30, 2009, 06:04:59 PM
EEGAAD!!! I hadn't thought of that!!!!! If thats the case Lucas electrics and warm beer come to mind! ;D
EEGAAD and Lucas are an appropriate response.
"Warm" beer is actually about 50°F. It is the proper temperature for many English Ales. Ice cold and they lose their aroma and flavor until they warm up a bit.
Quote from: Red Arrow on March 30, 2009, 06:14:57 PM
EEGAAD and Lucas are an appropriate response.
"Warm" beer is actually about 50°F. It is the proper temperature for many English Ales. Ice cold and they lose their aroma and flavor until they warm up a bit.
I've owned three Triumphs, 2 TR-6's and a TR-7, and a Lotus powered Jensen Healey.
"No, it's not leaking oil, it's marking it's territory."
My brother owned a TR-3A. Two cousins had several Healeys. A navy friend had several Healeys. Other friends have had TR-6, MG Midget, Spitfire, Lotus Europa and some I forget. All were fun and great toys. They had character. Can you say side curtain? We don't need no stinkin' door windows. SU Carbs were great performers, you just had to re-sync them frequently. It helped if you put the proper oil in the domes. They were all a car nut's car; no drive and forget it with them.
I really miss my little MG-B roadster. Ahh...wire wheels, balancing SU's, the sexy muffler and Smith guages. I also miss the talk of spanners, Lucas electrics (never had problems with mine) and proper wax oils. That car would have been a good retro for someone to build with modern technology like the reborn Mini Coopers. Put an electric motor in it and shag some jigglies baby, yeah. 8)
Quote from: Gaspar on March 05, 2009, 10:09:31 AM
I wonder what makes it so hard for companies like our US automakers to keep up?
We have other industries that continue to advance technologically, and update production systems to compete world wide. Heck, Honda plants in the US retool every couple of years and pump out new models and technologies at an astounding rate.
The automation systems in the Toyota and Subaru plants are amazing, and the quality control is second to none. Why can't we install the tail pipes on a caddy straight or put the hood on a GMC Yukon level on both sides? Why is the hood ornament on every Doge Strata crooked? Why does the heater on all Doge Dakotas leak hot air through the center vents when the AC is on? These problems I mention have existed for 10 years or more and everyone seems to just accept them. When you drive up behind even a new $40,000 Cadillac you expect to see one tail pipe tip mounted crooked. If you were to pull up behind a Mercedes or Honda Accord and see this, you would assume it had been in a wreck or something.
The demand exists. Toyota is selling Tundras like wildfire. The Nissan pathfinder, Toyota Sequoya, and other SUVs built here by Japanese companies are rolling off the lots. In the smaller car categories the Accords and Civics and even the new Scion division of Toyota moving well.
Why can't we do the same? What EXACTLY is the obstacle, that holds back our ability to compete?
We used to claim that these companies used cheap labor and we couldn't compete with that, but today they are all built right here in the US by Americans. Perhaps it's the fact that they use components made cheaply in other countries, but we do that now, too, to an even larger extent than they do.
What could it be? I just don't know.
It's a philosophy. I worked for a Japanese company back in the mid 80s. The company manufactured trim and form machines and I was a service engineer. If you're not familiar with the equipment, just google it. Anyway, as part of my training, I was sent to Japan to work in the factory. Everything the workers do must be performed immaculately. It doesn't matter if it is perfectly functional, it must also look good (fit and finish). Back then I learned why the Japanese mentality about quality was superior to the average American.
Quote from: TulsaFan-inTexas on March 31, 2009, 08:52:02 AM
It's a philosophy. I worked for a Japanese company back in the mid 80s. The company manufactured trim and form machines and I was a service engineer. If you're not familiar with the equipment, just google it. Anyway, as part of my training, I was sent to Japan to work in the factory. Everything the workers do must be performed immaculately. It doesn't matter if it is perfectly functional, it must also look good (fit and finish). Back then I learned why the Japanese mentality about quality was superior to the average American.
Do you think the UAW embraces a similar or superior philosophy?
If not, then why?
Lucas was frequently referred to as "The Prince Of Darkness"
Quote from: Conan71 on March 31, 2009, 09:38:26 AM
Lucas was frequently referred to as "The Prince Of Darkness"
The head light switch should be marked "Off, dim, flicker". ;D
Quote from: TulsaFan-inTexas on March 31, 2009, 08:52:02 AM
Back then I learned why the Japanese mentality about quality was superior to the average American.
The funny thing is that they learned it from our people post WWII. Previously the electronics they made had defect rates that would be embarrassing to most Chinese factories today.
It says something big about the indescribably low wages a Chinese factory worker gets paid when you think that somewhere around 40% of the electronic products shipped over here from most factories have to be tossed because they are broken when they arrive, yet the final price still drastically undercuts things made elsewhere.
Quote from: nathanm on March 31, 2009, 05:52:39 PM
The funny thing is that they learned it from our people post WWII. Previously the electronics they made had defect rates that would be embarrassing to most Chinese factories today.
There was a time when I was a kid that the words Japanese and Junk were synonymous. They sure turned that image around.
Quote from: Red Arrow on March 31, 2009, 07:02:05 PM
There was a time when I was a kid that the words Japanese and Junk were synonymous. They sure turned that image around.
They embraced the American quality control process, and without hindrance were able to take that to amazing heights. Once they began to build factories in the United States, with American workers, they were painstakingly studied by American car makers, and many of their management techniques such as team lines, competitive quality analysis, and performance based bonus systems were attempted by the management of companies like Saturn, Christler, and GM. They never made it past the unions, because they were all based on individual or team performance, not tenure.
They are still here, prospering, available for study and duplication.
The roadblock remains in the same spot.
dismantle the unions.... that would fix everything since middle mgmt and the higher ups are blameless... dismantle the UAW and GM could bring back the Fiero... kewl... thank you Easter Bunny... er, uh... gaspar. /sarcasm.
How much more $$$ do Japanese CEOs and upper and middle mgmt make compared to their workers? How does that compare to salaries at GM?
I'd be very curious to know how the UAW's contract with GM varies from its contract with Ford, who has not had to take any bailout money at all. Something tells me the difference is probably pretty small.
Quote from: USRufnex on April 02, 2009, 07:00:26 PM
How much more $$$ do Japanese CEOs and upper and middle mgmt make compared to their workers? How does that compare to salaries at GM?
I just learned something from you. Thank you.
I just spent the last hour researching this and you are very correct.
(http://4.bp.blogspot.com/_dSJGAAWaK7g/SShLehfzEUI/AAAAAAAAAB0/D9LaCg7gjeU/s200/SalaryPyramidGmToyota.png)
Salary pyramids for
Toyota (red) and GM (blue).
The figures used to build these pyramids are as follows. GM has 266,000 employees, average total worker compensation of $75/hr, and a CEO salary ratio of about 400. Toyota has about 316,000 employees, average total worker compensation of $45/hr, and a CEO salary ratio of 15.
Note that the vertical axis is uniform for both GM and Toyota; that is, the difference in the height of the pyramids is accurate to the data. The total area of the pyramids is a representative measure of the total cost of all salary in the corporation. It should be clear that there's definitely something very wrong at GM - considering that Toyota is doing just fine.
I am still not advocating the Union VS Management philosophy because it's casualty is always quality, but your assertion that upper management soaks up a significant amount of company resources is correct.
+1 to you Ruf.
Quote from: Gaspar on April 02, 2009, 08:22:12 PM
I just spent the last hour researching this and you are very correct.
I am still not advocating the Union VS Management philosophy because it's casualty is always quality, but your assertion that upper management soaks up a significant amount of company resources is correct.
I certainly cannot argue for the salary ratios at GM. My question is if the salary
ratios at GM were roughly equivalent to Toyota, would the cost of salaries/wages per vehicle be competitive with Toyota?
Quote from: USRufnex on April 02, 2009, 06:49:31 PM
dismantle the unions.... that would fix everything since middle mgmt and the higher ups are blameless... dismantle the UAW and GM could bring back the Fiero... kewl... thank you Easter Bunny... er, uh... gaspar. /sarcasm.
Dismantle all non-union employee positions. The union is blameless. Let the UAW run GM. /sarcasm also
Quote from: USRufnex on April 02, 2009, 07:00:26 PM
How much more $$$ do Japanese CEOs and upper and middle mgmt make compared to their workers? How does that compare to salaries at GM?
Let's add: How much do the UAW big wigs get in compensation compared to the compensation of their rank & file members? (I'm serious, not just trying to be a wiseguy. I really have no idea beyond expecting the big wigs to make more.)
figures may be a couple years old but... UAW prez Gettelfinger had an annual salary of $144,733... UAW Secretary treasurer, $133,891... union VPs, $129,659... union board members, $118,813... American CEOs average FOUR TIMES the pay of their Japanese counterparts... average American CEO makes 262 times the wages of the average worker... average assembly worker makes $28 per hour, rising per capita healthcare costs have been costly... union workers pay roughly 2 hours wages per month as union dues...
After my post, I had some time and looked up UAW/Gettelfinger and found some similar numbers. I admit I was surprised. I expected around $1 million. The same references indicated other unions had higher pay scales than the UAW for senior personnel but we aren't talking about them here.
Part of the equation still has to be that even if GM, Chrylser, and Ford big wigs got the same ratio as their Japanese counterparts, would the big 3 then be competitive in the market place? How far down the salary/wage ladder do they have to go?
Quote from: Red Arrow on April 05, 2009, 11:35:51 PM
Part of the equation still has to be that even if GM, Chrylser, and Ford big wigs got the same ratio as their Japanese counterparts, would the big 3 then be competitive in the market place? How far down the salary/wage ladder do they have to go?
It wouldn't make a significant dent in GM's red ink. When you're billions in the hole, saving even a couple hundred million won't do much. That being said, I think it showcases the now, now, now aspect of nearly all American businesses who can't seem to look past next quarter. That mindset is what put GM and Chrysler in the place they are now.
I blame the day traders and the media that panders to them.
Rufnex:
I agree that executive compensation is out of hand. But is it the province of the government to tell businesses what is and what is not a good investment? When We the People own or bankroll the company, sure. But in general let businesses make stupid decisions if they want to.
Hopefully investors, bankers, and private equity funds start asking questions about such things before investing.
Is Bill Gates worth $35,000,000 a year to Microsoft? Definitely. Steve Jobs to Apple? Yep. Fred Smith to FedEx? For sure. Maybe even Ford Jr. is worth millions to Ford Motor since they seem to be heading in the right direction. But are any of the past 3 CEOs worth much at all to GM? Apparently not. I believe the answer is more often "No" to the question are executives worth it.
But sometimes the answer is yes. If an executive can force his will and turn GM into a profitable company, he's worth billions. So I hope the government doesn't muddle too much with the system, I hope the system figures it out and corrects the situation more naturally (sure we can loan you $1bil for a new plant, but no executive can make more than $X as long as the loan is outstanding).
Quote from: cannon_fodder on April 06, 2009, 08:30:44 AM
Rufnex:
I agree that executive compensation is out of hand. But is it the province of the government to tell businesses what is and what is not a good investment? When We the People own or bankroll the company, sure. But in general let businesses make stupid decisions if they want to.
Hopefully investors, bankers, and private equity funds start asking questions about such things before investing.
Is Bill Gates worth $35,000,000 a year to Microsoft? Definitely. Steve Jobs to Apple? Yep. Fred Smith to FedEx? For sure. Maybe even Ford Jr. is worth millions to Ford Motor since they seem to be heading in the right direction. But are any of the past 3 CEOs worth much at all to GM? Apparently not. I believe the answer is more often "No" to the question are executives worth it.
But sometimes the answer is yes. If an executive can force his will and turn GM into a profitable company, he's worth billions. So I hope the government doesn't muddle too much with the system, I hope the system figures it out and corrects the situation more naturally (sure we can loan you $1bil for a new plant, but no executive can make more than $X as long as the loan is outstanding).
This will certainly be a good example. President Obama and Congress are now behind the wheel of GM. Within the next couple of years (or months) we will know how effective that is.
Quote from: cannon_fodder on April 06, 2009, 08:30:44 AM
Rufnex:
I agree that executive compensation is out of hand. But is it the province of the government to tell businesses what is and what is not a good investment? When We the People own or bankroll the company, sure. But in general let businesses make stupid decisions if they want to.
Hopefully investors, bankers, and private equity funds start asking questions about such things before investing.
Is Bill Gates worth $35,000,000 a year to Microsoft? Definitely. Steve Jobs to Apple? Yep. Fred Smith to FedEx? For sure. Maybe even Ford Jr. is worth millions to Ford Motor since they seem to be heading in the right direction. But are any of the past 3 CEOs worth much at all to GM? Apparently not. I believe the answer is more often "No" to the question are executives worth it.
But sometimes the answer is yes. If an executive can force his will and turn GM into a profitable company, he's worth billions. So I hope the government doesn't muddle too much with the system, I hope the system figures it out and corrects the situation more naturally (sure we can loan you $1bil for a new plant, but no executive can make more than $X as long as the loan is outstanding).
By and large I agree that compensation shouldn't be capped. But still, how do you limit some of these obscene income multiples? I'm thinking about the 236 to 1, for instance. The market itself obviously isn't putting any downward pressure on executive comp -- and I include all the traditional forces of supply, demand, board member accountability and shareholder vote in the "market" basket. In what looks like too many cases, compensation has become completely uncoupled from performance. And if that's true, do we just let accountability lapse entirely until market forces -- maybe -- bring common sense back into play?
I think that the evidence proves that GM deserves to die. It is however, a grave mistake for the government of a capitalist country to put a salary cap on any private individual or industry.
The instant any legislation caps the salary of a private individual, we cease to be a Capitalist country.
Our government has an established minimum wage. When the government establishes a maximum wage, we can no longer consider ourselves free-market capitalists. We will have embraced Socialism completely.
The beauty of Capitalism is that companies, shareholders, and the individuals are allowed to achieve or fail miserably. It functions with the same rewards and cruelties as natural selection. In either process, we find that interference can only destroy.
When compensation overshadows production, companies fail. If we put the mantel of success or failure on the government, through income regulation or redistribution, we put an end to capitalism and the innovation that it creates.
Why create a better mousetrap if there is no reward for your innovation.
What happens in the next few months with GM will determine the fate of this country.
Quote from: Gaspar on April 06, 2009, 10:45:56 AM
I think that the evidence proves that GM deserves to die. It is however, a grave mistake for the government of a capitalist country to put a salary cap on any private individual or industry.
The instant any legislation caps the salary of a private individual, we cease to be a Capitalist country.
Our government has an established minimum wage. When the government establishes a maximum wage, we can no longer consider ourselves free-market capitalists. We will have embraced Socialism completely.
The beauty of Capitalism is that companies, shareholders, and the individuals are allowed to achieve or fail miserably. It functions with the same rewards and cruelties as natural selection. In either process, we find that interference can only destroy.
When compensation overshadows production, companies fail. If we put the mantel of success or failure on the government, through income regulation or redistribution, we put an end to capitalism and the innovation that it creates.
Why create a better mousetrap if there is no reward for your innovation.
What happens in the next few months with GM will determine the fate of this country.
That's a little breathless, don't you think?
What's your solution here, Gassy? It's obvious that CEO pay rates are distorted and don't function on a realistic plane (I'm talking about CEOs who are not Bill Gates, Steven Jobs, or Warren Buffet). Many of these people are being paid huge sums regardless of their success or failure. That kicks a crucial leg out from under the whole free market structure, because the downside of risk has been entirely eliminated. If they're getting paid ungodly sums either way, there's really no incentive at play one way or the other. Why bother to build a better mousetrap if you're going to be compensated richly whatever happens?
Wevus:
I really think the market will adjust itself. IN the 1990's stock options and all sorts of items that diluted shareholder value were given away freely. That was corrected by shareholders revolts.
Currently cash compensation and bonuses are under fire. I imagine the markets will take care of it. If they don't, we must assume the owners of the companies are OK with the compensation.
If the owners are OK with the compensation and the Government isn't bailing them out, what right do we have to complain? If start Tulsa Lawn Mower People Inc. and want to pay my foremen $1,000,000 and my workers $5.65 your only say is to do business with me or not. You have no right to step in and tell me I have to take money away from my foremen and give it to the mower pushers.
If the foremen then run the company into the ground they are out of a fat job and I (the owner) am out of my investment.
This model is destroyed when markets are not allowed to kill off mismanaged companies. There is no incentive for owners to monitor their investment. Nor is there an incentive for workers to really put pressure on the issue (we will LOSE OUT JOBS if you don't manage this company better, so either you change it or I have to quit before the ship sinks).
Very frankly, companies are not managed to benefit the workers OR the managers. They exist to benefit the owners. The owners need to step up and handle this. Start voting NO one executive compensation packages.
Quote from: we vs us on April 06, 2009, 11:11:55 AM
That's a little breathless, don't you think?
That kicks a crucial leg out from under the whole free market structure, because the downside of risk has been entirely eliminated. If they're getting paid ungodly sums either way, there's really no incentive at play one way or the other. Why bother to build a better mousetrap if you're going to be compensated richly whatever happens?
That's ridiculous. The risk is far greater. If market energy at GM and Christler were allowed to run it's course, and workers, shareholders, and the public weren't relying on the US Government to provide a parachute, then the company would die (spawning the birth of perhaps a dozen new innovative brands). Whatever was left of the companies would be lean and wise, and investors would have a pattern to use as a precedent to a new smarter corporate policy.
You can't argue this point, because it HAS happened before, a hundreds of times, with a hundred companies. Failure is sometimes necessary.
Harvesting the organs always beats keeping a brain dead patient on life support. Sure, It's hard for the family, but it saves lives.
I understand that wealth makes you angry. Many Americans share your emotion. To see these CEO's pulling million dollar salaries is disgusting when so many of us are hurting. To see them mismanage their companies and cause millions of people to lose their jobs hurts.
Damn the methods! Damn the shareholders! Damn the processes! . . . but don't be so angry that you damn the country in your march for retribution.
Take away the shareholders' ability to vote on executive compensation? Really? Take away an investors choice? Really? Give that choice to government? Really?
Who decides what the company builds? Who interprets what the consumer wants?
Government?
Great!
Gas,
Andrew Mellon couldn't have said it better himself. :P
Quote from: USRufnex on April 06, 2009, 02:21:15 PM
Gas,
Andrew Mellon couldn't have said it better himself. :P
Thank you.
Of course, even Andrew Mellon believed in progessive taxation and additional taxes on "unearned income".......
http://www.absoluteastronomy.com/topics/Andrew_W._Mellon
Mellon believed that the income tax should remain progressive, but with lower rates than those enacted during World War I. He thought that the top income earners would only willingly pay their taxes if rates were 25% or lower. Mellon proposed tax rate cuts, which Congress enacted in the Revenue Acts of 1921, 1924, and 1926. The top marginal tax rate was cut from 73% to 58% in 1922, 50% in 1923, 46% in 1924, 25% in 1925, and 24% in 1929. Rates in lower brackets were also cut substantially, relieving burdens on the middle-class, working-class, and poor households.
------------------------------------------------------------------
Mellon also championed preferential treatment for "earned" income relative to "unearned" income. As he argued in his 1924 book, Taxation: The People's Business.
Yes, thank you, I know quite a bit about Mellon.
I appreciate the complement, but you are too kind. I am nowhere near Mellon's intellectual caliber.
Gas-- "Our government has an established minimum wage. When the government establishes a maximum wage, we can no longer consider ourselves free-market capitalists. We will have embraced Socialism completely."
Well, the Supreme Court in 1923 did rule the minimum wage as unconstitutional, thus paving the way for the Great Depression....
http://www.geocities.com/CapitolHill/Senate/6854/greatdep.html
While the disposable income per capita rose 9% from 1920 to 1929, those with income within the top 1% enjoyed a stupendous 75% increase in per capita disposable income.
A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period. From 1923-1929 the average output per worker increased 32% in manufacturing. During that same period of time average wages for manufacturing jobs increased only 8%. Thus wages increased at a rate one fourth as fast as productivity increased. As production costs fell quickly, wages rose slowly, and prices remained constant, the bulk benefit of the increased productivity went into corporate profits. In fact, from 1923-1929 corporate profits rose 62% and dividends rose 65%.
The federal government also contributed to the growing gap between the rich and middle-class. Calvin Coolidge's administration (and the conservative-controlled government) favored business, and as a result the wealthy who invested in these businesses. An example of legislation to this purpose is the Revenue Act of 1926, signed by President Coolidge on February 26, 1926, which reduced federal income and inheritance taxes dramatically. Andrew Mellon, Coolidge's Secretary of the Treasury, was the main force behind these and other tax cuts throughout the 1920's. In effect, he was able to lower federal taxes such that a man with a million-dollar annual income had his federal taxes reduced from $600,000 to $200,000. Even the Supreme Court played a role in expanding the gap between the socioeconomic classes. In the 1923 case Adkins v. Children's Hospital, the Supreme Court ruled minimum-wage legislation unconstitutional.
The large and growing disparity of wealth between the well-to-do and the middle-income citizens made the U.S. economy unstable. For an economy to function properly, total demand must equal total supply. In an economy with such disparate distribution of income it is not assured that demand will always equal supply. Essentially what happened in the 1920's was that there was an oversupply of goods. It was not that the surplus products of industrialized society were not wanted, but rather that those whose needs were not satiated could not afford more, whereas the wealthy were satiated by spending only a small portion of their income.
Quote from: USRufnex on April 06, 2009, 04:44:12 PM
Well, the Supreme Court in 1923 did rule the minimum wage as unconstitutional, thus paving the way for the Great Depression....
Always wondered what caused the great depression. I thought it was that silly stock market thing, but naaah! that couldn't have been it.
You bring me a little joy every day. ;D
Quote from: USRufnex on April 06, 2009, 04:44:12 PM
Well, the Supreme Court in 1923 did rule the minimum wage as unconstitutional, thus paving the way for the Great Depression....
I expect it was more complicated than that. Otherwise, all we would have to do to get out of this economic slump is raise the minimum wage significantly. Let's try $20/hr.
guess I couldnt find the appropriate snarkey smiley... I was only responding to gaspar^s ridiculous assertion that equates minimum wage with socialism... besides, minimum wage workers are worthless anyway... they should be paid "as low as the market will bear"... /snark.
Quote from: Gaspar on April 06, 2009, 12:31:10 PM
That's ridiculous. The risk is far greater. If market energy at GM and Christler were allowed to run it's course, and workers, shareholders, and the public weren't relying on the US Government to provide a parachute, then the company would die (spawning the birth of perhaps a dozen new innovative brands). Whatever was left of the companies would be lean and wise, and investors would have a pattern to use as a precedent to a new smarter corporate policy.
You can't argue this point, because it HAS happened before, a hundreds of times, with a hundred companies. Failure is sometimes necessary.
Harvesting the organs always beats keeping a brain dead patient on life support. Sure, It's hard for the family, but it saves lives.
I understand that wealth makes you angry. Many Americans share your emotion. To see these CEO's pulling million dollar salaries is disgusting when so many of us are hurting. To see them mismanage their companies and cause millions of people to lose their jobs hurts.
Damn the methods! Damn the shareholders! Damn the processes! . . . but don't be so angry that you damn the country in your march for retribution.
Take away the shareholders' ability to vote on executive compensation? Really? Take away an investors choice? Really? Give that choice to government? Really?
Who decides what the company builds? Who interprets what the consumer wants?
Government?
Great!
You're confusing me with one of your imaginary socialist enemies. I don't hate wealth, and I don't hate capitalism. I also don't think democratic government is a panacea, but it ideally provides the best counterweight yet devised to the interests of the few and the powerful.
Our economic system is not an ideology. It's an expression of human nature, and like human nature it needs to be channeled and guided to be useful. Otherwise the collective fallout to society and to the earth is just immeasurable.
I believe in checks and balances, and I believe that extremes of anything -- including individual freedom -- will ultimately tank us. That's why I believe that if a system like the free markets can't or won't produce a desired result, then it's in our interest to tweak it until it does. I understand the point that CF makes -- the market theoretically can work through any imbalance. But I don't believe it's always in our interest to wait for that to happen. It may be months, years, decades or more before we achieve our desired result. In the interim, what would the human cost be? Our economic system exists to serve us, not for us to serve it.
Quote from: we vs us on April 07, 2009, 09:32:26 AM
I believe in checks and balances, and I believe that extremes of anything -- including individual freedom -- will ultimately tank us. That's why I believe that if a system like the free markets can't or won't produce a desired result, then it's in our interest to tweak it until it does. I understand the point that CF makes -- the market theoretically can work through any imbalance. But I don't believe it's always in our interest to wait for that to happen. It may be months, years, decades or more before we achieve our desired result. In the interim, what would the human cost be? Our economic system exists to serve us, not for us to serve it.
This is a good thread.
Sure, the Great Depression was essentially a free market correction. But what a lulu of a correction. It's akin to tumbling off the edge of the Grand Canyon.
Let's face it -- we don't want to relive those times. The concept of checks and balances to prevent economic turmoil, or to smooth it out when it occurs, is prudent and humane. The lack of regulation led to 9,000 banks going bust in the 1930s and stupid housing loans during the 21st century. When you have 35 percent unemployment, as we did in the peak of the Great Depression, the human cost to adults and especially their children was immense.
On one hand, you had farmers in my native Illinois who were burning corn in their heating stoves because it was cheaper than coal (yes, that really happened). In the meantime, you had children that starved to death because their parents were dead broke and had no food (this was before food stamps).
Those things are so perverse, it's understandable why millions of Americans joined socialist and communist parties during the 1930s (including a lot of Oklahomans, I might add). Seeing that kind of suffering and anarchy spawned from a roiling free-market system would make many sensible people consider other alternatives in a hurry.
Now, I'm no socialist. But I'm no hardcore free-market capitalist, either. There's got to be a middle somewhere. Maybe it'll take tweaking to get there, and more tweaking in the future to maintain it. But to essentially take an all-or-none extremist position (free markets vs. socialism) ignores that there may be good aspects to both.
The United States Constitution was founded on compromise. There's no reason to believe its economic system can't be a system of compromise, too.
Compromise, you say?!? :o
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