Recently, I wrote a fairly angry letter to my Maryland Senator, Barbara Mikulski (D). She "wrote" me back recently (sending my fiancee the same letter, which leads me to suspect that - gasp! - Barb did not actually write the thing.)
Below are excerpts from her letter followed by the reasons why she is wrong on her "points."
We need to do everything we can to save jobs during these difficult economic times. I am a champion of the jobs in the automobile industry. I don't champion an industry. I champion the jobs in the industry. I will do all I can to save these jobs.
What we have here is a misunderstanding of markets. "Saving the jobs" is much different than "saving the whales" in the sense that while the latter is a finite group that can die out completely, the former is not a finite group. If jobs are lost in the auto industry, others will very well open up to 'take their place.' More specifically, if Ford goes under (and their suppliers follow suit), other car companies (Toyota, Honda, Hyundai) will experience an upsurge in consumer demand (from former Ford customers). Thus, those companies would need to hire more people.
The basic idea here is that when jobs close, other jobs tend to open. If a person gets laid off, that person can look for another job and more often than not, will find one. Nor does the found job HAVE to be in the same field as the lost job. When linotypist jobs dried up (because the advance in computer technology made the physical printing press methods obsolete), jobs in the computer market opened up. Linotypists simply went out and computer typesetting came in.
Of course, it can be argued that a recession (or depression) will likely mean that fewer jobs are created to replace the dying jobs. Certainly it is true that if the Failing Three go under, the number of jobs created at other auto companies to 'fill the void' may not be as many as jobs that were lost.
But the ultimate point is that we are achieving nothing by delaying the inevitable, postponing the death of companies that have been near death for years.
The responsible economic decision is to let companies succeed and fail on their own, and if this means that there are fewer jobs as a result, then this is the the economy's way of saying that production is outstripping consumption and that a scale-down is needed. If Ford has more hired help than their revenue will support, then it does little good to 'prop up' those jobs by forcing tax payers to support what the economy will not support on its own. (It is better to let those jobs die and let the market, not the government, command how many jobs are created to take their place, and where.)
It seems to me that the big bias here is not against losing jobs, but losing jobs in AMERICAN companies. I fail to see, though, any justice in forcing the taxpayers to subsidize companies that offer inferior products to foreign counterparts, if Americans have demonstrated that they would rather buy the cars of the foreign counterparts. Economic protectionism, whether it be in the form of subsidies or 'bail-outs,' do not do anything to "protect" consumers, Barb!
The American automobile industry is one of the biggest drivers of the U.S. economy. One out of every 10 jobs in America is auto-related. The American automobile industry is one of the biggest drivers of the U.S. economy. One out of every 10 jobs in America is auto-related. A collapse of GM, Ford or Chrysler, would cripple the American economy, given the huge network of suppliers, dealers, and other businesses and communities that would be affected., given the huge network of suppliers, dealers, and other businesses and communities that would be affected.
I have no idea where this stat was found, but let's assume it is accurate. 1 in 10 equals 10%, and while that is a fair percentage, it stil leaves 90% of the economy unscathed. Second, even if 1 in 10 jobs are auto-related, that does not mean that all of these jobs are linked to Ford, Chrysler, and GM. (Many foreign companies do a lot of their production in the US and utilize American parts.)
Once we get beyond that, though, I cannot figure that what Mikulski says, that a "collapse of GM, Ford or Chrysler, would cripple the American economy, given the huge network of suppliers, dealers, and other businesses and communities that would be affected." Frankly, the only persons I have heard say this are politicians and auto lobbyists.
Now, I COULD imagine the economy being significantly crippled by the going-under of Wal-mart, Target, and Kohls. Think of all the businesses that depend on these retailers for the majority, if not the totality, of their business. Now, ask yourself whether you think that three car companies who fail to turn a profit year after year would have anything CLOSE to the same type of effect on the economy.
As for suppliers, dealers, and other businesses, that rely on the Failing Three, it is true that some may struggle and see a decrease in business. First, that is simply the nature of business. When you depend on other companies to buy your products and those companies struggle, so will you. But beyond this, it is like I said before. Any gaps left by the failing of the Failing Three will quickly be filled by other companies. Thus, I cannot imagine that many companies that rely on Ford, Chrysler, and GM will not find new acquaintance with other car manufacturers who suddenly witness a spike in demand.
Next to the purchase of your home, the purchase of your automobile is your next big ticket. And if you buy a car, someone's got to make them, someone's got to sell them, and someone has to service them.
True! But it only proves my point, not Barb's! When it comes to cars, someone has to make them, someone has to make parts for them, and someone has to service them. So, if the Failed Three go under, other companies will take their place. If suppliers cannot sell their parts to the Failed Three, then they may end up selling to other companies that pick up the slack left by the Failed Three. And companies that once repaired Fords might now try and repair Fords and Hondas.
Leave it to politicians to prove the opposition's point in such rhetorical way as to mistake it for proving their own!
That's why I've introduced legislation that would make interest payments on car loans and state sales tax on cars tax-deductible for new cars purchased between November 12, 2008 and December 31, 2009.
A bail-out coupled with a tariff?! Double whammy. Wlhat if the consumers would rather buy a Honda (as they have shown). If the consumer decides in a way that disagree's with Barb's preferences, she will do what is in her power to induce them to make a different decision. Economics by fiat.
Knowing of your views was helpful to me, and I will keep them in mind as Congress continues to address the current state of the automobile industry
Do YOU believe her?
Nice going, Barb.