What about taxes, then? Would it be legal to tax the consumer at a higher rate on an imported good?
Edit: Or give a tax break for buying American, like how a lot of states gave a tax break for buying hybrid for awhile.
A tax break would be plausible, but the Japanese would likely view it as a form of tariff.
They’ve got to understand we’re in tough times right now. Isn’t that what diplomats are for?
It would be cheaper to declare that everyone who works for GM now has a government job. That job is to sit around and get fat. That way the jobs are saved and the american consumer can still drive the foreign cars that they find superior.
Raising tariffs during a financial panic did not work out so well the last time. Google Smoot-Hawley.
For those who want to emulate Japan’s industrial policy, the eighties called and they want their talking points back. Japan has been in an economic funk for almost two decades because of an unwillingness to let unprofitable companies fail.
The japanese factories in the USA (HONDA, TOYOTA, NISSAN) are all non-unionized. These plants produce excellent quality cars, and their workers are paid wages comparible to UAW-organized plants.
So, are the inefficiencies introduced by the unions to blame?
I recall reading that at the marysville (OHio) Honda plant, the line went down-everybody pitched in, and got things going. in a union plant, you have defined jobs, and one guy can’t fill in for another, unless a union shop stewrd gives permission.
Mybe this was OK in 1950-but not today!
To answer the OP, if GM goes under, there will be a mad grab for its capital assets, assuming someone is willing to lend the capital. If the government doesn’t step in and not let it fail, of course. If the government is in interventionist mode and is trying to save GM outright, expect some form of huge corporate welfare, though as recent events have shown, the government could possibly have some ownership which means all us taxpayers now own GM.
There will be a massive ripple effect through out Detroit and Michigan. First, the foreclosures as well all the socioeconomic problems associated with it will rise dramatically. The state revenues will drop immensely. Most of Michigan will probably look like a ghost town. The last time I was in Detroit, they weren’t exaggerating when they said that everything is run through GM. Maybe EDS can pick up some slack, and prevent some brain drain, but that’s more like a buoy in the middle of a tsunami.
There will also be a huge transition period as the local economy re-tools and re-educates itself to a new industry (or hopefully, more industries). Some will transition faster than others, but all those mom and pop shops that work with GM exclusively will suffer, and probably greatly. Expect bankruptcies to rise exponentially.
The key to trying to easing all of this is to ensure a quicker transition. Socially, I’m not sure what the government can do…that wouldn’t otherwise create massive market distortion and a chilling effect on business. On the other hand, any assistance to make business transitions more smooth will look like corporate welfare. Flint is awful enough place already, it’s hard to see it get any worse; though, it will if GM does fold, and expect similar Flint like conditions throughout the state.
Personally, I’m against any more corporate bailouts, and I’m starting to think the financial bailouts are not a good thing either (unless someone has it on good authority that the entire financial system will collapse). GM should be made the example of bad management and horrific labor policies and its consequences.
This really is a bad time to go that route, as others have stated. If diplomats are going around asking for tariff relief, we’re just asking for economic warfare. We might survive, assuming we can survive the impending, crushing inflation, but at the very least, we’re going to see price levels only seen in movies set in the future.
A company like General Motors would not “Go under” the way, say, an unsuccessful dry cleaning business would. They’d declare bankruptcy and continue operations, for the most part, and would be eaten up by other automakers. The capital assets, engineering skills, and product lines are too valuable to allow them to simply die.
In all likelihood, you’d just end up with Ford Corvettes or Nissan Le Sabres or some such thing.
I appreciate that a lot of people might lose their jobs (as if that isn’t already happening) but the government propping up GM is an awful idea, and raising tariffs is an insane and stupid idea - that’s what causes the first Depression. If General Motors can’t make money, it’s best for everyone in the long run if it dies. It blows pretty bad for anyone who loses their job in the shuffle to reassign their assets, but if the government’s going to prop them up you’re just losing jobs by virtue of heavily taxing the market to prop up an automaker that blows money. If you had a thousand dollars I said you had to invest, woudl you rather invest your money in GM, or Honda? If you answered Honda, then why do you want the government, on your behalf, investing your money in GM?
If you really must keep building cars in the USA, well, just look around. Lots of cars are built in the USA. Let Ford and Chrysler and Toyota and Hyundai eat GM, or let private investors pick off the various facilities and product lines and produce cars themselves.
Both are tariffs. Either risks running afoul of NAFTA, since almost all major automakers make cars for the American market in Canada or Mexico.
The destructive effect of tariffs cannot be overstated. I am not kidding when I say tariffs started the Depression; the stock market crash was recovering and people were still employed when the Smoot-Hawley Act started an interenational trade war that precipitated the Depression - a tripling of unemploment rates in just three years and cutting the average American’s income in half.
Risking international trade wars to save one stupid company is nutty. I know GM seems like a permanent fixture on the US landscape, but, really, they can be allowed to die, and the United States will soldier on and all the money being poured down the GM drain will go to other businesses who, one has to assume, have a good chance of being more produtive with it than GM is.
Universal healthcare is a liberal’s wet dream. It is not a national emergency.
Replacing cars as they wear out with more efficient/greener models is acceptable. Replacing the entire fleet at once, which is what I think DanBlather had in mind, is not.
You provided a link to the New York City Taxi & Limo Commission. That has absolutely nothing to do with showing Federal authority to order the states to replace existing vehicles.
We don’t need to buy into the idea of plug-in hybrids to pull this off. It needs to be something that can be done at the turn of a switch and that is possible if we require diesels for government fleet cars. GM only needs to install the engines that they currently use in their European cars. The only thing the Government needs to do is jump-start the algae based bio-diesel production currently coming on line and that can be done with minimum tax incentives. If you can create a need, the products to support it will follow.
The federal government buys it up?
There is no such thing as a government car fleet, per se. Federal agencies each have their own fleets with their own purchasing requirements. Many agencies coming under the GSA fleet program.
There are also strict fuel efficiency requirements. While it might be nice if the US Government only bought “American” vehicles from “American” manufacturers, the fact remains that taxpayers want their tax dollars used wisely. That’s why your government buys lots of “foreign” vehicles from “foreign” manufacturers. They simply make more cost-efficient, energy-efficient vehicles than GM, Ford or Chrysler.
I would hate to see GM go under for a variety of (obvious) reasons. At the same time, GM has had a gravy train for a long time. Even those reports of Ford manufacturing 65 MPG vehicles in the US only for export to outside of the US doesn’t help here.
A few years ago Japan restricted the import of rice. They defended this policy by saing that rice farming was part of their national heritage. Well fuck them, building cars is part of the American national identity and if it takes a little protectionism to make that happen it’s fine with me. As other posters have said, most other industrialized countries have some sort of industrial policy to make and keep them competitive.
As for universal health care being a liberal wet dream, I don’t think so little of the American people to think that they can’t pull off what every other industrialized country on the world has done. Who’s going to pay for univeral health care? The question should be what afre we hoing to do with the extra money when we reduce the cost of healthcare by 30%. Maybe we can use it to treat conservatives when fo cognitive dissonance when they see that liberal policies work when implemented by competent people of good will.
The only reason you would replace the entire fleet at once rather than do it as they wear out is if the govt. was full of stupid people. We just voted them out of office, however, so I’ll assume that we’d do it in a more rational manner.
What “extra” money? The government currently does not provide healthcare for the bulk of the population. Under a universal system, the government would provide that care. This means they would be spending money they are not spending now. Whether that care costs the government less than it currently costs individuals or private insurance companies is irrelevant. There is no savings for the federal government…it would be a massive spending program, and would have to be paid for somehow. The options are to either cut spending (good idea) or raise taxes (Boo! Hiss!).
Nickel and dime it with 50 cars here, 25 there ain’t gonna save GM.
As someone who lives and consumes in America, fuck you too! I do not want to be told I have to buy an inferior product at an inflated price.
I’d also appreciate not being plunged into the next great depression by idiotic policy. As indicated by other posters, protectionism has wider ranging consequences than just the industry involved. The damage you will do to employment as a whole could far outweigh the damage done by the death of GM.
I might have more sympathy for GM if they were building good vehicles. Part of the reason they’re having problems is because they’ve refused to put out small cars that compare to the imports and have instead relied on the high-markup SUVs and trucks. They’re losing because of poor, short-term-focused decision making, not foreign government subsidies. I don’t want my money going to propping up poor businesses.
Not quite. The NUMMI plant in Fremont, California is a joint venture between Toyota and General Motors. It manufactures both the Corolla and the Pontiac Vibe and is a UAW-organized plant.
The Ford Villager and Nissan Quest minivans were a joint venture manufactured at Ford’s Avon Lake, Ohio plant – another UAW-organized plant.
Mitsuibishi’s North American plant in Bloomington, Illinoisis a UAW-organized plant.
Blaming autoworkers for U.S. auto companies’ problems is like blaming bad beer on the person who puts it in the bottle.
He didn’t blame autoworkers. He blamed unions. There is a difference between the two.