The argument about GM is the silliest part. I think it's somewhat plausible that YC could find a way to use $40Bn productively.
Again, the point of this bailout is not just to save 60,000 current GM jobs. The point is to save the GM, the GM supply chain, the local economies of several large industrial states, and the millions of people in an economic ecosystem that has built up around GM. Looking at only the 60,000 jobs at GM is taking an absurdly narrow view of the situation.
> the GM supply chain, the local economies of several large industrial states
I don't see how these are going to just disappear if GM is gone. There are other car companies these suppliers can sell to. Of course there will be disruption, and probably some job losses, but not the whole 2-million-person industry (to use the industry number). And if some of those jobs do disappear, maybe it's because demand for the product no longer supports them.
I know my perspective is different on this, because I'm 25, and honestly cannot fathom a lifetime with one company. My career will be a couple years here and there, and most likely I'll have more than one career as well. So it is alien to me that anyone wants to protect (or even prefers) this idea of having a single job, at a single employer, for life. Why is it so terrible that someone might have to find a new job or that a town might die out?
That said, I'm not unfeeling about this issue. I realize these are real lives here (my dad is a GM retiree). What I don't understand is why we are bailing out the company, and not the workers.
I'd rather we spent the money on retraining the employees, hopefully giving them skills in an industry that isn't slowly dying. And this generalizes to all those losing their jobs, no matter the industry. Stop trying to save the individual companies (bailouts) or whole industries (tariffs and subsidies) and educate people.
"I don't see how these are going to just disappear if GM is gone. There are other car companies these suppliers can sell to."
That's your opinion, but the facts are pretty clearly against you. Listen to the radio and read the newspaper -- the suppliers are already failing. And they're not failing because there's no demand for cars (GM sold about 9 million cars last year, incidentally), but because their primary customer has stopped paying the bills. That's what the government is trying to save -- not to mention the numerous American towns that have no economy without the local GM plant.
And before you argue that bailing out these towns is the wrong solution, try to remember that the world doesn't turn on a dime. Yes, a place like Youngstown, Ohio probably needs to find a way to survive without the GM plant. But they aren't going to diversify their economy overnight, and it isn't going to help them to let their primary employer die.
So maybe you're right, and some non-zero number of these suppliers would survive a total GM liquidation. I don't know. The point is, the bailout isn't designed to save GM, so much as it's designed to save the entire economy that surrounds GM. Everyone who tries to make the calculation in terms of a cost-per-GM-head is being simple, and is failing to consider the larger picture.
"And before you argue that bailing out these towns is the wrong solution, try to remember that the world doesn't turn on a dime. Yes, a place like Youngstown, Ohio probably needs to find a way to survive without the GM plant. But they aren't going to diversify their economy overnight, and it isn't going to help them to let their primary employer die."
How much can we afford to spend on people's romantic attraction to their home town? This country's had ghost towns appear when markets collapse and industries disappear before, it could stand to see that happen again. I happen to live in a college town where the second biggest employer (i.e. not the college) is hiring electronics assemblers every week, because it's in a growing market. Why can't a few people leave Michigan and move here?
It's probably wrong to think about this in terms of Youngstown, Ohio surviving the death of GM. People can leave Youngstown.
I think it is fair to see the 40B as simply saving the 60K or so jobs and little more. If a natural disaster took 60K lives, I do not think it will cause a prolonged national economic depression.
Likewise, I do not think adding 60K employed consumers will go a long way in fixing the current economic crisis.
Of course, saying that the 40B will "save" the jobs is in itself a big assumption. There is every chance that GM will run out of 40B and still shut down.
Comments
The argument about GM is the silliest part. I think it's somewhat plausible that YC could find a way to use $40Bn productively.
Again, the point of this bailout is not just to save 60,000 current GM jobs. The point is to save the GM, the GM supply chain, the local economies of several large industrial states, and the millions of people in an economic ecosystem that has built up around GM. Looking at only the 60,000 jobs at GM is taking an absurdly narrow view of the situation.
> the GM supply chain, the local economies of several large industrial states
I don't see how these are going to just disappear if GM is gone. There are other car companies these suppliers can sell to. Of course there will be disruption, and probably some job losses, but not the whole 2-million-person industry (to use the industry number). And if some of those jobs do disappear, maybe it's because demand for the product no longer supports them.
I know my perspective is different on this, because I'm 25, and honestly cannot fathom a lifetime with one company. My career will be a couple years here and there, and most likely I'll have more than one career as well. So it is alien to me that anyone wants to protect (or even prefers) this idea of having a single job, at a single employer, for life. Why is it so terrible that someone might have to find a new job or that a town might die out?
That said, I'm not unfeeling about this issue. I realize these are real lives here (my dad is a GM retiree). What I don't understand is why we are bailing out the company, and not the workers.
I'd rather we spent the money on retraining the employees, hopefully giving them skills in an industry that isn't slowly dying. And this generalizes to all those losing their jobs, no matter the industry. Stop trying to save the individual companies (bailouts) or whole industries (tariffs and subsidies) and educate people.
"I don't see how these are going to just disappear if GM is gone. There are other car companies these suppliers can sell to."
That's your opinion, but the facts are pretty clearly against you. Listen to the radio and read the newspaper -- the suppliers are already failing. And they're not failing because there's no demand for cars (GM sold about 9 million cars last year, incidentally), but because their primary customer has stopped paying the bills. That's what the government is trying to save -- not to mention the numerous American towns that have no economy without the local GM plant.
And before you argue that bailing out these towns is the wrong solution, try to remember that the world doesn't turn on a dime. Yes, a place like Youngstown, Ohio probably needs to find a way to survive without the GM plant. But they aren't going to diversify their economy overnight, and it isn't going to help them to let their primary employer die.
So maybe you're right, and some non-zero number of these suppliers would survive a total GM liquidation. I don't know. The point is, the bailout isn't designed to save GM, so much as it's designed to save the entire economy that surrounds GM. Everyone who tries to make the calculation in terms of a cost-per-GM-head is being simple, and is failing to consider the larger picture.
"And before you argue that bailing out these towns is the wrong solution, try to remember that the world doesn't turn on a dime. Yes, a place like Youngstown, Ohio probably needs to find a way to survive without the GM plant. But they aren't going to diversify their economy overnight, and it isn't going to help them to let their primary employer die."
How much can we afford to spend on people's romantic attraction to their home town? This country's had ghost towns appear when markets collapse and industries disappear before, it could stand to see that happen again. I happen to live in a college town where the second biggest employer (i.e. not the college) is hiring electronics assemblers every week, because it's in a growing market. Why can't a few people leave Michigan and move here?
It's probably wrong to think about this in terms of Youngstown, Ohio surviving the death of GM. People can leave Youngstown.
Completely agree with you.
I think it is fair to see the 40B as simply saving the 60K or so jobs and little more. If a natural disaster took 60K lives, I do not think it will cause a prolonged national economic depression.
Likewise, I do not think adding 60K employed consumers will go a long way in fixing the current economic crisis.
Of course, saying that the 40B will "save" the jobs is in itself a big assumption. There is every chance that GM will run out of 40B and still shut down.
How many jobs do you think 60,000 employed consumers can create?