In Obama's Economy: The Employees and Owners of Ford Motor Company...

[Politico]

In Obama's economy, the employees and owners (i.e., shareholders) of Ford Motor Company, a successful American company that knows how to profitably operate in the automotive industry, pay a considerable amount in taxes. These taxes helped Chrysler get bailed out for the second time, which subsequently enabled Chrysler to turn around and run a multimillion dollar pseudo-political ad during the Super Bowl about the economy improving: http://www.youtube.com/watch?v=pGMOhOYvcw4

I was fooled in 2008 about Obama being a moderate, a New Democrat in the Clinton mold. Obama is really a tax-and-spend liberal in the Mondale mold. The only thing we have yet to see are the massive tax hikes that he has in store for us if he gets the second term he supposedly "deserves."

Why would Ford, GM or Chrysler compete as hard as possible in the future if a bailout is always right around the corner? Think about it.

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." - Ronald Reagan

[opebo]

Nonsense buddy.  'Auto companies' are branches of government which are largely effected by macroeconomics rather than some kind of 'hard work' or 'good decisions'.  As you well know, quality of products has nothing to do with 'success'.

It was only neo-liberal economic policies which killed GM and Chrysler, so rectifying these polices is the solution, not closing those branches.

[Politico]

Nonsense buddy.  'Auto companies' are branches of government which are largely effected by macroeconomics rather than some kind of 'hard work' or 'good decisions'.  As you well know, quality of products has nothing to do with 'success'.

It was only neo-liberal economic policies which killed GM and Chrysler, so rectifying these polices is the solution, not closing those branches.

It's actually quite simple: Ford was successful because they mostly delivered products the market demanded. They did so in a cost-efficient manner. In stark contrast, GM and Chrysler mostly delivered products the market did not demand, and they obviously did so without being cost-efficient. To put it succinctly, Ford the winner was forced to help bailout losers. A policy prescription like this that is applied over and over again, and bailing out Chrysler for the second time sends that signal, is not going to lead to pleasant outcomes in the long-run.

I can understand the GM bailout, and do not necessarily disagree with it, but the Chrysler bailout was wholly inexcusable. Their assets should have been liquidated to the highest bidders. They had already been bailed out once before. Fool me once, shame on you. Fool me twice, shame on me.

Again, why would Ford, GM or Chrysler compete as hard as possible in the future if a bailout is always right around the corner? Think about it.

In Opebo terms, and hopefully I do not get any infraction points for this because it is simply for amusement, if all Thai professional businesswomen were paid the same amount regardless of quality of service, if there was government intervention to ensure that Thai professional businesswomen get paid the same amount regardless of how good or how bad they are, what do you think you'll eventually end up with no matter which Thai professional businesswomen you choose?

[True Federalist (진정한 연방 주의자)]

As I said in another thread, I fail to see why some Republicans consider badmouthing the recovery to be good politics.  If the recovery falters, they'll most likely benefit from that in any event, but if the economy continues to revive at its current slow pace, or worse actually starts to surge, they are setting themselves up to be in danger of losing the House.  They've got plenty of good cards to play besides bashing Obama about the slow pace of the economy.  Focusing on this card so much has little upside benefit for the Republicans and a whole lot of downside peril.

OTOH, it is sad when of the previous posters in a thread I'm replying to that Politico has made the least insensible comments.

[Politico]

As I said in another thread, I fail to see why some Republicans consider badmouthing the recovery to be good politics.

One, this is not a recovery by American standards. Being pleased with mediocrity, if not outright stagnation, is best left to Europe, not America. Two, once the sh**t really hits the fan in the EU, who knows what will happen? We know it is going to be bad no matter what. The question is how bad.

Think about it this way: Remember how bad the economy was in January 2008, and how worse it became by March 2008 (Bear Stearns) and then even worse by September 2008 (Lehman Brothers)? We've yet to reach a Bear Sterns moment, let alone a Lehman Brothers moment, but both are around the corner. Now you know why Mitt Romney is going to be the 45th President of the United States of America.

[True Federalist (진정한 연방 주의자)]

It's actually quite simple: Ford was successful because they mostly delivered products the market demanded in a cost-efficient manner. GM and Chrysler mostly delivered products the market did not demand, and they obviously did so without being cost-efficient. To put it even more simply, Ford the winner was forced to help bailout the losers.

I can understand the GM bailout, and do not necessarily disagree with it, but the Chrysler bailout was wholly inexcusable. Their assets should have been liquidated to the highest bidders. They had already been bailed out once before. Fool me once, shame on you. Fool me twice, shame on me.

A good part of why Ford was able to avoid a bailout was they went to a high leverage position before the credit crunch, which gave them the cash to ride out the downturn.  They planned for the possibility, while GM did not and was unable to secure the financing they needed once the crunch hit. Considering that Ford shareholders have made out much better than old GM shareholders have, to say the bailout helped GM disproportionately would require not using a shareholder-centric view of what a company is.

As for Chrysler, the fact is that if Chrysler had gone into conventional bankruptcy, its factories would all be closed now, and those jobs and those of their suppliers and dealers would be gone for good.  There has been and continues to be an oversupply of production capacity in the auto industry.  Keeping Chrysler running until it could be taken over by another company was the best way to keep those jobs in America.  It likely would have been better if it hadn't be Fiat that took Chrysler, but no better option presented itself.

[Politico]

Considering that Ford shareholders have made out much better than old GM shareholders have, to say the bailout helped GM disproportionately would require not using a shareholder-centric view of what a company is.

It is more fair to think of it like this: GM employees/shareholders benefited at the expense of Ford employees/shareholders despite the latter being undeniably savvy and arguably successful whereas the same cannot be said of an inept GM. Having winners bailout losers is not a good prescription more than perhaps a one time exception in the case of GM due to their sheer size, and the history of the company. Chrysler has no excuses. They were bailed out once before, and the signal should have been sent that one bailout, no matter how big you are, is all you get. I am sure GM would compete a bit harder today if they had been given that signal.

[TheGlobalizer]

GM also had the highest net labor impact on their production costs - a bunch of nearly-exclusive suppliers with fixed labor costs negotiating from positions of economic weakness.  GM didn't just fail because GM is poorly run - it was also brought down by suppliers (Delphi et al.) who had trouble and were unable to supply GM consistently.  A lot of Big Auto arrogance in Detroit, IMO.

Like Politico said, Ford is understood to have done a better job understanding its market.  Relatively speaking, of course, because the Japanese companies have been understanding our market pretty well for 20 years with corresponding market share gains.  They also have a much more nimble supply chain, due to the lack of pervasive union-style staffing (they adopt just in time much moreso than American companies historically have).

[True Federalist (진정한 연방 주의자)]

As I said in another thread, I fail to see why some Republicans consider badmouthing the recovery to be good politics.

One, this is not a recovery by American standards. Being pleased with mediocrity, if not outright stagnation, is best left to Europe, not America. Two, once the sh**t really hits the fan in the EU, who knows what will happen? We know it is going to be bad no matter what. The question is how bad.

Think about it this way: Remember how bad the economy was in January 2008, and how worse it became by March 2008 (Bear Stearns) and then even worse by September 2008 (Lehman Brothers)? We've yet to reach a Bear Sterns moment, let alone a Lehman Brothers moment, but both are around the corner. Now you know why Mitt Romney is going to be the 45th President of the United States of America.

If it gets that bad, then yes, the Republican nominee (who is not yet guaranteed to be Romney) will win the White House.  But if it doesn't get that bad then not only will Obama get a second term, but the Romney campaign strategy will hand the Democrats the House.

You praised Ford for avoiding a bailout while GM and Chrysler did not, but failed to realize why that was the case.  Ford planned for the possibility that not everything would go as they would have liked.  If the economy had continued to go well, GM would have been lauded as the automaker who planned best as they would have had the capacity to meet consumer demand that Ford would not have.  Romney and his surrogates are acting like GM, assuming that events will unfold in the manner that is most advantageous to them.  The Republicans need to act more like Ford than GM.  Basing their electoral strategy on one particular chain of economic events is bad strategy.  Despite your hopes for economic gloom and doom, the economy could do well, and if that happens, the Republicans are setting themselves up for catastrophic failure.

[King]

Valuing a couple percentage points of Ford stock that the people at Ford (outside shareholders are not AT Ford) don't seem to care too much about over the hundreds of thousands of lives that would have been destroyed?

Ford operates its factories in the same towns and counties as its competitors.  If the economy and value of those regions collapse because two companies do then Ford is in trouble simply because the area becomes too volatile to do business.

[Jacobtm]

Politico is great.

They were Bush's auto-bailouts before they were Obama's, after all...

[TomC]

Why would Ford, GM or Chrysler compete as hard as possible in the future if a bailout is always right around the corner?

Because we "believe in America" of course.

[Beet]

Ford supported the auto bailout because they were dependent on the same supply chain, which would have been devastated. Toyota also supported the bailout.

[pbrower2a]

Nonsense buddy.  'Auto companies' are branches of government which are largely effected by macroeconomics rather than some kind of 'hard work' or 'good decisions'.  As you well know, quality of products has nothing to do with 'success'.

It was only neo-liberal economic policies which killed GM and Chrysler, so rectifying these polices is the solution, not closing those branches.

It's actually quite simple: Ford was successful because they mostly delivered products the market demanded. They did so in a cost-efficient manner. In stark contrast, GM and Chrysler mostly delivered products the market did not demand, and they obviously did so without being cost-efficient. To put it succinctly, Ford the winner was forced to help bailout losers. A policy prescription like this that is applied over and over again, and bailing out Chrysler for the second time sends that signal, is not going to lead to pleasant outcomes in the long-run.

Ford had problems but solved them earlier. That is just luck.

You must be logged in to read this quote.

The results justify themselves. Liquidation as a rule is a destructive process. But let's remember that both GM and Chrysler are defense contractors, which may have something to do with the bailout.  

You must be logged in to read this quote.

The fault lay elsewhere in decisions by a previous administration and in a speculative bubble not focused on automobiles that went bad.   If you have triage and you must choose between giving a liver transplant to a child who has liver problems through no personal fault and some habitual  drunkard who hasn't gotten the message by age 55 that alcoholism is a way to an early grave, then which prospective patient gets the donated liver?

The strength of our economic system depends upon people taking reasonable chances. That includes second chances, which explains why we have such institutions as bankruptcy protection.

You must be logged in to read this quote.

You will get infraction points for that non-family-friendly analogy.  More relevant is an assembly line in which machines set the pace of work and ensure that people can't do spectacularly better than another worker. I understand to some extent how an assembly line works -- and the learning curve for assembly-line work is nearly flat for a very long time. once one reaches the standard. There just isn't much to learn. One has the hand speed and manual dexterity or one doesn't. Assembly-line workers are paid by the hour, and if their work fails to meet a certain standard they are gone. What one is capable of doing aside from working on an assembly line doesn't figure into the pay.

Wage differences on an assembly line within a manufacturing plant generally reflect

(1) training wage versus 'trained' wages
(2) doing one of the more difficult, critical,  or dangerous processes on the line
... like being a "straw boss"
(3) having more versatility on the job so that one can be moved elsewhere on the line if necessary
(4) unequal pay due to inability to negotiate effectively for pay.  

I question whether the first three cause much trouble.  Someone who can be moved from Position #15 to Position #98 in the event that the person usually at Position #98 is not at work that day is more valuable than someone who can't be moved around as needs change.  People who can do things other than assembly-line work generally don't stay on such work unless the pay is really attractive.

The fourth cause should be irrelevant. Self-promotion and kissing up to the boss rarely have any bearing on one's competence in most jobs. Employers often browbeat employees into working for less; big employers often have professional staff that know how to scare people into taking pay cuts out of need for the paycheck. Oh, so your wife just had a baby? That may not decrease your competence on the job, but that may have weakened your bargaining position with  your employer. And then there is the possibility of discrimination on the job on grounds of gender, race, ethnicity, national origin, etc.

Employers who have any decency avoid  cause #4. Those that exploit cause #4 deserve a strong and militant union just to keep them honest.    

[Simfan34]

Politico, your criticism does not make sense. What we had before the bailouts was an industry that had suffered from poor planning and burdensome union obligations that lead, in turn, to even more poor planning. What the bailouts did was allow them to restructure and remain open, as opposed to a bankruptcy that may have very well seen them be taken over and shut down. That would affect Ford as well.

[opebo]

...if all Thai hookers were paid the same amount regardless of quality of service, if there was government intervention to ensure that Thai hookers get paid the same amount regardless of how good or how bad they are, what do you think you'll eventually end up with no matter which Thai hooker you choose?

They are all paid the same regardless of service, Politico.  Service has no bearing on price - only youth and beauty do.

[Politico]

Nonsense buddy.  'Auto companies' are branches of government which are largely effected by macroeconomics rather than some kind of 'hard work' or 'good decisions'.  As you well know, quality of products has nothing to do with 'success'.

It was only neo-liberal economic policies which killed GM and Chrysler, so rectifying these polices is the solution, not closing those branches.

It's actually quite simple: Ford was successful because they mostly delivered products the market demanded. They did so in a cost-efficient manner. In stark contrast, GM and Chrysler mostly delivered products the market did not demand, and they obviously did so without being cost-efficient. To put it succinctly, Ford the winner was forced to help bailout losers. A policy prescription like this that is applied over and over again, and bailing out Chrysler for the second time sends that signal, is not going to lead to pleasant outcomes in the long-run.

Ford had problems but solved them earlier. That is just luck.

Luck has nothing to do with the fact they make automobiles that people want whereas Chrysler and GM generally do not (And this is coming from an owner of a GM, but I am no going to be so delusional as to think GM has been making vehicles in high-demand the past decade...). For example, the Focus is hugely popular overseas, the F-150 is the best selling truck of all-time, etc.

Every business that seeks to survive, let alone grow, needs to supply products that are demanded by consumers. GM, and especially Chrysler, have been poor at this. That is, easily, the biggest difference between Ford and GM/Chrysler.

You must be logged in to read this quote.

When was Chrysler a defense contractor after the early '80s? What is your source on that?

I can understand, and even largely agree, with bailing out GM all things considered. But only somebody from Michigan can honestly argue for bailing out Chrysler a second time. Bailing out Chrysler a second time was like making Michigan a welfare recipient who received payment from the other 49 states (and successful companies based in Michigan like Ford)...

You must be logged in to read this quote.

I can understand giving people a second chance, but a third chance? Are you really going to defend that with stuff like this?

You gotta draw the line in the sand somewhere, or else everywhere will end up looking like Detroit in 20-30 years.

[Politico]

OK, so regardless of one's position on bailing out Chrysler for a second time (let's reinforce moral hazard instead of eliminating it? Well, in that case, don't be shocked when Chrysler/GM go under yet again...), at least we can agree that this is a fair slogan for Obama 2012:

Obama 2012: Yes We Can (Make the Rest of America Look Like Detroit)

[TomC]

Is that why Romney left Michigan? Too many poors in "America's cess pool?"

[True Federalist (진정한 연방 주의자)]

One wonders why the Romneybots are trying to drive Reagan Democrats to vote for Santorum.  Santorum was already surging in Michigan before yesterday.  They might want to wait until after the Michigan primary to resume bashing the auto industry.

[Simfan34]

Ford is a great and wise company.