Sunday, November 30, 2008

BAIL OUT FOR THE AUTO SECTOR -- WHAT ABOUT THE POOR?

There is a very controversial crisis going on right now with the economy.

The U.S. just approved $700 billion in bailout money for the financial sector to back up mortgages and credit card debts. They are now ready again to approve a further $800 billion.

The three automaker CEO's then come flying to Washington in their private jets to pressure Washington to bail them out as well to the tune of $25 billion. The Canadian government is exploring doing the same at both the provincial and federal level.

As a taxpayer that does not make anywhere near what an average autoworker makes, nor do I have any hope of retiring with a pension ... likely, I -- like many other people -- will be working until the day I am in the ground, I vehemently disagree with all these bailouts.

On one website, I read how the governments in Ontario and Canada pissed away $1 billion in the auto sector already and the writer posted the number of jobs lost at respective plants in the past year or so. The question the writer asked afterwards, is for us all to do the math, how many job losses will $5 billion buy? Do the math!

First, before bailing out the auto sector or any other business, it should be noted WHY these big firms are finding themselves in trouble. If people are not buying the over-priced cars that the Big Three are making, how is $5 billion here and $25 billion in the U.S. going to create these markets? This bailout will not make the average family better off to the effect they will now be able to buy a new car ...

The issue is jobs, jobs, and more jobs. If I am not working, nor are my neighbours down my street working, are we going to be able to go out and buy a GM or Chrysler product, just because they are now being bailed out so they can make more product that nobody can afford?

If you want to help the car companies, or anybody else for that matter, help should be delivered to families and small businesses, so they can purchase more ... people with no disposable income, such as people on Ontario Works and Ontario Disability Support Program, are not going to be buying new clothes, eating in restaurants, seeing movies, etc. let alone buying a car. People who work for low wages are also not in a position to buy a new car.

However, when people ARE working and EARNING good money, they have the confidence to go out and buy more things, including new cars.

The only people this bailout is helping is well-paid unionized autoworkers, as well as highly paid executives, the very same group only months before, were crying to the government to cut their taxes ... and it is so interesting that when the first sign of trouble comes, they come running back to the taxpayer ...

In their world, governments are supposed to get out of the way with respect to taxation, regulation, health and safety, product safety, etc., but come back into the fray with huge sums of money on demand, just because ... if our governments say no, which they should for the most part to the extent of their legal capacity to do so, these same companies also threaten us all that if we don't pay the untold billions that virtually ALL the plants will shut down and leave this country, and leave more than a million jobless in its wake.

You, nor anybody in the government, should be paying heed to this. We have already paid and paid into this sector through so-called economic development initiatives, only to see several plants close or cut major shifts on their assembly lines anyways, despite the aid and tax cuts we've already given them.

The unfortunate thing, however, is we may be stuck backing part of the GM workers' pension plans. They say the average worker gets $1,600 per month from GM, but what they don't tell you is that they likely get the maximum amount for CPP, which is just over $1,000 a month, plus the OAS of approximately $500 per month, in addition to whatever funds they saved on their own. This is a far cry from the $1,100 a month most people will be getting, so why should we care?

If the government foolishly made a promise that they will cover some of these costs, likely under the Bob Rae government during the 1990's, then we probably will be stuck paying and paying for this. If you ask me, we should be giving them nothing more.

Until I see the government handing out money to small businesses like me, or housing help to homeowners seeking to make repairs to their homes in a less convoluted bureaucracy that already exists, then I say what is good for the goose is good for the gander. I walk down the main streets of my city and see many businesses closed down for good, as well as meet people who are losing their homes ... because they injured themselves at work or got sick and the insurance company or WSIB is giving them an incredibly hard time.

I don't know about you, but I sense when these small businesses fail (and of course, their owners have to immediately resort to welfare as there is no Employment Insurance for them), or people either get denied or lose benefits to which they are otherwise entitled, these people, which seem to be growing in number year after year, are NOT shopping in the stores, eating at restaurants and least of all, not buying cars.

The Employment Help Centre here in Niagara found that out of a thousand people they interviewed that use their services, only seventy of them had both a valid license and a vehicle. Yet, what do 99.9% of all employers in Niagara demand? A license and a vehicle!

Would it not be better to help people access better paying jobs, so that eventually they develop the disposable income and/or credit rating necessary to buy cars, as opposed to just pouring more money into a black hole, while people continue to suffer?

I have nothing against autoworkers, and I am sure the loss of a job is just as hard for many of them as it is for anybody else, but I absolutely resent our government playing favourites with what industry it will support and which industries it will not.

Some members of the Canadian Auto Workers Union, although I am not sure if this is union-inspired or just brought about by a few radical members ... are trying to get their members to support only businesses that have owners that drive GM products, for example.

What about those of us that do not drive, because it has been determined by somebody else that our medical conditions don't permit it? How about those that don't drive because they simply cannot afford to do so? Are these autoworkers going to penalize them, just because they do not have a $50,000 GM product in their driveway?

It is time that taxpayers speak up. It is time that small business owners speak up, as well as Canadians who are going through long-term unemployment for reasons that have nothing to do with this economic restructuring ... perhaps, ageism, abelism, classism, etc. have a lot to do with it, which is the silent partner in this crisis, though nobody will admit it.

To me, if anybody should bail out the auto industry, it should be the big oil companies, as for the past five or so years, they've profited immensely by keeping people in their cars (and blocking people from using alternative transportation options).

Let the Big Three go through the Chapter 11 in the U.S. and the Companies Creditors' Arrangement Act here in Canada (similar to a Chapter 11 in the U.S.), and let them all restructure. Air Canada been through it. Stelco been through it. Many other companies have been through it and re-emerged stronger, more streamlined and responsive.

If these CEOs are as smart as they say they are and the union leaders feel they are in for more than just the ride, then perhaps they should be contributing to the solution, as opposed to coming back to taxpayers cup in hand, begging for handouts. Shame on them!

Yet these are the very same people that demonize and attack the poor in our society for ending up in the positions that they are in. They get told to get a job, any job. At the same time, these same executives are begging for major billions of dollars of taxpayers dollars. Why is nobody demonizing them?

Your thoughts?

2 comments:

miohippus said...

perhaps a bailout is in order, but first, as in the US, let the big 3 tell us their business plan. We should stipulate that all execs sep down. The new crew must have their salary limited to $250,000. Then we can ask wage employees (and pensioners) for concessions.

The Advocate said...

The days for multi million dollar salaries are over. You're right.

But bailing them out is not going to get the product to the market.

I want to see other forms of economic renewal work first, then consider a strong business plan to fill what can be a growing need after people get more money in their pockets.