Krugman: US Auto Industry To Disappear--What Does This Mean???

by: Paul Rosenberg

Sun Dec 07, 2008 at 13:49


UPDATE: [ASW, 12/8] Krugman explains he was misquoted.

AP is reporting (h/t ObscureName in a Quick Hits comment):

Krugman: US auto industry will probably disappear

By MALIN RISING - 5 hours ago

STOCKHOLM, Sweden (AP) - Nobel economics prize winner Paul Krugman said Sunday that the beleaguered U.S. auto industry will likely disappear.

"It will do so because of the geographical forces that me and my colleagues have discussed," the Princeton University professor and New York Times columnist told reporters in Stockholm. "It is no longer sustained by the current economy."

Krugman won the 10 million kronor (US$1.4 million) Nobel Memorial Prize in economics for his work on international trade patterns. Some of his research on economic geography seeks to explain why production resources are concentrated in certain locations.

Speaking to reporters three days ahead of the Nobel Prize ceremony, Krugman said plans by U.S. lawmakers to bail out the Big Three automakers were a short-term solution, resulting from a "lack of willingness to accept the failure of a large industry in the midst of an economic crisis."

What's it mean in several senses:

(1) If Krugman is right.
(2) That he would say something like this, phrased the way that he is quoted.
(3) That he is seemingly ignoring "outside the box" thinking that is so clearly called for in this case.

Paul Rosenberg :: Krugman: US Auto Industry To Disappear--What Does This Mean???
(1) The answer to #1, I think, should be fairly obvious: the auto industry represents the heart of US manufacturing.  If it goes, millions of jobs go with it, and the geographic distribution of those jobs means that entire communities will be wiped out.  Avoiding a true depression under this scenario could well be impossible, though I would suppose that Krugman himself will dispute this.

However, I can't really see how this can be true.  The US is a huge auto market, and someone is going to be selling cars here for a very long time to come.  The problems faced by US car makers are not, so far as I can tell, inherently tied solely to the sort of analysis that Krugman is getting his Nobel Prize for.  The carrying of health care costs as private-sector costs is the first thing that comes to mind here.  More under #3 below.

Therefore, the demise of the US auto industry, if it should come, would not be an economic event, but a political decision.  And it is virtually impossible to conceive how the Democratic Party could possibly survive such a decision.  Have just now come to power, this would be an unforgivable blunder.

(2) Why would Krugman say this?  Who knows?  But one can say something about the other side of the coin--what can we rule out thinking about Krugman, in light of the fact that he apparently did say this?

Well, for one thing, we can stop believing in him as the Messiah.  This should have already been quite obvious, from his various acts of waffling over the bailout.  Is he far, far better than most?  Indubitably.  Is he a very smart economist?  Are you kidding?  But is he a true, cutting edge progressive leaders?  No. And I don't think he ever claimed to be.

In fact, I still think it's quite possible that if such leadership showed up, Krugman would move farther left to support it.  But I don't expect him to be the one leading the charge.

Don't forget, he was hired by the NYT as pretty much a middle-of-the-road expert on the economics of globalization.  That's not a slot that one expects to find progressive leadership coming from.  He stepped up admirably when he saw the Bush Administration lying outrageously about its tax cut proposals in 2001, and the rest of the media treating those lies like unquestionable holy writ.  And he continued speaking out as he saw more and more of the same pattern of behavior across the board.  He has been an exemplary citizen in one of our nation's darkest of times.  But none of that, per se, makes him necessarily a pro-active progressive leader.

We have to become much more sophisticated as consumers of expert opinion in the field of economics, and above all, we need to become more sophisticted in separating expert economic analysis from informed political opinion.  I have always trusted Krugman far, far more for the former, as opposed to the latter.  And this merely serves to underscore why.

(3) It seems to me that Kreugman is clearly not thinking outside the box here.  This applies in at least three potentially interrelated ways that I can think of, right off the top of my head.

The first is the possibility of transferring health care costs to the federal government, as part of modified Obama health care plan that shifts significant more toward getting us to single-payer sooner, rather than later.

The second is the possibility of transforming the auto industry into a more generalized infrastructure industry, primarily focused on transportation in general--building high-speed rail, for exmple, in addition to cars/trucks/buses--and renewable energy infrastructure.

The third is the possibility of nationalizing the industry, which looks to be cheaper than continuing to try to bail it out, and which could make it much easier to accopmlish further adaptations to meet shifting national priorities.

I don't pretend to be an economist, much less one of anywhere near Krugman's stature.  But, like him, I, too, am an engaged citizen.  And I cannot ignore the fact that he has not engaged with these further possibilities that increasingly are no longer optional for us to be considering and discussing.   Indeed, if anything, I have probably only begun to scratch the surface here, of the more imaginative and critical thinking that need to be done.

Tags: , , (All Tags)
Print Friendly View Send As Email
Krugman: US Auto Industry To Disappear--What Does This Mean??? | 145 comments
I tmeans that Krugman has changed his position... (4.00 / 2)
180 degrees since 3 weeks ago where he insisted that the Big 3 must be saved...

I guess he decided to get on the "take it out on Michigan" bandwagon...

Of course, he isn't helping at all... just like Michael Moore isn't helping...  but, who cares if the midwest turns into an economic Mad Max movie?  We deserve it for having unions or something....

At least you still support us, Paul.  Here in the blue midwest, we voted for hope.  In return, we've gotten, "Let them fail!"  Thanks, democrats and others who absolutely hate us!!

And you are right.  There is no way for the democratic party to survive without a concerted effort to maintain U.S. manufacturing.  If the big 3 fail without any serious effort from our party, then millions of votes (including mine) will be lost to the party forever in these states.  Say goodbye to Michigan, Indiana, Ohio, Pennsylvania, Wisconsin, and possibly even Minnessota.  The only think saving New York state would be New York city, and just barely.

You midwest-haters (not you, Paul) think you can live without us, fine?  Just keep up the "let them fail" and we'll see how well you fare...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

Let's see what the full context of Krugman's statement was (4.00 / 2)
before we run him out on a rail. I know it's frustrating, I'm from the midwest, I've seen this first had. I've lived through it with my family. But I'm willing to give Krugman some leeway because this is a newspaper's report on what he said and we don't know all of what he said.
[ Parent ]
Well, if it's a gaffe on his part, OK... (4.00 / 1)
...but, he should know better.  He did say that the automakers must be saved not less than 3 weeks ago.  Stuff like this doesn't help.

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
[ Parent ]
Not a gaffe, but misquotation and crappy reporting (0.00 / 0)
See MattD's Quick Hit / Krugman's blog.

I know this is elsewhere, but I wanted to place this higher up in the comments to save others from the pointless intellectual wild goose chase I just went on.

Please update or delete this post!

[ Parent ]
That was my first thought. (4.00 / 1)
This is a drive-by bit of gossip with no context at all, and none apparently available. Everybody's getting all hysterical about 2 or 3 short sentences.

Economists who are worth anything at all look at the long term. He's not saying nothing should be done in the short term, he's saying it won't be a permanant fix. I assume he's looking at factors like the realities of the global economy, the decline of America's business/financial dominance, the shift from an industry-driven to a finance-driven society, and the resource/energy limits we have run up against. In that context, I don't see anything in his statements that anyone could reasonably argue against.

If any criticism is justified, it's that he's merely stating the obvious: the car industry as we know it cannot survive. That doesn't necessarily mean it can't morph into something sustainable, but that would require vastly better national and industry leadership than we've had in many decades.

[ Parent ]
industry-driven to a finance-driven society (4.00 / 7)
Yeah, how's that working out for us?  If 30 years of trickle down and globalization haven't taught this country that it needs to make things then we all deserve to die.  In one week, I will be providing outplacement services to 2,600 terminated Chrysler engineers, IT, Finance and HR professionals, 80% of which have grad and post grad degrees.  

So keep sending your kids to college, and your jobs overseas.   We have talent, and we can't be the world's leading anything if we don't make anything.  Once the big three get rid of their baggage (that's people you know), they'll compete and win.  No, they'll never be the size or the economic engine for the middle class that they once were, but hey, screw Michigan the middle class.

You just keep funding those universities and burying yourself under piles of student loans while all the jobs go overseas.  Keep on distracting yourself with strawman arguments about 33 vs 40 mpg and anecdotal horror stories from the 80s.  The truth remains that this will become a nation of have and have nots, a third world country, if we don't make any thing.  Advanced manufacturing is where our future is.  

As I said, how's that finance and service industry doing for us so far?

[ Parent ]
The country doesn't care about us, dkmich... (4.00 / 2)
...in fact, I'm learning that the rest of the country actually hates us for whatever reason... they want to see us turn into an economic dead zone...  maybe it makes them feel better about their own economic plight... I don't know... but, now I know how the black people felt in New Orleans when the rest of the country blamed them for drowning.

According to the CNN poll, 67% of westerners and southerners want to see our states die.  I can understand the South, but the West?  What happened to Democratic unity?  They must not understand that if the midwestern economy is destroyed, it won't stay blue for long... unions won't be there to keep people focused on the economy...  it will revert to resentment, hate, God and guns... ever wonder why republicans would be dancing on our graves?

But, fellow democrats out west, too?  Et tu brute?

Now, I don't want to cast dispersions of the good folk here... This is one of the few liberal sites that is pro union and pro manufacturing (and I appreciate the great support that the front pagers have been posting), but our democratic "friends" on the coasts want revenge on the Hummer so badly, they are willing to kill us (and yes, many folk will die without their union health care) to do so.  I think that cooler heads are prevailing, obviously... but I do not understand the lingering resentment towards us...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

[ Parent ]
Well whatever the national sentiments are (4.00 / 1)
you can rest assured that the Midwest IS the base of the Democratic caucus in both the House and Senate. Durbin ain't gonna let them go down. And even some Dem senators from the east that you might not expect to be as sympathetic, like Tom Carper, are going to fight for it because they have plants in their state (Newark, DE to be precise).

As far as people wanting to see detroit fail. Well I think it's the same sentiment as people that hate any kind of farm bill. They hate it because they think it's a bunch of rich farmers doing nothing and they destroy the earth. There are problems with our agricultural economy, just as there are problems with our automotive industry. But does that mean we scrap the whole thing and initiate a free-for-all race to the bottom with wages, or, for the farm economy, a race to the top with consolidation of agriculture?

So I understand your frustration, and I hope the next time the farm bill comes around, if you aren't already, that you'll be more sympathetic to the people on the short end of that publicity stick as well.  

[ Parent ]
I'm generally supportive of farm bills..... (0.00 / 0)
...I know that a lot of them are filled with needless waste going to agribusiness, but agricultural support is one of the last vestiges of the New Deal, and I'd rarely speak up against one...


REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
[ Parent ]
don't most farm subsidies go to agribusiness? (0.00 / 0)
it's a sincere question - i've heard this before and since you seem to know about this, i thought i would ask.
[ Parent ]
No. (0.00 / 0)
Most farm subsidies go to farmers. Now our farm policies do  promote the production of commodities which benefit large agri-businesses. But Conagra does not receive farm subsidies.

And I think farm subsidies should be structured in such a way to promote truck farming (i.e. fruits and vegetables), conservation (more-so than they already do), and organic farming (which was added to this farm bill), as opposed to strictly commodity farming (i.e. corn). But the farm program should not be scrapped. If it is, all that will happen is you'll get the equivalent of the consolidation we've seen in the banking sector occurring in the agricultural sector (even more-so than what has already happened). Now most (conservative) economists think that's a good thing. They think having more farmers is an unproductive use of capital and labor. But many farmers happen to think there are other reasons to keep farmers around besides strictly monetary ones.  

[ Parent ]
I don't think that is true. (0.00 / 0)
As I see it agribusiness, likes things just the way they are.  Farmers have all the risk.  I agree with what you say about restructuring the farm bill, but I don't think ADM and Cargill want to own farms.  
[ Parent ]
I either wasn't clear or you misunderstood me. (4.00 / 1)
It's not that ADM or Cargill will own the farms, it's that all the land will be owned by about 3 or 4 companies (which originally could have been farm families or it could be banks or corporations) and the farm sizes will be in the tens of thousands of acres managed by a few employees. It will be a rural desert. And also I wouldn't be so sure about ADM and Cargill not wanting to own farms. Look at what Smithfield has done to the hog industry in North Carolina. There are almost zero independent hog operators in NC. They were all bought out and forced out by Smithfield once the packing laws were loosened in the 90s.

 

[ Parent ]
Hog farming and crop farming are two different animals. (0.00 / 0)
Banks and corporations have tried to own crop farms with little sucess.  People just aren't willing to put in the work required for something that is not theirs.  Also, Cargill and ADM have exactly what they want right now.  Subsidies keep grain prices low, and farmers are the bad guys that get the subsidies.  Now, I would agree that there will be a continued consolidation of farm ground to a smaller number of owners, where the limit is depends on how subsidies are structured.  
[ Parent ]
Well I'd still say that ADM and what-not (0.00 / 0)
could de-facto own many of the farms. But either way, it doesn't matter since we're in agreement on my main point.

Now, I would agree that there will be a continued consolidation of farm ground to a smaller number of owners, where the limit is depends on how subsidies are structured.  

And therefore if we don't want that to happen then there will always be a need for a farm bill so the little guys can still make a living at farming.  

[ Parent ]
It is plain old parochialism and/or plain old ignorance. (4.00 / 1)
If Detroit fails, transplants gain market and their state's prosper; or if they don't get the negative impact to their wallets now, they will.  
[ Parent ]
Where's the poll? (0.00 / 0)
Just curious; I'd like to see the questions asked, and the like.
[ Parent ]
Advanced manufacturing (4.00 / 1)
would mean more robotics and less jobs. I agree, it's where the future is. Getting good at it is also the only way the US might regain some of its industrial might. Repurposing America's industrial assets to build the infrastructure for advanced manufacturing might be the best way to ease the employment agony. In the long run, though, it won't cancel the need to change the way wealth is generated and distributed in a low-work society.
[ Parent ]
And This Is Precisely The Sort Of Contingent Possibility That Krugman's Comments Ignore (0.00 / 0)
Eventually, nanobots may do everything for us. But who will own the nanobots?

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3
[ Parent ]
Krugman ignored this (4.00 / 2)
in all 2 1/2 sentences? How dare he.
[ Parent ]
He Ignored It In SAYING Those 2 1/2 Sentences (4.00 / 1)
And I'm raising questions about it.

How DARE I!

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
More robots = more manufacturing = more high wage jobs. (4.00 / 1)
Besides, robots only go so far.   Can't live without them or the people in the shops that work with them.  Robots are tools for people.  
[ Parent ]
Exactly. (0.00 / 0)
More high-paying jobs and fewer jobs. Just like what happened to all the mill workers in New England when the automated looms came along. Which is why a bailout makes sense only as a way to ease the pain of a basic technological transformation. We need radically new ways to distribute wealth. Like it or not, I don't see any alternative in the long run.
[ Parent ]
Not fewer overall...but yes, fewer per industry. (4.00 / 2)
We need to make computers, refridgerators, clothes, TVs, new batteries, new, new, new....

If you don't make it, you can't innovate it.  It is why engineering and manufacturing go together.  

[ Parent ]
I agree with you (4.00 / 3)
Read Jamie Galbraith's "The Predator State".  A nation can set a just price for things.  It can set a living wage standard. But it also should keep things in more balance.  The CEO salaries started getting screwed up when, as Galbraith says, "everybody wanted to keep up with the Gates". So more and more money got funneled to CEO pay rather than
R&D.  Money got thrown at CEOs who were no longer engineers or inventors or movie moguls or home builders.  They were rewarded for short termism  and not strategic thinking.  And then they made so much more money that they just started gambling with their left over funny money.  And the finance guys took all that funny money and  busted the system.

If you don't make stuff, there is nothing to finance.  Our future lies in making things, but not making too many things.  Growth is not necessarily a good thing.


[ Parent ]
Either we do serious population control, (0.00 / 0)
including limiting immigration or we produce enough high wage jobs to employ them all.  We cannot raise goats for a living.  Countries in Africa have tried that with very limited success. :D
[ Parent ]
i don't know where you were coming from (4.00 / 1)
but this is a really upsetting series of things to say.  yes, the united states need to have decent jobs with decent w wages, like all places do.  mocking places that have subsistence agriculture (or more likely enforced cash crop agriculture) as the resuolt of colonialism and imperialism, including by the u.s.(!) is upsetting.  And definitely not progressive.

also, unionbusting is a much bigger problem than immigration or population int he united states.  But no mention of that, and a call for closed borders instead, especially in a world this unequal?  Can't have it both ways - either you're a progressive inside the united states and outside, or you can't ask for solidarity and support from others inside the united states who aren't affected by the same issues as you.

[ Parent ]
Your interpretation has nothing to do with what I said. (4.00 / 2)
My point was in direct response to "Growth is not necessarily a good thing."  While I agree with that pov, we either have to grow the jobs or curtail the population, including immigration.  A lower class mired in poverty is not acceptable regardless of country of national origin.  

[ Parent ]
let's see (0.00 / 0)
you expressed fear of the u.s. economy becoming goat-herding like in "africa", attributed the lack of success in those economies to their trying it there (without any mention of why african countries are so thoroughly destabilized - i.e. colonialism and neocolonialism that made the standard of living we're used to available to us), and started talking about population control and closing the borders, but nothing about the businesses and ideologues that are perpetuating these myths about the working classes and industrialization in other countries or the alleged divisions of interest between citizen and noncitizen workers).

like i said, i don't know where you were coming from, but i'm pretty sure that my interpretation has a lot to do with what you said.  it might be wrong, but it's based on your words and the ideas they are reflecting (nativist economic populism).  for the recond, i think that economic populism is the ONLY way forward - but it has to come with some appreciation of globalism, gender, race, sexuality, etc - eventually.  not today necessarily but eventually :)

or - you scratch my back, i'll scratch yours :)

[ Parent ]
sorry i went back and looked at your original comment (0.00 / 0)
and i realized i was overreacting.  i think i experienced a few psychological triggers when i read what you wrote but i can see that even though i don't like it, one could do a lot worse (e.g. lou dobbs).
[ Parent ]
"Curtail the population"? (0.00 / 0)
You really need to clarify just want you mean by this.

One might argue that cutting off healthcare benefits is a means to accomplish this goal, but I'm certain you don't intend to suggest that kind of population control.

Who gets to choose which part of the population gets "cutailed"?  

"It sounds wrong...
     ...but its right."

[ Parent ]
See my comment below .. (4.00 / 3)
I think this is Krugman's opinion(in the AP article) .. on what will happen .. versus what should happen .. I have a hard time believing he really wants The Big Three to go under .. I am sure he knows the economic devastation that would ensue
[ Parent ]
Of course he does. (1.00 / 4)
Krugman knows it better than anyone.  But the obvious read of these quotes doesn't fit with Paul Rosenberg's utterly moronic view that everyone is out to get the six or seven people on the planet who qualify as "progressives" in his book.  It's really quite bizarre that Krugman is being attacked in this way.

Explains the Reagan Democrats quite well, though.  The Us vs Them, the paranoia, etc.

All that's missing are a few hopelessly stupid lines from Sirota.

[ Parent ]
You Invest So Much Energy In Actively Misreading Me (0.00 / 0)
that you could power your own hybrid with it.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3
[ Parent ]
Of Course It's Not What Krugman Thinks SHOULD Happen (4.00 / 1)
But he's offering his opinion as if his opinion could have no possible impact on anything.  And that's really what matters here, as this is most certainly not simply a matter of economics.

The foundational name of the field, after all, is political economy.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
So now Krugman (0.00 / 0)
is somehow obligated to be a PR flack?
[ Parent ]
what happens (4.00 / 1)
when someone believes in the methodology of their field so strongly that regardlesss of their personal inclinations, what they think "will happen" is a better  measure of their political position than what they think "should happen"?
[ Parent ]
Enough (4.00 / 2)
Stop turning this into regional warfare, Mike.  Why you're so determined to see everything as some great assault on the Rust Belt, I don't know, but it's stupid.  None of us want to see the Rust Belt ruined.  And, judging by the actions of Congress, it doesn't seem anyone has any intention of allowing it to be ruined.

Truth be told, if you want to get into this regional warfare bullshit, the Rust Belt should aim its guns at itself.  Decades of voting for idiocy have finally caught up with states like Ohio.  Every four years, we have to listen to Ohio whine about jobs going away, all the while guys like you bash us "Coastals," with our silly ideas about healthy environments and energy efficiency.  And we've been right every. fucking. time.  And still we try to appeal to you on jobs, yet you go back and vote for the same assholes who've fucked you and yours royally for decades.  The Rust Belt seems to be borderline-retarded from where I sit.  I don't know if it's the industrial shit you've been dumping in your water supply for the last God-knows-how-long or what, but again: borderline-retarded.

Stop jumping on Krugman when you have no idea what context he said this in.  Honest to fucking God, now we're jumping on Paul Motherfucking Krugman -- the guy who was ahead of everybody for last nine years (including the 2000 campaign) -- as being insufficiently progressive?

You're smarter than that, Mike.  Think.

[ Parent ]
Regional warfare indeed. (0.00 / 0)
I feel the same irritation you do about the regional whining, but you're doing the same thing. Kinda wish you'd skipped the 2nd paragraph.
[ Parent ]
Not at all. (0.00 / 0)
Everybody has had a hand in voting for politicians who've ducked labor.  What I'm objecting to is the idotic idea that the poor wittle Midwest is being picked on.
[ Parent ]
The next time NOLA or FL gets hit by a hurricane, or (4.00 / 3)
CA has mudslides, wild fires or maybe falls into the sea, remember, they asked for it because they make shitty zoning laws that keep putting homes where nature doesn't want them to be.   Bail them out?  Why should we.  They asked for it.  This really isn't all that much of a stretch.  

Whining?  Even your choice of that word says more about your attitude than I need to know.  Whining, indeed.  NOLA needs to quit "whining", too.  They "deserve to die".  

Pure doltish ignorance!  

[ Parent ]
I'd give this three 4's if I could. (4.00 / 1)

[ Parent ]
I don't know what I'm supposed to think.... (4.00 / 1)
...Krugman three weeks ago says that the automakers should be saved, and now he says, "don't bother?"  Yeah, I want to hear more, but what am I supposed to think?

The banks get and continue to get red carpet treatment while we schmucks in the midwest are supposed to beg and grovel for a fraction of the moneys involved...

As for the class war stuff... Honestly, I'm one of those "latte liberal" Obama guys who had to deal with all sorts of prejudice during the primaries over here... I'm about as blue collar as Bill Gates. I thought the whole class war thing was ridiculous, but I'm starting to sense that the rest of the country (and I don't mean the people here, 'cos you guys have been very supportive overall) really look down on us.

This article says it best:

http://www.freep.com/article/2...

But bottom line, don't you sense a certain nose-in-the-air attitude in Washington and around the country about factories, American cars and the people who make them? That a whole lot of Americans just think we hinterlands folk must be oafs who don't deserve to succeed, let alone get a second chance?

We're a little hypersensitive... and everything people do, even with the best intentions, that doesn't help us, gets us antsy.  I don't know what Krugman meant, but his statement will not help move the case forward.  Michael Moore's intentions are good with his nationalization diatribe, but his method only validates the myths of Detroit....

If I've bashed on "coastals", its only 'cos I have felt little solidarity from many democrats towards the democrats here.... It's like people have forgotten who put Obama into the white house!  The CNN poll had 67% of westerners opposed to any aid to us.  Well, California, Oregon, Washington...  can you see why we get a bit upset?  We don't feel there is much solidarity in the party. The news reports that the democratic caucus is dispirited 'cos they are going to have to do something to protect other democrats.  Thanks!  We'll remember that next time you guys need disaster assistance.  

Now, the people here are great... and we really appreciate your support, but I think this is the only liberal blog that has such unqualified support for manufacturing, and the reasons are obvious.  Without domestic manufacturing, this country is nothing...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

[ Parent ]
Where does he say "don't bother"? (4.00 / 1)
Please cite that. I understand your anxiety about what happens to the Midwest (I live here too), but your constant overdramatizing and jumping to conclusions only weakens the case and distracts from what you have to say. This worthless report quotes (maybe) 2 or three short sentences that say nothing about the bailout. Chill awready.
[ Parent ]
I Don't Think He Was Saying "Don't Bother" (4.00 / 2)
He was just careless handing ammunition to those who do.

And God knows, he's way smarter than that.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
And that need to be the key point (4.00 / 2)
even if the big three go down, keeeping them alive another year or two for $35B dollars is going to produce a hell of a lot more than that in economic activity.

What I'm amazed that the big three aren't doing as a PR stunt is pointing out the subsidies that Honda and Toyota get, both from Southern States and from the Japanese government.  The thing that they're getting killed on amongst my friends that oppose the loan is the 'the Japanese car companies are doing fine!' line.  

It needs to be poitned out that they are on radically different playing fields.

[ Parent ]
More evidence that maybe it's time for some of the execs to step down (4.00 / 1)
They obviously aren't good strategic thinkers, and they aren't car guys (most are from the finance side of things, except the boeing exec), and with your point, they obviously aren't good marketers, salesman, or just at making a good argument. So why are they in there?
[ Parent ]
I'm curious, lord_mike. (0.00 / 0)
It seems like there's more to your anger than just the fate of Midwestern workers. You don't seem very interested in converting manufacturing infrastructure to other uses, like public transit and rail. Is part of it wanting to somehow go back to the days when the romance of the car might have made some sense and seemed sustainable?
[ Parent ]
I don't care about the car... (4.00 / 3)
If General Motors became General Windmill I'd be pleased as punch, and so would its workers...

But, I know from experience that once these plants actually close, that's the end...  It is too costly to reopen them again, and no one will invest the kind of money to do it.  

that's why I pooh pooh the idea that oh, we'll just switch to other manufactruing in these regions.  Who's going to do it and with what money?  The government might have money to invest in that, but someone has to put it to work, and no one has done anything remotely close to that in the last 40 years.

In order to covert the manufacturing to green or other manufacturing (and I think it's a great idea and believe that Obama will be doing that), you have to do it while these plants and businesses are still running...

Hoping that people will reinvest in shut down manufacturing facilities is a pipe dream.  In the last 40 years, I've never seen it happen once.  The only time a plant gets reopened is for a wal-mart or condo complex.

That's why it might seem that I'm being stubborn... it's only 'cos I know we have to keep GM and its suppliers alive
in order for them to change...

An investor may be willing to work with a working machine chop or buy a working plant to make windmills, but not a closed one.  That's why GM has to stay alive for at least awhile longer... otherwise there will be no renewal from teh ashes.

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

[ Parent ]
There is something fishy about this story (4.00 / 2)
Just like week I saw him interviewed on TV about how important it was to SAVE the US auto industry.  He's written about it on his blog...again note the necessity and urgency to help them now to save the US auto industry.

There is something off about the article.  In particular look at the first quote....it seems to be starting in the middle somewhere.  Or it was in response to a question that was a set up.  There is something creepy about the whole setup of the article.

I just don't find it credible that his position has changed so markedly with no notice or explanation.

I think this is the AP striking again in it Nedra Pickler usual manner which massages the truth so much it doesn't resemble itself at all.

"Incrementalism isn't a different path to the same place, it could be a different path to a different place"
Stoller

[ Parent ]
Sounds like he's referencing (4.00 / 4)
his "new" economic geography work. Which a lot of economic geographers were not, shall we say, overly enthused about. Partially because (if memory serves, and I definitely could be wrong on this) I think it might fall into the usual trap for economists of ignoring the very things you are talking about, vis a vis, public policy, government intervention, trade rules, nationalization, etc. In other words, externalities that are hard to build into models. These are the kinds of things that Geographers are usually better at describing than economists. Thus the tension between economic geographers and Krugman's "economic geography".  
I'd Love To Hear More About This (4.00 / 2)
These are the kinds of things that Geographers are usually better at describing than economists. Thus the tension between economic geographers and Krugman's "economic geography".  

I'm not up to date on this at all, but I'm definitely one who leans heavily towards the geographers' POV.


"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
I'll see what I can dredge up from my old essays on the subject (4.00 / 3)

[ Parent ]
I am wondering something .... (0.00 / 0)
do you really think Krugman wants to see the Big Three(or at the very least .. Chevy and Ford) go under?  I don't ... I think he is just stating what he thinks will eventually happen .. obviously it is hard to tell from the AP article .. I am sure he looks at douchebags like Shelby and McConnell in the Senate .. and wonders if the Democrats have the spine to stand up to them .. and also .. I am sure Krugman is looking at what is going to keep them going for the long term(if that is possible) .. like are they going to keep coming back for more bailout?
I Don't Think He WANTS It (4.00 / 2)
But he doesn't seem very determined to oppose it, does he?

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3
[ Parent ]
You talk as if (4.00 / 3)
it's a given that acceding to the moron-criminal execs' demands will somehow magically make the industry sustainable. That's too ridiculous to even discuss. Where's you evidence?

I'm in favor the loans with very tight conditions, or for nationalization. Unless the industry is repurposed and modernized, though, such moves will be no more than bandaids. To argue otherwise is just dishonest.

[ Parent ]
I Agree (4.00 / 4)
Though I'd scratch the loan part and go straight to nationalization.

When have I ever supported doing favors for irresponsible corporate executives?

It's the industries and all the jobs, people and communities dependent on them that I'm concerned about.

Let the failed executives outsource themselves to India, China, or Burma, perhaps.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Agreed (4.00 / 1)
and I'd fire most of the execs especially at GM and Chrysler.  I would consider keeping Mulally at Ford since they seem to be moving in the right direction.

My one concern about nationalizing these companies is that some tough decisions have to be made like merging GM and Chrysler as well as dumping a whole bunch of brands with poor sales.  That is going to cause some temporary pain even if the workers will be redeployed over time.

Will that be possible with a nationalized industry?  I am worried about Congress getting involved and saying you can't do this for X,Y,Z reason.  Think closing military bases before the Base Closing Commission structure was put in place.

[ Parent ]
I Don't See Congress Being Involved Directly Like That (4.00 / 1)
I think it's pretty obvious you'd need a governing structure with general Congressional oversight only.  No micro-managing.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3
[ Parent ]
Hope You Are Right but (0.00 / 0)
I have seen Congress micro-manage plenty over the years.
[ Parent ]
Hope You Are Right but (0.00 / 0)
I have seen Congress micro-manage plenty over the years.
[ Parent ]
Even a band aid would be worth it (0.00 / 0)
Even if we give people more time to earn money and move away and figure out what to do with their lives, and to keep these towns alive, it will be money well spent, so long as we keep the guys on top from frettering it all away.
[ Parent ]
Scary, but.... (0.00 / 0)
Oh, it's thinking outside the box, alright -- you know, the kind of thinking which starts from the point of acknowledging that cars aren't healthy for children and other living things, and ends at a point where, like the society of Paolo Soleri's vision, we inhabit a vastly different infrastructure from the one which began, arguably with the Hoover Dam and rural electrification.

All well and good, except for the road (heh) from here to there. What slipped out of Krugman's mouth seems to me much less a serious vision for the future, and more like Stalin's romance with collectivized agriculture -- where brute force was the only force thought capable of tidying up the loose ends of an inefficient economy (and a recalcitrant populace into the bargain. The right isn't the only political ideology which has historically been cavalier about its human resources.)

Since Krugman is smart enough to realize the implications -- collateral damage on an enormous scale -- I almost suspect him of caprice. Naomi Klein's shock doctrine in reverse, as it were, employed in a sardonic way to remind global capitalists that they have a lot more to worry about than the ragtag collection of DFHs and third-world subsistence farmers on the left.

I don't think he is referring to a swift failure (4.00 / 1)
But a long and gradual decline.

I don't agree with the reason though.  I think American manufacturing culture just doesn't have what it takes to make good cars efficiently.  They have no pride in making a good product because the upper management are all accountants and marketing execs.  

They are bankrupt right now because they are just shitty companies rather than geographic location.

In my opinion honda and toyota will gradually replace them as the American manufacturing center.  And they will do it in the south gradually.  

Now this ignores the possibility of a west coast car company.  I wouldn't be surprised if they somehow manage to make a startup style auto company.

http://transgendermom.blogspot....

You just can't stop yourselves, can you. n.t (4.00 / 1)

[ Parent ]
Now's The Perfect Time To Replace Top Management (4.00 / 1)
They have no pride in making a good product because the upper management are all accountants and marketing execs.  

They are bankrupt right now because they are just shitty companies rather than geographic location.

For example, what part of nationalizing the industry don't you understand?

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Its not going to happen (4.00 / 1)
And personally I think its a bad idea.

I don't think that the democrats should be focusing on holding up a regional industry.  They aren't a regional party anymore and I don't think it would work out well.  The culture of the companies are rotten and thats not gonna change by nationalization.

I'd prefer that the assets be broken up and sold off at auction.  My bet is that there are companies out there who think that they can turn things around.  They probably would need some government assistance, but that would take up 4% of the democrats time rather than 90%


http://transgendermom.blogspot....

[ Parent ]
Ain't no one gonna buy it... (0.00 / 0)
No one invests in the rust belt...

We may not be a regional party, but we sure need that region to remain blue, or we will not be a national party anymore, either...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

[ Parent ]
I'd be willing to bet that some would (0.00 / 0)
They wouldn't do it without government assistance of course and pay cuts to older and retired workers would be given, but that was going to happen eventually anyways.


http://transgendermom.blogspot....
[ Parent ]
There's no history of that happening here.... (0.00 / 0)
....none.... and no one would believe them if something like that were proposed...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
[ Parent ]
This would be a *total* disaster. (4.00 / 3)
For liberals, for the region, for the country.

Maybe it's because I was born in a rust belt town (hell, my parents met at Ford) that I feel some connection to these workers.  It's hard to tell people to pull themselves up by their own bootstraps once you know them (and if you can, you're selfish bastard).

There's no reason why GM can't move in the direction of Ford, and Ford can't move in the direction of Toyota.  It was 20 years ago that the Japanese began to build good cars.  It took 10 years for everyone to believe that Japanese cars were clearly superior.  15 years before that, everyone thought they were junk.  This is doable.

A huge help will be health care reform, which Obama will do.

[ Parent ]
Health care would be a great help to (4.00 / 1)
the domestic autos and ALL of the companies that are trying to compete against companies in countries with health care and everything else subsidized.  
[ Parent ]
Shifting the health care cost to government, (4.00 / 1)
would be a big help to business, but until we lower the cost of healthcare, it will still be a problem.  Single payer would help do that, but we need to do more than just shift the cost around.  
[ Parent ]
Unlike domestic autos, (0.00 / 0)
insurance companies have lobbyists than own Washington.  They will never do anything to hurt "insurance" companies regardless of how good it might be for anyone else.

Domestic autos on the other hand, "If it was just a couple of companies in Detroit, I'd let em die in a NY minute." says Dodd.  Yeah, screw MI.  Just because it is blue and has been a donor state longer than I am old, why should anybody give a crap about this state.  I could barely bring myself to vote for Obama in 08.  If he doesn't start putting his money where his mouth was when he was campaigning in the midwest, he can kiss off my vote in 12; and I won't be the only one.  Unions aren't going to like being lied to either.  

[ Parent ]
I'm really curious how my comment (0.00 / 0)
on shifting healthcare insurance and the need to not only shift the cost, but also lower the cost, lead to your response.  Did I come across as not wanting to help MI?  If I did then I am sorry, that was not my intention.
[ Parent ]
The cars at GM and Ford are already getting better (0.00 / 0)
the quality gap between Japanese and American cars is way overstated amongst consumers.  The 10 year gap you talk about is pretty much right--people are today bitching about 1996 model GM cars.
[ Parent ]
um (4.00 / 1)
the entire u.s. economy is built on cars, for better or for worse - it's not just a "regional" economy.  personally, i would love to see car culture eliminated and replaced with mass transportation, but in the short run the economic effects of eliminating an industry the size of the auto industry won't just affect ohio and indiana and michigan - the same way that eliminating the finance industry wouldn't just affect new york.
[ Parent ]
Hell (4.00 / 1)
the flow of the neo-Okies out of MI, OH, WI, and IA would be a disaster in and of itself for the rest of the country.  It's madness to call for depression-level unemployement to be concentrated in any part of the country.
[ Parent ]
so usual per the last 6 months (0.00 / 0)
the questions are:

a) what is congress trying to do?  e.g. in south korea, they used arrests and shaming of ceos to great effect in expanding state management (but not direction) of infant industries.  or, as is more my guess, is congress simply clueless.

b) does congress have any idea what it's doing?

[ Parent ]
They are making good cars again (4.00 / 3)
"This year, Consumer Reports rated Ford's quality on par with Toyota and Honda. Last week it was announced that Ford has more vehicles with five star safety ratings than any other manufacturer."

This is from a story by Detroit writer, Toby Barlow. Maybe  I'll cross post my diary on his article  over here.

The Midwest (I was raised in Illinois and schooled in Michigan) is a good place for factories.  It so cold and bleak for 7 months out of the year that even a factory looks comfy.  The cloudy gloomy skies are one reason why I think I'm an optimistic realist.  You know when you wake up that it's going to be gloomy.  But you do it anyway.  No whining.

It is essential that we keep the manufacturing and not sell the innards to the Chinese et. al.  Once we loose that, we will not recover.  Watch Avi Lewis and Naomi Klein's "The Take" about a group of workers in Argentina  who take over their closed down factory and run it themselves.  You can't do that if the parts of the factory have been sold.  

[ Parent ]
China is not some engineering wunderkind (0.00 / 0)
They can barely keep the power running 20% of the time in some of their industrial cities.

And once they can do all that stuff they will have labor costs to compete with us.  The only real issue with china is that we don't have enough oil  for everyone.  Thats an entirely different issue.

Ford is certainly the best of the three and it might survive as it does have some genuinely good cars.


http://transgendermom.blogspot....

[ Parent ]
Whereabouts in IL? (0.00 / 0)
I'm from there, too.  Gurnee.
[ Parent ]
South west of Chicago (0.00 / 0)
When I grew up there, Palos Heights was a little town in the country.  Now it's part of the Chicago suburbs really.  But we went to see movies in Joliet.
[ Parent ]
you're talking in terms of business though (0.00 / 0)
burger king makes better hamburgers than mcdonalds but i think they make less money.  you have to look at restoring profitability and more importantly productivity growth to reach global competitiveness.  it's the same problem that infant industries face in less industrialized countries the analysis holds i think.

isn't there someone here who knows the numbers for the auto industry as a whole?  does it make sense to merge the companies or nationalize them or quasi nationalise them or what?  quite frankly, i wouldn't trust past administrations to do it, but the obama style of technocracy seems a lot more rational so far.

of course, it's also deeply conservative, which is why they won't take over the companies in the long run.

[ Parent ]
Wiil Be v. Should Be (4.00 / 1)
Do we actually believe that a) nationalizing the American-owned component of the auto industry to compete with the Japanese-owned component of the industry has a snowball's chance?  Not in this decision-making timeframe.

Do we actually believe that, short of nationalization, the American-owned component of the auto industry will remake itself in producers of mass transit vehicles?  Sure, a dream brought to you by the tooth fairy.

Subsidizing the industry now, during this deep recession, may help prevent a second great depression, and it is thus worth keeping the industry on life-support so it may die a less harmful death in a few years.  Meanwhile, jaw-boning a few more hybrids out of it is political cover for an otherwise unpleasant decision to phase out life-support and let it die.

Krugman is, unfortunately, correct.

Do We Actually Believe That America Will Elect A Black President? (4.00 / 2)
Yeah, what was I thinking?

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3
[ Parent ]
Kudos (4.00 / 4)
to you, Paul, and to Michael Moore, for trying to move the Overton Window on this issue.  Nationalization and mass transit based reindustrializational of Detroit are worthy outcomes and, who knows, we are living in changing times.  
[ Parent ]
Do we actually believe that Detroit can compete in mass transport? (0.00 / 0)
I googled, but except GE transportation, building diesel lokomotives, I couldn't find any information on US owned companies building, say, light rail, subway, or high speed trains. Looks like it's foreign owned companies, partially producing in the US, who own the market. How is Detroit supposed to build an industry from scratch and compete against the technological advantage of this competition?

Sry, but imho that's much less probable than the US electing a black president.  

[ Parent ]
Check Out The US In WWII (4.00 / 2)
Entire economy repurposed pretty much from top to bottom in a matter of months.

It can be done.  It just takes a real emergency to make the humanly possible politically possible.

And, of course, I have to keep saying it, so that people will get it, we have to get rid of top managment, and NATIONALIZE the companies.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Well, the US DID produce tanks, planes, and ships before WWII (4.00 / 2)
And it was competitive, especially regarding planes. This was another starting point than Detroit going into mass transport today. Really, I don't think such a transformation would be a good idea. Despite Krugman's pessimism, I think the big three, or let's rather say, the new big two could manage a turnaround in the car business. GM successfully launched the Saturn brand not so long ago, before they let it starve. And they were ahead of the world with the EV1, before they wrecked those cars. It could be done again. But not with the fools that drove the companies into the mess, of course.  
[ Parent ]
Missing The Point (4.00 / 1)
Detroit wasn't building those things.  Nor were dozens and dozens of shipyards that sprang up virtually overnight on every coast.

Sure, we had some such manufacturing capability, but things changed so fast, so much, on such a vast scale that it staggered the very people involved in making it happen.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
The point isn't transforming the prodction! (0.00 / 0)
It's developing the technology. Afaics no US owned manufacturer has it. It has to come from an international company.
[ Parent ]
Technological Development Happened During WWII, Too (0.00 / 0)
On top of all the more minor things, there was this little thing you might have heard about called the Manhattan Project.  

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3
[ Parent ]
What are you swapping it for? (0.00 / 0)
The Manhattan Project relied heavily on German Jewish exiles and on British physicists to augment the ranks of the American researchers. Similarly, British developments in aeroplane technology tended to be rapidly passed on to America once we had them working.

But that was in the early 1940s. Britain needed American support and loans (and we couldn't make tanks worth the name, so we also needed Shermans).

It strikes me that the parallel here is pretty good - America has the need for something and the potential workforce for which to retool an industry, but it needs the blueprints. The question then becomes what America can swap for this technology.

Forgotten Countries - a foreign policy-focused blog

[ Parent ]
This is where protectionism is actually your friend (4.00 / 1)
you tarriff the foreign stuff, in order to buy your domestic industry the time to develop the sufficient technology to compete with the foreign stuff, as it will then be made too artificially expensive to compete.  Then, you drop the tariff wall once your stuff is on par.

It has been done successfully a million times.

[ Parent ]
Only that protectionism generally reduces competitiveness (0.00 / 0)
Let's face it, tariffs have time and again resulted in industries becoming less competitive, not more. It takes a determined supervision and a disciplined focus on advancing the technology to overcome this inherent mechanism. And in the meantime, when the new industry is still struggling to pull even with the internaional standard, the whole nation has to use inferior products. In the case of public transport, this means less safe, less durable, and less efficient trains. Why go through this, just to invent the wheel once again?

Teaming up with an international partner who already has the know how sure is a better idea.

[ Parent ]
protection potentially helps you in this regard (0.00 / 0)
because it gives individual companies moreleverage on their international partners (e.g. i looked at real estate partnerships in india and the foreign companies all bring brand and practices but the indian companies end up owning the asset at the end of the day).  if you could establish a 100% stake in an indian hotel venture as a foreign company and there were no other effective constraints (like the cost to your brand of paying bribes and evicting peasants from the land) then they would do it themselbes and the indian companies and joint ventures would have a harder time acquiring the technology and business practices you're talking about.  it's a separate argument whether foreign practices are "better" or just "different".

anyway, i think your general argument about protectionism is wrong - at least oversimplified.  when countries achieve the status of dominating the global economy like britain in the 19th century and the u.s. after 1980, the ideology  of free trade is part and parcel of that, and it's that that you're artciulating.  there's in fact, strong evidence that state involvement and economic nationalism (with appropriate policies and tailored towards the social and political conditions of the country) have played a strong role in rapid industrialization.  that doesn't mean it's without incredible violence - e.g. the mass murders of labor and left people in counties like south korea or the u.s..

more to the point - there are certain things that a market mechanism can be good at - like weeding out sick companies or industries - however, one of them is not long run capital investment in industries that are not immediately profitable and are risky - like intracity and intercity mass trasnportation in a country designed around the car.  but the u.s. already does this through academia - it uses universities to invent technolohgy like psychopharmaceuticals that is alhen used in business.  i think it also does so through military research and the space program, but those are ofen repeated justifications for those two things and i honestly don't know the details to know whether it's true or not.

[ Parent ]
Sry, doc, but I really think you mix things up here. (0.00 / 0)
Scroll up this thread - we were talking about tariffs, and that's why I was pointing out the inherent competitiveness problem of protectionism. But how are foreign investments in hotels in India connected to this? They don't have much of a tariff problem, and the hotel business isn't one where it's technologically difficult to be competitive.

And then, Britain in the 19th century - that was an empire, not a bastion of free trade! They had tariffs for international traffic, bt the domestic market of the Empire was larger than that.

The US after 1980 - free trade alright, but lousy export numbers. And all those years of US carmakers competing only among themselves, disregarding new technologies on the global market, made them easy prey when the Japanese started targetting the US, remember? That's actually evidence for my point.

Finally, yes, some kinds of long term, risky investments, on a large scale but with low RoI, are best left to the government, agreed. But what has this to do with protectionism or tariffs?

Hmm, dunno, somehow I have the feeling we're talking about different issues here..,

[ Parent ]
tarriffs, subsidies, currency valuation, etc. (0.00 / 0)
are forms of protection (whether - explicit or "effective"   - they benefit companies inside the country against comptetitors who can put them out of business globally.  this is why it makes sense when you have industries are globally price / quality compiculaetitive to offer protection in the form ofar riffs, etc.  so regulations on who can own what percentage of a company or land in particular industries or export / import duties are all forms of protection - like the hotel example i was giving.  and they have a lot of nuances in terms of what mechanisms you use to do the protection.

now if you think about the implications of this, only the country whose capitalist sector is most advanced - globally price/quality competitive - will advocate an ideology of "free trade" (though it will still preserve protections like u.s. agricultural subsidies, restrictions on movement of labour and whatever else its political class decides).  when the u.s. reached a point of sole superpower status / center of capitalism, its financial sector exported a lot of capital for reasons i dont fully understand and didn't direct it towards the manufacturing base in the country - presumably for higher profit or out of a collective miscalculation/imablance of power where individual companies' or sectors' interests were put ahead of collective interests.  as my cousin (who is a businessperson in india) asked me in 2004 - why is the u.s. doing this?  i don't have an answer but his was the first capitlist / business-centric opinion i ever heard express this idea - because it wasn't popular in the thomas friedman version of "reality."  instead, we were fed ideas about retraining and a "post-industrial" economy- which turns out to be a deindustrialized or at least denationalized economy.  depending on what happens, this might be okay (e.g. japanese auto companies running factories in the u.s. with the same standards) or it might not be - but either way, the people holding capital are increasingly outside the u.s.

this is why i draw attention to the inability of the u.s. government to discipline capitlists and individual companies and business as a whole.  in effect, we've seen all protection (through things like the tax code - see christopher howard's the hidden wearlfare state) and military action and diplomacy to opeln markets and very few demands placed on the companies for productivity growth and maintaining global price/quality competitivnes.  investing in suvs was not only stupid environmentally, but BECAUSE it was stupid environmentally in a long run way, it was a stupid long run business model.  so when the oil price went up (again)...well...why would someone by those cars and the government hadn't mandated fuel efficiency standards that would have helped the companies in the long run even though they opposed them in the short run.  (same with health care, which creates more productive workers and reduces costs for companies and the economy as a whole - again, effective protection).

[ Parent ]
i think the key thing here (4.00 / 2)
and the reason it may not work in the short term in the u.s. is that you need protection, but you also need a strong enough to discipline individual businesses and the business sector as a whole.  otherwise, sick industries remain operating, you don't get the productivity increases you want, and your industries don't become globally competitive en masse.

i haven't seen anything close to a stick being applied to business (esp finance cpaital - but business as a whole) in the u.s. - especially once the businesses get what they want.  in a serious state-driven industrial strategy, Aig execs would not just have been shamed in the media, but would have been arrested or some such thing for taking taxpayer money and using it on retreats (i think i have the compny right).  regardless of whether it was fair or not to do so - because it's about restoring state discipline over industry and individual comapnies.

[ Parent ]
Buy American requirements (4.00 / 1)
How is Detroit supposed to build an industry from scratch and compete against the technological advantage of this competition?

A little piece of legislation passed in 1933 called the Buy American Act (41 U.S.C. § 10a-10d) requires the federal government (as well as state and third-party projects using federal funds) to choose American over foreign contractors.  The requirement can only be waived if the American bids are ridiculously more expensive or the product offered by American companies just doesn't cut it.  This provides a huge advantage for companies producing things like locomotives and subway cars, which these days are almost always bought by public agencies, but the law doesn't do any good if no American firm makes the product in question.  So if Detroit actually showed the will to start building trains, federal money (and, as a consequence, private capital) would be there to back it up.

[ Parent ]
That was before all the WTO. Wouldn't be allowed today. (4.00 / 2)
Foreign nations sure would sue, and implement retaliatory measures if the US would openly subsidize their car industry in such a way that excludes the competition. Improving the competiveness by reducing labor costs, most importantly by health care reform, seems to be a much better, and less controversial, plan.  
[ Parent ]
Still in effect, excluded from WTO (4.00 / 1)
From Wikipedia:
Under the 1979 General Agreement on Tariffs and Trade (GATT) Government Procurement Code, the U.S.-Israel Free Trade Agreement, the U.S.-Canada Free Trade Agreement, and the World Trade Organization (WTO) 1996 Agreement on Government Procurement (GPA), the United States provides access to the government procurement of certain U.S. agencies for goods from the other parties to those agreements. However, the Buy American Act was excluded from the GPA's coverage.

[ Parent ]
I don't see how it's from scratch... (4.00 / 1)
Vehicles are vehicles. If the US car industry is to survive it will have to develop non-fossil-driven cars from scratch, so no matter what, the current regime cannot hold. Everything depends on somehow getting smart leadership running the industry and a new set of national priorities. Detroit would have to return to expertise in engineering and manufacturing instead of just marketing and distributing.

Getting there will depend on massive government involvement. IMO, without that, Krugman is right IF he's foreseeing that the short-term bailout will not save the industry.

[ Parent ]
"Vehicles are Vehicles"? (4.00 / 1)
Are you really thinking that the Chevy Volt can somehow being transformed into a light rail train? Aw, come on, Dave! Those are totally different industries, with different technological problems.
[ Parent ]
No. (4.00 / 1)
I think making vehicle bodies and drive systems share more engineering and manufacturing requirements than not. The technology is neither obscure nor secret. I'm not saying the current Detroit exec types could do it, but there is still plenty of heavy manufacturing expertise in North America that repurposed entities could draw upon. It's really a matter of engineering and retooling, which is, in turn, a matter of money, which would have to involve federal funding of some kind.
[ Parent ]
Well, I guess what could be done... (4.00 / 1)
is implementing a national light rail program, for instance. Call for international companies to bid on the contract with the requirement that the assembly has to be done in the US, in a factory that the government bought from GM, and that, say, 50% of the parts have to be built in the US. Couple the contract with the necessary credit provided by the US (cause the international companies will face difficult to get moneys on that scale from their home banks). Dunno how this would look to the WTO, but it would ensure that the technology won't be a problem, and that thousands of US workers will keep their job. Would fit well into Obama's infrastructure plans, too.  
[ Parent ]
south korea didn't used to build ships (0.00 / 0)
now they do.
[ Parent ]
One, Maybe Ford, Could Survive (0.00 / 0)
perhaps by purchasing Elon Musk's Tesla operation and mass producing and selling good all-electric cars at affordable prices:
http://earth2tech.com/2008/09/...

But that survivor would not resemble the Big Three and Krugman would still be correct.

Or the other way around. (4.00 / 1)
What if the government financed Tesla's taking over Ford or GM?
[ Parent ]
Exchanging one incompetent business staff for the other? (0.00 / 0)
With all due respect to the Tesla folk's power of vision, and their technological achievements, but it's a sad fact they're almost bankrupt because they didn't have a reliable business plan and still haven't managed to get the production running professionally. And that despite all the advance payments they got from the long list of customers who ordered a Tesla. Sry, but imho the Tesla managers are not the most competent car specialists when it comes to planning, creating and running a cost effective, flexible, scalable car mass production.  
[ Parent ]
Fill in the blank (0.00 / 0)
with the company of your choice. I used Tesla as an example of a company that seems capable of innovative thinking about transportation.
[ Parent ]
______Sedgway______? (0.00 / 0)
No, not really, only joking!  
[ Parent ]
Tesla is going broke and filing bankruptcy... (0.00 / 0)
Maybe GM should buy them and try to put the two technologies together.  
[ Parent ]
Detroit's problems are just part of the bigger picture (0.00 / 0)
Everything I read and hear about the GM corporate culture tells me that this is a company that cannot be saved.  Not without completely wiping out the upper echelons of management and basically starting from scratch.

Unfortunately the same is true of much of the rest of US industry.  Take a look at telecommunications, where AT&T has crumbled to a subsidiary of a foreign company, destroyed by know-nothing CEOs who never understood the business.

Who is responsible?  We all are.  While the bean-counters have been running US industry into the ground, to the delight of Wall Street, colleges and universities have struggled to attract native-born American students to science and engineering.  Those disciplines are regarded as too hard, and they aren't a sure route to the McMansion with two SUVs in the driveway and a flat screen in every room.

How, Exactly Am *I* Responsible??? (4.00 / 2)
Who is responsible?  We all are.

I agree wholeheartedly that American capitalism has deep and pervasive systemic problems.  But this is substantially due to the outsized dominance the right has achieved for the past 40 years.  I don't at all see how any of us here can be held responsible for that.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
By "we" I mean American society... (0.00 / 0)
...that especially in the 80s embraced an economy based on financial services, and decided that the decaying industrial heart should be left to rot.

We aren't going back to a pre-1970s industrialized economy, not with the wage competition from countries like China and Vietnam.  We need to think about how to go forward.  

Perhaps the synthesis of manufacturing and software is a place where the US still has an edge.  US education has always (before NCLB) emphasized synthesis and creativity, and these really are the skills one needs for good software developers.  And in engineered systems, software is playing an increasingly important role.  But exploiting this synergy requires overcoming cultural obstacles of its own, for example, the inability of people with engineering background to "get" software development, based I think on the inherently creative aspect of software that engineers do not appreciate.

[ Parent ]
Nobody asked me. (0.00 / 0)
In fact, we all told the fed they were nuts when they showed up In Detroit and said manufacturing is out here.  We asked just how somebody was suppose to support a family as a burger flipper.  Those fools expected us to believe that computer jobs were the answer to it all.  The few jobs we had in MI are now disappearing too.  Hospitals had a nursing shortage until the big three started laying everyone off , and they started losing their medical benefits.  Now, the hospitals are cash strapped and laying off.

The part that really makes me angry is the disrespect we were shown in DC.  Nobody and I mean nobody deserved that from those assholes.  If anybody ought to declare bankruptcy over mismanagement is those fools in Washington.  I sure give all four of them a lot of credit for holding their tongues because I would have stool up and told them to go f&ck themselves.  Maybe they should have hopped a freight train and wore a fright wig for their further entertainment.  I will never forget or forgive the people that did this, or Obama for remaining silent and letting them twist in the wind.  

[ Parent ]
Just struck me that (4.00 / 1)
we complain both about students not having enough grounding in the (serious) humanities:  stuff like literature and philosophy; and we we complain about their not having sufficient background in math and engineering.

This began in the 1980s with the rise of the MBAs.

[ Parent ]
It's all in the timeframe. (4.00 / 2)
In the markets, everybody's predictions are correct at some point: there will be downturns and recessions and upturns and bounces and bubbles. Knowing that, however, is useless because all that matters is the timing.

What seems obvious in this worthless bit of context-free AP gossip is that Krugman is thinking over the long term, as any decent economist should. And of course he's obviously right: the US auto industry cannot survive long-term doing business as usual, and it can't survive long-term in the current basic US economic/political environment.

Unless we decide to go all luddite and turn away from robotics and computers, industries of all kinds will require fewer and fewer workers, and of the remaining workers, fewer will be US-based. That's the long-term.

Somewhat shorter term, we can't sustain historic levels of growth in car production and consumption. The environmental consequences would kill us, we'd run out of resources faster than we could develop new ones, and we're running out of land we can pave over to serve the needs of the car culture. Even if we could quickly convert to efficient electric/hydrogen/whatever tech, we'd just be buying time. Our industrial base has to be converted to build the infrastructure we'll need during our withdrawal from auto addiction. That should sustain it for a generation or more.

While we stagger from crisis to crisis, no one is thinking seriously about how to adapt the economy to the realities of less human work, environmental and resource limits, and the more steady-state economy that will evolve. If we want to maintain a decent way of life, we're going to need a massive overhaul of how wealth is generated and distributed. That is the heart of the problem, and our present economic problems are merely the warning symptoms of the coronary to come if we don't quit screwing around.

None of which has any bearing on what to do about the tragedy that threatens America's industrial workers right now. The short-term matters, and we can't sacrifice the workers whose future depends on the survival of terminally ill businesses. We have to, as a nation, get them through this crisis, but we also have to begin figuring out how to end such dependency for good. I don't see anything from Krugman that argues otherwise.

I would imagine (0.00 / 0)
that even if health care is moved to a nation service, that it means that current labor rates and other regulatory costs in the USA are not competitive with the vast cheap unregulated labor pools well known throughout the world, and that barring the Congress doing something honest like addressing that imbalance (vs gushing about american pride) Krugman is calling it like he sees it, American industry is toast. Some speculate within the next ten years, with the higher technology industry moving to China. Even south america is much cheaper.

Does the UAW really think it can compete with 1 Billion people in poverty who will work for rice under the current trade playing field? Moving Health Care expenses off the corporate books only begins to scratch the surface of the cost differential.

-

ps - last week people were crowing about Krugman because he supports a gigantic stimulus plan. I see this as no reason to hate or love Krugman more. He is but one person with opinions - and a pretty smart guy. whether he agrees or disagrees with you is far less important than if his arguments have merit. but most people are judging these things based on if the person reinforces their own belief system. that's a slow path to enlightenment.

-

pps - sweet, hat tips for the banned!

~* the * Will * to go on *~

It's easy to defer (4.00 / 4)
to Krugman, because he's a professional economist with so much experience and a such a deep understanding of complicated processes that we find ourselves struggling to grasp at.  But you could say the same about Greenspan and Bernanke--and look where they've gotten us.  Relying on expert opinion is good policy, but we (and our elected representatives) can't make good policy without questioning the experts, and occasionally going against them.  Because Krugman has a liberal record and economics can be difficult for us to understand, it's tempting to treat him like some kind of oracle, but he's only human, and he can make mistakes.  And if we're too lazy to study up on economics and call him on those mistakes, or at least to ask questions, we'll have no right to complain when mistakes become conventional wisdom or public policy.

By the way, one interesting idea that came up in the bailout hearings last week (I believe it came from Sen. Dodd) was for the automakers to get into the business of building trains and public transit vehicles.  For decades the auto industry viewed public transportation of any form as unwelcome competition.  But the great advantage of building trains is that the buyers would largely be public, and thus less vulnerable to cycles of economic decline.  If the Obama administration commits funds to improving rail and public transit nationally, and if Ford, GM and Chrysler got into that business, banks would be more willing to lend to them.  We're already making progress on this front, too: a little-noted progressive victory on election day was the approval of funding for high-speed rail in California.

Krugman was derided (0.00 / 0)
by the Naders (and probably Michael Moores) of the world as being too pro-corporate in the 1990s because of his support for free-trade (as a means of boosting the lives of those overseas).

That said, there's no way he wants to see the car companies fail.  He is strongly pro-union, and this would decimate labor unions.

[ Parent ]
his whole career as an economist is built on being pro free trade (4.00 / 1)
and he should be derided for not recognizing fully enough what wallerstein and many other economists recognize - that neoclassical economics is not a map to the world - it's a map from a tolkien novel.
[ Parent ]
Shock doctrine hardball (4.00 / 5)
I think Krugman is playing "shock doctrine" with the Democrats. The Republicans play hardball. The Democrats may possibly be softball players, though too often they seem to be on the same team, just going through the motions of opposition - and more important than adversarial positioning - actually representing the interests of the vast majority of the American public.

Krugman has to know that his words will be devastating to the Detroit auto industry - if the Democrats don't act as if the situation is a desperate one - and they haven't been doing that. Geez the Republicans are telling major parts of America to go fk themselves and Democrats are sitting on their hands trying to cajole the Republicans into some sort of pretend attempt to save the industry. A pretext similar to the one that gave us the wonderful oversight of the financial industry bailout.

Consider that the welfare states of America are the ones that vote heavily Republican. The ones represented by the Republican politicians shouting the loudest against supporting the auto industry. This is Obama's post-partisan fantasy world. They represent the old south and the sparsely populated plains states. Those states get far more in revenues from the federal government than they contribute. Democrats should end that. Why was NASA moved to Texas? How about moving it to Long Island or Mass or Washington State? Move the Navy ship yard out of Mississippi back to Brooklyn. Hardball.

Republicans don't have a problem with killing millions of jobs for a generation. They like depressions. Labor is cheap. They don't even have to move their precious barge. The cheapest labor will be right here in U! S! A! U! S! A! U! S! A!

Krugman is trying to force the Democrats to start playing politics like millions and millions of Americans are facing a generation of hardship, if not longer. The trouble is too many Democrats are like Chuck Schumer, looking out for hedge fund managers, gulping when they face a few million dollar cut in their hundred plus million dollar Christmas bonuses but keeping very low key when millions of formerly working stiffs face financial ruin. Real ruin. No home ruin. No food ruin.

Actually (0.00 / 0)
Nasa is best the closer it is to the equator.

http://transgendermom.blogspot....
[ Parent ]
I'm not sure how far outside the box this is anymore, but no-one has mentioned it. (0.00 / 0)
The crisis among the Big Three coinciding with Obama's planned investment in infrastructure development suggests the U.S. should follow California Governor Schwarzenegger's lead in building hydrogen fueling stations (with on-site solar/wind electrolysis) while federal funds assist auto-industry retooling.

Such a solution should jump-start US auto exports and address the problem Krugman notes.

Of course this doesn't address the immediate short-term problem for workers, but Chrysler is already talking of paying workers to re-train when they are pulled off the Fremont assembly line next month.  It might not be a terrible solution for the government to provide funds to train autoworker to retool the factories.  (Of course, that would make it hard to support so many executives, so the companies probably wouldn't go for this easily).

This is the heart of the matter: (4.00 / 5)
Therefore, the demise of the US auto industry, if it should come, would not be an economic event, but a political decision.  And it is virtually impossible to conceive how the Democratic Party could possibly survive such a decision.  Have just now come to power, this would be an unforgivable blunder.

And if it comes to pass, it will be an unforgivable blow against the labor unions by the Democratic leadership.  At that point the coalition is seriously frayed, if not cracked.

And into that crack or tearing on that fray comes Sarah Palin and her husband's "good union job" for the next four years.  Remember, she wanted to keep campaigning in Michigan even when McCain pulled out.  Michigan, Ohio, Indiana and Wisconsin -- not a bad base to start from for a right-wing populist running against big government and big finance.

Paul Rosenberg outlines the absolutely correct course of action:

The first is the possibility of transferring health care costs to the federal government, as part of modified Obama health care plan that shifts significant more toward getting us to single-payer sooner, rather than later.

The second is the possibility of transforming the auto industry into a more generalized infrastructure industry, primarily focused on transportation in general--building high-speed rail, for example, in addition to cars/trucks/buses--and renewable energy infrastructure.

The third is the possibility of nationalizing the industry, which looks to be cheaper than continuing to try to bail it out, and which could make it much easier to accomplish further adaptations to meet shifting national priorities.

The other possibility is the passage of EFCA on January 20th and the immediate unionization of all foreign auto operations in the U.S.  This at least would enable the UAW and the government to work towards spreading the pension and health costs over a wider base.  But it's only a short-term solution with serious potential for blow back.

What the democratic leadership seems to be forgetting (or ignoring) is that we've just put $7 TRILLION dollars into the financial sector in loans, investments and guarantees.  Is the financial sector the only U.S. economic sector that matters?

Right now the answer to that seems to be yes.

Krugman is ascientist. (4.00 / 3)
Just because his models have led him to certain conclusions does not mean he's happy about those conclusions.

Most global warming researchers aren't exactly excited about the outcomes predicted by their models either.

he's not a scientist (4.00 / 2)
he's a conventional social scientist and a public political figure.  there's a difference  in both the level of certainty that one can have as well about the kinds of "knowledge" that get produced as well as the effects of the field itself on what it (allegedly) observing.

that said, i do agree that there's a difference between his personal preferences and what he sees as structural changes.

[ Parent ]
Glad You Could Make It (0.00 / 0)
Wish you'd been here sooner.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3
[ Parent ]
No. (0.00 / 0)
I'm sorry, I work in biology, and frankly the level of certainty we have in my own field is often not much more than that we see in economics.  And in a field such as climate research (which I used as an example), there is so much intersection with the social world and human action that making a meaningful distinction between "social science" and "physical science" is not really possible.
[ Parent ]
well we can deconstruct science altogether if you want :) (4.00 / 1)
but the explanation i always use is whene you talk about "class" in india - the discussions will be endless about the meaning of the term and whether it makes any sense or is valid at all.  If you want to talk about biomedical researchers "cells" there is pretty much a consensus among scientists about what they're talking about (at least far greater than with class in India).  

if you see unthinking social science by immanuel wallerstein, it details exactly how political the social sciences always have been - the same way that stephen jay gould does for intelligence measurement.  It's interesting that you picked climatology - that's one of the fields like evolution where more rigorous methodologies meet politics and economics and historical debates most intensely (like psychopharmacology and allopathic medicine in general, the roots of same-sex attration, etc.).

[ Parent ]
sorry i just realized (0.00 / 0)
that we agree about climatology. :)  i think we actually agree more broadly, but you have skepticism about different fields and that's informing how we discuss krugman and neoclassical economics (as frequently currently practiced) more broadly.
[ Parent ]
Outside the box (4.00 / 4)
The US car industry isn't about to disappear, there were about 8 million passenger vehicles sold per year before the current downturn. About half were made by the big three.

What will happen is that the firms will not be American owned . This has already happened in steel and other industries that were once thought to define US industrial strength.

All the problems attributed to the big three are red herrings. The unions don't command outsized pay packages compared to the foreign-owned firms. There presence, however, has forced the foreign firms to offer similar compensation packages. If the UAW is destroyed (one of the real goals of the GOP intransigence) then the free-rider benefits that the workers at the foreign-owned firms enjoy will be lost. There will be a general cutting of wages and benefits at all firms.

US owned firms don't make vehicles which are substantively different than those of the foreign firms. There is nothing stopping Toyota from importing the small, high efficiency vehicles it sells in other parts of the world, but it doesn't because it knows, just as well as does GM, that they aren't in demand in the US. So what if they have a car that gets 40mpg and GM only has one that gets 35mpg? Does anyone really think that a 12% difference in fuel economy is going to change the picture that much?

There may have been a greater difference in quality or whatever 20 years ago, but that has long since disappeared, critics are living in the past and fighting a war which is over.

So, cars are not substantially different, production costs are not much different and neither is efficiency. The big three are in trouble because the downturn has occurred when they were in a vulnerable position caused by the high cost of transitioning to a new style of business. This means not only reforming the management structure, but their employee relationship and their vehicle engineering. This all takes capital and cash flow, both of which are in short supply now. They know this which is why they are looking for bridge loans and foreign investors (who will only come in if they think the firms won't fail).

As for outside the box economic thinking - Krugman, and 99% of all economists are firmly wedded to a capitalist model. This requires continual growth, the increasing consumption of scarce raw materials and generating demand in excess of what is really needed. None of this is really sustainable in the future. Real outside the box thinking requires designing an economic and social system to replace the present one.

Since I'm not one whose living depends upon catering to big business interests (either in government or academia) I can offer non-capitalist ideas.

Here are a couple:
Planning For a Steady State (No Growth) Society

After Capitalism, What?

Policies not Politics

Krugmann May Have Come To Feel (4.00 / 1)
that the best thing is to kick the collapse down the road to a time when a resurgent economy can better absorb it.

But it seems possible to me that the companies could be restructured in such a way that their takeover by people who know how to run car companies might be feasible.

Krugman Could Be Correct (0.00 / 0)
One fundamental problem is that GM and Chrysler (in particular) build too many cars that too few people want to buy. Maybe a big high speed rail project could move those manufacturers and workers into building products that at least the government wants, but these companies are dying largely because of product problems. Ironically their managers fought all the legislation that could have saved them. What a different world this would be if GM was now on its third or fourth EV1 design, for example.

Regardless of what government does, wise or not, people have lost their jobs in the auto industry (and related employment), and more people are going to lose their jobs. The Japanese government tried to prop up companies that should have failed, and that policy was a disaster, with the pain still being felt almost two decades later. Yes, this is going to suck, badly. But just as New England recovered from the textile industry collapse, so too the upper Midwest will recover.

No, it won't... (0.00 / 0)
...the difference is that people want to invest in New England... they have no desire to invest here... never have...

Once manufacturing goes, it goes forever...

we've been trying to recover for 40 years... we aren't getting anywhere close...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

[ Parent ]
Living near Detroit (4.00 / 1)
I live near Detroit like several people in this thread.  I live just up 94 from Detroit and work in Troy.  There is nothing more than I would love to see a mass transit system here in this area.  Its the one thing that has been consistently killed year after year.  

There are not too many things I get more stressed about than having to drive 40 minutes in traffic every morning and evening.  I would take it every day to work if I had the choice.  So that has to count for something.  

[ Parent ]
Over-reaction? (4.00 / 1)
I think you're probably over-reacting. Un-contexted half-paragraph quote from an AP stub article, not really something to get worked up about.

Me | My Work | Future Majority
Eternal Vigilance, Yadda, Yadda, Yadda (0.00 / 0)
Besides, look at the vitality of the discussion in the comments here, not just about Krugman's comment, but about the issue of the auto industry's future itself.

I think there are very legitimate concerns here regarding Krugman, and a number of folks have articulated them quite well.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Truth: Krugman reaffirmed support for temporary auto bailout (4.00 / 1)
Two minutes on Google News reveals that Krugman continues to support the government temporarily keeping the auto companies alive. He characterized American government as having

"...unwillingness, I believe a correct lack of willingness, to accept the failure of a large industrial sector -- even if it's an industrial sector in decline -- in the midst of a very very severe recession."  

Krugman says the government is "correct" not to let the auto companies die right now.  Krugman does NOT support letting the American auto companies die right now.  And this is something Krugman's already said recently on his very own blog, as you can go read at: krugman.blogs.nytimes.com/2008/11/16/cars/

Krugman does appear to think the American auto companies (Ford and GM, as opposed to, say, Toyota plants in America) will go out of business eventually; he just doesn't want them to do so right now.

So if it's the auto industry in the next few years you're worried about, Krugman agrees with you.  The only difference might be that in the long term, Krugman doesn't panic about the idea of 2025 and after (say) being years with no big American auto companies.

Are you upset that Krugman thinks the American auto companies will go out of business eventually?  Why?  If Americans continue to make cars in Toyota plants instead of in GM plants, what difference does it make?

If the answer is, "GM pays better and has better benefits than Toyota," then the long-run solution is better unions all over the country and national health insurance and a more progressive tax structure, not permanent subsidies which we all pay for going to one particular set of companies and workers.

If the answer is, "a country that doesn't have homegrown manufacturing jobs can't do well by the working class," then again I'd say the long-run answer is better unions in the service industries, not permanent special favors for manufacturers -- nurses and computer-network technicians are jobs that are just as skilled, and could (sometimes do) pay just as well, as a union manufacturing job.

If the answer is, "a country without auto companies can't be a technology leader," people said the same thing about semiconductor plants, and yet America's powerhouse in software and hardware design has continued even when a lot of the basic hardware tasks are off in East Asia.

I don't see what's so magic about having American auto companies in the long term.  Neither does Krugman.  There are better ways to get all the good things American auto companies get us.  We should preserve GM and Ford for the next few years, because we need to keep all those people at work.  But if they wind down slowly from 2015 to a final buyout by Toyota or Honda in 2020, that'd be just fine.  The American economy's gone through a lot bigger transitions than losing a few Detroit companies.

GM and Ford and Chrysler are too big to shut down or sell off right now -- Krugman says that, and I'd guess he's right.  But in the long run, homegrown auto companies aren't magical, they aren't special, and America doesn't need them if they can't prove their worth in providing jobs without requiring government handouts.

Krugman mis-quoted by the media. (4.00 / 2)
Here.
Me, misreported

Urk. I gather that there's a report on the wires quoting me as saying that the US auto industry would disappear. What I actually said was that the concentration of the industry around Detroit would disappear.

And did I really say "me and my colleagues"? I guess it's possible - but that doesn't sound like I speaking.



Jeff Wegerson
I Can TOTALLY See (0.00 / 0)
our top-notch political reporters getting that all botched up.

But this was still a very useful, and very timely discussion to be having.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Fixing health care won't help the auto industry... (0.00 / 0)
I am always amazed when obviously intelligent people write that reforming the health care system will help American businesses be more competitive.

My company (a health insurance company) pays for ~75% of my medical, prescription, dental, and vision insurance.  Of course, they don't really give this to me for nothing; it comes out of the value (or perceived value) my work brings to the company.  

If John McCain had his way, employer-subsidized insurance would go away and I would have to buy my family's insurance in the open market.  Presumably, if this happened my salary would be adjusted upward to include the money that they are now "contributing" to my health insurance.  IOW, what my company contributes towards my health insurance is not free; it is part of my compensation.  It merely appears to be free since we've all more or less agreed that it is free.

If we went to a single payer system it is likely that taxes would be the funding mechanism and this tax would be withheld from my paycheck.  If funded by payroll taxes, I wouldn't see it directly, but in any event my salary would go down by approximately the amount that I now contribute to my health insurance.

As far as the money is concerned, reforming the health-care system will have virtually no impact on my finances; one way or another, I'm going to pay.  (Aside from the likelihood that under a single-payer system I'm out of a job...)  This is also true of the auto industry.  Most of it's employees, whether union or not, receive a health-care benefit that, one way or another, will have to be paid for out of revenues.  The biggest benefit to the auto industry is that its obligations to retirees will likely be reduced or eliminated (to be picked up by the rest of us).

From a purely financial perspective, it is hard to see how this will make American companies more competitive.  Their costs are not likely to drastically change.  (Yes, they'll save some percentage of their current administrative costs and a very few will benefit from being able to off-load their retirees onto the rest of us.)  Employees may benefit to the extent that reforming the health-care system may give them the freedom to change employers more readily.  (However, as an IT consultant/contractor for most of the past 25 years who has worked at +/- 30 companies in that time, let me assure you that the grass is always greener...)

Krugman: US Auto Industry To Disappear--What Does This Mean??? | 145 comments
USER MENU

Open Left Campaigns

SEARCH

   

Advanced Search

QUICK HITS
STATE BLOGS

Home | RSS/XML Feed | Register | Contact

  © OpenLeft 2007-2010, Powered by SoapBlox

Powered by: SoapBlox