Back in December, I flagged a Businessweek story about the potential for "leakage" in government stimulus spending - that is, the potential for government stimulus spending to actually fuel job outsourcing if that spending is not limited by Buy America restrictions. Now, the New York Times reports that the same can be said for subsidies to the automakers:
G.M. Seeks More Imports From Low-Wage Countries
By LOUIS UCHITELLE
Published: May 18, 2009
With a green light from the Obama administration, General Motors is moving toward a reorganization that will increase vehicle imports from its plants in Mexico and Asia while closing factories and cutting the work force in the United States.
That approach drew a sharp rebuke from the United Automobile Workers union on Friday. In a letter to each member of Congress, the U.A.W., which represents G.M. factory workers, argued that to qualify for more government assistance, the auto giant should be required "to maintain the maximum number of jobs in the United States."
The administration, however, appears to accept the proposition that to return to profitability as quickly as possible, G.M. must import a significant percentage of cars from its plants in low-wage countries, like Mexico and China, or low-cost countries, like Japan.
It's one thing for private corporations to create a business model based on a race to the bottom of wages, environmental laws, etc. It's a gross business model, but it is their right to create that business model (though it is also the government's fault for creating trade policies that actually encourage that kind of business).
But it's an entirely different thing for the government itself to help create that business model with taxpayer subsidies. That's our money being used to restructure the automakers - and it shouldn't be used to effectively destroy our tax base, our manufacturing industries and our jobs.