Posted by: Marshall Sponder | November 16, 2008

Detroit’s Dilemma

Occurred to me, while reading Paul Krugman’s blog post on Cars (which references another from Jonathan Cohn) that the main falacy of those, mainly Republicans, who want to let the Auto Industry collapse, is not, that the Automaker’s deserve what they get … but .. that we’re operating in a Free Market.

Here, read this:

“… Critics of a bailout note, rightly, that bankruptcy isn’t simply about giving distressed companies financial protection to get through rough patches. It’s also about letting the free market do its work–about forcing inefficient companies to reorganize or, failing that, to make way for others. If the government spares Detroit from failure, the government might end up supporting obsolete companies while rewarding both management and labor for their oafish behavior.”

I’ve noticed, sometimes, that any idea, any argument, notion, can be used to support multiple outcomes – for example, the Auto Industry could easily deserve to fail – and if you use two dimentional thinking – that’s the conclusion you’d come to.

On the other hand, when taking that argument about the Free Market and Automakers deserving to fail with the other things that will now happen as they fail – an entirely different picture is painted .. like this one:

“… Restaurants, gas stations, hospitals, and then cities, counties, and states–all of them would feel pressure on their bottom lines. A study just published by the Michigan-based Center for Automotive Research (CAR) predicted that three million people would lose their jobs in the first year after such a Big Three meltdown, swelling the ranks of the unemployed by nearly one-third nationally and leading to hundreds of billions of dollars in lost income. The Midwest would feel the effects disproportionately, but the effect would reach into every community with a parts supplier or factory–and, to a lesser extent, into every town and city with a dealership. In short, virtually every community in the country would be touched.”

Now, bear in mind, 3 million people out of work in the next year, additional to the 6.5% unemployment rate we have now would put us above 8.5% unemployment, maybe a bit more since a lot of other industries are hurting, not to mention city and state goverments.

That’s why I’m of the belief that rational, sound thought, comes out of an chain of ideas, not slavishly holding to any one of them.

It’s also being said that we ought to be going shopping now, instead of saving money – yep, in this Bizzaro world, everything is reversed, according to THOMAS L. FRIEDMAN

Go shopping.

Obama can’t wait until Jan. 20 to weigh in on this. If we don’t stimulate the global economy fast enough and big enough, some of Obama’s inaugural balls might be held in soup kitchens.

When President Bush told us to go shopping after 9/11, he was right. We needed to stimulate the economy then. The problem was that the Bush economic team never turned off the green light and told people to “go saving.” So with easy credit seemingly endlessly available, American consumers saved virtually nothing and bid up housing prices to record levels. Retailers expanded stores and China expanded factories to accommodate all the shopping. It was quite a party. We had banks in America giving mortgages to people whose only qualification “was that they could fog up a knife,” one mortgage broker told me.”

In this situation we find ourselves, we have to think out of the box – sometimes, that’s difficult to do, but that’s why we’re getting rid of the old crop of leaders, because they were not able to.

And let’s face it, didn’t the Republican‘s get elected based on appealing to primitive emotions and the Reptilian Brain?   If you don’t believe me, read this old post of mine Power of Pervasive Subliminal Advertising and bear in mind that one of the problems with the Reptilian Brain is that it can not process complex emotions and situations – which is why it clings to only one idea at a time or strings together ideas that don’t really belong together, as John McCain‘s campaign did.

Today, using a modern mind, fully in touch with reality, you’ve got to look past taking a single point of view.  Ask yourself if saving 3 million jobs isn’t better than the alternatives we’re presented with.

And let’s not even get into why we’re in the situation which the collapsing World Economy – we’ll have enough time to remember the “good old days” for the next couple of years, while world from sinking into a Global Depression.

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  1. […] idea that I wrote about today, but in an entirely different context, at The Analytics Guru – about Detroit’s Dilemma and lack of support from Republicans due to their relience on, what I called, the Reptilian Brain – […]

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