I guess it’s official, General Motors files for bankruptcy protection and the US Government is now a major stakeholder, owning 60%. This is a sad day for Capitalism and hello to the American Central Planned Economy.
I never thought I would see this day in America.
Adam Smith in “An Inquiry into the Nature and Causes of the Wealth of Nations” embraced the idea of the “invisible hand” of competition as being the best manner in which to assure the best quality goods at the best prices.
Using Smith’s hat maker example, suppose you are the only hat maker in a small town. Your hats are poorly made and over-priced, but you are the only hat maker in town. Suddenly one day another hat maker opens up shop in the town and begins turning out better quality hats than yours, and sells them at a lower price. You now have only two options. You can match his quality and price, or you can go out of business. That is Adam Smith’s “invisible hand” of competition at work.
Let’s look at Obama’s invisible hand for the American car industry. Suppose you are one of the big three automakers, your competition is producing better quality cars than yours, and sell them at a lower price. You have three options. You can match the competition’s quality and price, you can go out of business, or you can protect the unions and allow the American tax payer to bail you out. That is Obama’s “invisible hand” of competition at work.
I have not reviewed the GM buyout offers yet, however if they are similar to Chrysler, GM union workers will receive early retirements, extended benefits, and free cars. America is great if you are a union worker in this Obama central planned economy. A private foreign owned entity is being centrally managed and planned on the backs of the American tax payers.
Chrysler LLC has expanded early retirement and buyout offers for workers at six of the eight factories that it plans to close as part of its bankruptcy restructuring.
In some cases the offers are better than the ones currently on the table for all of Chrysler’s roughly 26,000 hourly workers. All the offers expire on May 26 with workers expected to leave the company the following day.
Under the old offers, workers would get a $75,000 cash buyout and a $25,000 voucher to buy a car to leave the company. Workers eligible for early retirement can get $50,000 and a $25,000 car voucher.
Chrysler spokeswoman Dianna Gutierrez said the new offers add a $115,000 lump-sum payment for workers with more than 10 years of seniority who chose to leave the company. They also come with 12 months of health care. The early retirement age also was reduced from 55 to 50, she said.
If I was “resourced” or laid off from my job, my employer would most likely provide severance benefits of two weeks per year employed. I would not expect other unemployment benefits other than normally provided to unemployed workers.
It really burns me to no end that the American tax payers are footing the bill. It is a sad day in America…
UPDATE: This get worse with each passing hour. I remember when The Corner was a great site… Not now…
Larry Kudlow, at The Corner says that GM is old news and calls this “old-fashioned Keynesian stimulus”
BACKGROUND BRIEFING BY SENIOR ADMINISTRATION OFFICIALS
ON THE GENERAL MOTORS RESTRUCTURING, May 31, 2009 Via Conference Call