Common Sense Economics

Have we lost our minds?

When I'm dealing with my own finances, I know my shortcomings. Because I'm no financial expert, I go to people who I know are. I read books by Dave Ramsey and Suzy Orman. I use the services of an advisor. I look at how people who are successful in life and in business and I emulate them. So, why can't the auto industry do the same?

Toyota and Honda have a business model that works. They are making money when the American car makers are not. The big difference? Their management/labor relationship. Toyota and Honda make a great product and have a fair compensation package. So what will it take to use that level of common sense in the American auto industry? How 'bout blowing out every current exec and starting over...completely over. And that includes getting rid of an antiquated business model with regard to labor.

Back when unions were formed, they were needed to fight the greed and corruption of management and unfair working terms. Now, the tables have turned, and the American public perceives it is the union that epitomizes that which is destroying the auto industry. We hear from the labor side that they have made plenty of concessions. But even with those concessions they are nowhere near the average American's compensation package. An autoworker for GM makes double the wage, has premium health care plans that cover not only them, but extended family and retirees for life. No other industry has this level of coverage. If I were faced with a salary cut or job loss, I would take a cut. Most regular folks with common sense would. Labor leaders have us believing they'd rather be unemployed than concede further.

The management should be re-built from the ground up. They lost touch with reality long ago and all of them should all be canned. That it didn't dawn on one of these knucklheads that their opulent first trip to Washington might not just look bad...it was just plain wrong! It took an outcry from the media before they grounded their private jets and drove hybrid cars to the second beg-for-money meeting in Washington. Will a multi-billion dollar bailout change how these clowns think?

The pain of any of the auto companies going into bankruptcy would be deep. We are warned it would be like the Great Depression. But like an drug addict, sometimes you have to lose everything and totally hit rock- bottom before you learn and change. Even the worst-case scenario would not match the Great Depression. We have programs and systems in place that will prevent that level of destitution. Those in unions will survive. Capitalism, competition and legislation now takes care of what unions use to do to protect workers.

In my own life; I sure do want a bunch of stuff. But I don't have the money, so I just don't buy it. I cut back this Christmas. I have two kids in college, and a mortgage to pay. I somehow pay those bills and more months than not I am stretched. Of course I feel terrible when I hear someone is losing their home to foreclosure, or can't pay a credit card debt...but when I also hear plans for those debts to be forgiven, I am angry that the people like me who do the right thing are being punished.

Common sense dictates we need to learn the lessons our parents and grandparents learned from the Great Depression, like if we don't learn from history...we may be bound to repeat it.