The economic Civil War/Salon

[twa]

What do you think,is The Big three failing caused by Southern alliances with other nations...or just poor business decisions?

http://www.salon.com/opinion/feature/2008/12/18/third_reconstruction/
The economic Civil War

The South's attempt to kill the North's auto industry is the latest battle in an ongoing conflict. It's time for a Third Reconstruction to put an end to it.

As the regional politics of the automobile bailout controversy demonstrate, the Civil War continues. If the major U.S. automobile companies go under, it will be partly because timely federal aid for them was blocked by members of Congress like Tennessee Senator Bob Corker, whose states have created their own counter-Detroit in the form of Japanese, Korean, and German transplant factories. The South will have risen by bringing down the North. Jefferson Davis will have had his revenge.

The most shocking thing about the alliance between the Southern states and America's friendly but earnest economic rivals to destroy America's most important industry is the fact that so few people find it shocking. Contrast the U.S. with the European Union. The nation-states of the European Union collaborate with each other in order to compete against foreign economic rivals, including the U.S., Japan, and China. By contrast, many states, particularly in the South, collaborate with foreign economic rivals of the U.S. in order to compete against other American states. Any British or French or German leader who proposed collaborating with Japan or the U.S. in order to wipe out industry and destroy jobs in neighboring EU member states would be jeered out of office. But it is perfectly acceptable for American states to connive with Asian and European countries in the destruction of industry elsewhere in the U.S.

Perhaps the lack of outrage over race-to-the-bottom rivalries among U.S. states and regions can be attributed to the longevity of this familiar Southern economic strategy. In the early 20th century, the Southern states were the first to adopt conscious statewide economic development policies, which then as now meant poaching industries from New England and the Midwest where wages and public spending and regulation were greater. That's how the South took the textile industry from New England, before losing it to lower-wage Asia. Now with the help of Nissan, Toyota, and BMW, the South is trying to replace Detroit as the center of U.S. automobile production, using low wages, anti-union laws, and low taxes to benefit from the outsourcing of industry from societies more advanced than the South, like Japan and Germany. The economic Axis is collaborating with the neo-Confederates against their common opponent -- the American Union. If they succeed, the losers will be not only non-Southern regions in the U.S., but the majority of Southerners of all races, whose interest in decent wages, good education, and adequate public services have almost always been sacrificed to the greed of the well-connected few by Southern statehouse gangs.


"A house divided against itself cannot stand." At each of the defining crises in American history, a major expansion of federal authority was necessary to overcome a division between North and South that threatened the future of the U.S. as a democratic, middle-class nation. The division between slave and free states was overcome by the defeat of the Confederacy and the Reconstruction amendments that abolished slavery and established national citizenship for the first time. During the New Deal era, the enormous gap between the agrarian South and West and the industrial Northeast was overcome by federal programs like rural electrification and highway building, federal regulation, and federal social insurance.

Today the division is no longer between slave and free states, or agrarian and industrial states, but between two models of industrial society -- the Northern model, based on adequate public service funding and taxation and unionization, and the Southern model, based on low-tax, low-service government and low-wage, non-unionized, easily exploited labor. If the industrial North and the industrial South compete for global capital investment, then the industrial South is likely to prevail, because Northern advantages in the form of a skilled workforce and superior public services are unlikely to overcome the South's advantages of low wages and low taxes and state and local tax subsidies. The result, sooner or later, will be the Southernization of the North and Midwest, as states in the historic middle-class core of the U.S. are forced by economic pressure to emulate the arrangements of Alabama and Mississippi and Texas.
More drivel at the link:D

[Thiebear]

not to put a Damper on the rant in this article:

Arn't the 2 of 3 Honda plants in Ohio NORTH of the Illinois plant?


Toyota's Buffalo plant has expanded five times since it was established in 1996. It has 1,350 employees.
Eliminate one shift that makes the Tacoma pickup truck at its joint venture plant in Fremont, Calif.

[endzone_dave]

Poor business practices. If the company I worked for had a lousy product, gave out free health care and a nice pension, it would be losing tons of money too.

[Thiebear]

http://www.businessandmedia.org/articles/2008/20081204085242.aspx

this article sums it up rather nicely: US auto guy goes to work for Hyundai and why...


short quote

“Another Hyundai advantage in Alabama – America’s most automated car plant,” Strassmann said. “Hyundai has achieved in only three years what Detroit has struggled with for the last 30 – a highly competitive combination of quality and flexibility. When SUV sales dived, the plant built more sedans. At many GM plants, that switch would take weeks.”

[twa]

not to put a Damper on the rant in this article:

Arn't the 2 of 3 Honda plants in Ohio NORTH of the Illinois plant?



OMG, they are even subverting Yankees in this evil plot?

We need to excise this cancer before it spreads.;)

[PeterMP]

Maybe this really deserves its own thread, but I think this is an interesting component to the auto bailout specifically that you aren't hearing about:

http://www.newsweek.com/id/175062

"The auto industry bailout may trigger a return to protectionism."

"Count Germany, Japan, South Korea, France, and other auto-producing nations among those making such a distinction. The World Trade Organization, fashioned in large part by the United States to guard against unfair trade practices, almost certainly will hear complaints about the bailout. The scope of the intervention in Detroit has the potential, according to Joe Guinan, a policy analyst at the German-Marshall Fund, "to be the torch that lights the fuse of a general resort to protectionism among America's trading partners and the beginning of a downward spiral that undermines the world trading system.""

Coupled with the current world economy and the historic affects of protectionism (http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act) it is interesting to ponder if we haven't found a new way to spawn a depression.

[zoony]

That might be one of the whiniest articles I've ever read

[Kunia5]

The "slippery slope" argument is the last bastion of feeble minds. The article states that bailing out GM/Chrysler and Ford will inevitably lead to "protectionism and a downward spiral." It means somebody doesn't want to debate the merits of an argument.

Certain things about human nature stay the same. But some things about human society have irrevocably changed.

Remember several years ago hearing about the next "great epidemic" that would kill millions. Because of science and instantaneous communication, we will never have another Flu Pandemic of 1919.

And AIDS does not count, because everybody knows what causes it, and it can be avoided. During the Flu Pandemic people did not know about the virus killing them. One day a person would be alive, and the next week he would be dead, without any diagnosis.

Since most people now believe it's impossible, my guess is that "managed capitalism" will be successful in this country. The government will probably be smarter at planning the economy than the market itself, given the track record of past several decades. What is outdated now is Dickensian, 18th century style, unregulated capitalism.


Maybe this really deserves its own thread, but I think this is an interesting component to the auto bailout specifically that you aren't hearing about:

http://www.newsweek.com/id/175062

"The auto industry bailout may trigger a return to protectionism."

"Count Germany, Japan, South Korea, France, and other auto-producing nations among those making such a distinction. The World Trade Organization, fashioned in large part by the United States to guard against unfair trade practices, almost certainly will hear complaints about the bailout. The scope of the intervention in Detroit has the potential, according to Joe Guinan, a policy analyst at the German-Marshall Fund, "to be the torch that lights the fuse of a general resort to protectionism among America's trading partners and the beginning of a downward spiral that undermines the world trading system.""

Coupled with the current world economy and the historic affects of protectionism (http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act) it is interesting to ponder if we haven't found a new way to spawn a depression.

[PeterMP]

The "slippery slope" argument is the last bastion of feeble minds. The article states that bailing out GM/Chrysler and Ford will inevitably lead to "protectionism and a downward spiral." It means somebody doesn't want to debate the merits of an argument.

Certain things about human nature stay the same. But some things about human society have irrevocably changed.

Remember several years ago hearing about the next "great epidemic" that would kill millions. Because of science and instantaneous communication, we will never have another Flu Pandemic of 1919.

And AIDS does not count, because everybody knows what causes it, and it can be avoided. During the Flu Pandemic people did not know about the virus killing them. One day a person would be alive, and the next week he would be dead, without any diagnosis.

Since most people now believe it's impossible, my guess is that "managed capitalism" will be successful in this country. The government will probably be smarter at planning the economy than the market itself, given the track record of past several decades. What is outdated now is Dickensian, 18th century style, unregulated capitalism.

1. In terms of the pandemic, don't believe it. There will be another one. I don't know when, but it will happen. Science still does very little for viruses.

2. We've had "managed capitalism" for a long time in this country so I'm unsure of your point but I wouldn't be surprised if Hawley Smoot, and Hoover made similar comments.

[Mad Mike]

Just got around to reading this. The basic point of an economic battle between detroit and the south is well taken. That IS what is happening. The rest is pure drivel.

And this... "the Southern model, based on low-tax, low-service government and low-wage, non-unionized, easily exploited labor." is just stupid.

The big problem in Detroit is that the unions have exploited the big three. The wages and benefits paid to auto workers there are enough to make me cry. I'm pretty talented and well experienced in my field. I do creative work that helps other businesses succeed. I use my brain and work hard to make deadlines in a stress filled environment. If I make a major mistake on a big print job it will cost someone a fortune and me my job. But some guy (who I'm sure is smart and works hard) who does a simple job like cleaning the floors for GM makes at least three times what I make with much better benefits. And I doubt very much that someone who works for BMW in South Carolina feels like they are exploited. They probably make twice as much as me with better benefits. :doh:

OK. I'm really depressed now. I need a time out. :(

[Johnny Punani]

ROFLMAO at this article...:laugh::laugh::laugh:

Neo-Confederates?!?!?!? Now...I have read everything...:rolleyes:

[jpillian]

I am sure this is how a writer at Salon.com would view such an issue : absotively retardedly.

[twa]

Maybe this really deserves its own thread, but I think this is an interesting component to the auto bailout specifically that you aren't hearing about:

http://www.newsweek.com/id/175062

"The auto industry bailout may trigger a return to protectionism."


It is my understanding two foreign auto makers are already preparing suits.

I will try to find the link later

[Predicto]

He forgot to mention the part where the governments of Tennessee, Georgia and the rest threw hundreds of millions of state tax dollars to those companies in order to get them to open factories in their states. That changes the "free market" equation drastically, IMO.

[Peregrine]

How does one even get a JOB writing stuff like that lol?

Apparently you don't need skills, common sense, or over 100 brain cells...

[Hubbs]

I can't believe Salon even allowed this to be published. It's laughable.

[Hubbs]

How does one even get a JOB writing stuff like that lol?

Apparently you don't need skills, common sense, or over 100 brain cells...

Seriously. I'm busting my ass trying to get a job as a journalist/writer, and people like this get paid....

[twa]

He forgot to mention the part where the governments of Tennessee, Georgia and the rest threw hundreds of millions of state tax dollars to those companies in order to get them to open factories in their states. That changes the "free market" equation drastically, IMO.

Are other states not free to offer the same incentives?

Is offering tax breaks to expand the tax base and employment wrong?(I can see the objection from similar industries in that state if excluded)

added
Doesn't Cali basically do the opposite by taxing new businesses more?(read you or someone bitching about that)

[SnyderShrugged]

He forgot to mention the part where the governments of Tennessee, Georgia and the rest threw hundreds of millions of state tax dollars to those companies in order to get them to open factories in their states. That changes the "free market" equation drastically, IMO.


That is a perogative of the state, why wouldnt they offer tax breaks to businesses to get them to operate in their state? I'm having trouble seeing the issue in a negative light.

[Predicto]

Are other states not free to offer the same incentives?

Is offering tax breaks to expand the tax base and employment wrong?(I can see the objection from similar industries in that state if excluded)

added
Doesn't Cali basically do the opposite by taxing new businesses more?(read you or someone bitching about that)

Yes other states are free to do it. Unfortunately.

The practice is counterproductive to the economic health of the nation as a whole. It's a race to the bottom with the companies having all the leverage. "We will give you money, we won't tax you, we wont make you be environmentally sound, we will sell out out our workers' benefits. Just close that factory in a different state and move here!!!"

Henry Ford understood that the best engine for long term economic health was a well paid worker base that could afford to buy the products being produced by their employers. For most of a century, America prospered as its workers prospered. That lesson now appears to have been lost. The rule now is: Blame the workers. Screw health care. Eff pensions. Let them eat cake. Go bankrupt to screw over the retired workers.

And yes, Cali essentially does the opposite, which is also stupid.

[Teller]

Not only that, but everyone in the south is uneducated, racist, and lives in a trailer. We make some mean-ass cornbread though.

How many wonders of the world are we up to now? This moron's continued employment needs to be added to the list.

[Predicto]

Not only that, but everyone in the south is uneducated, racist, and lives in a trailer. We make some mean-ass cornbread though.

How many wonders of the world are we up to now? This moron's continued employment needs to be added to the list.

Nobody went there but you H_H. Not even the guy who wrote the article.

[Teller]

Nobody went there but you H_H. Not even the guy who wrote the article.

Explain to me what a neo-Confederate is.

(Cause you guys ALLLLLLLLWAYS argue that the Confederacy was about state's rights.) :rolleyes:

[twa]

Yes other states are free to do it. Unfortunately.

The practice is counterproductive to the economic health of the nation as a whole. It's a race to the bottom with the companies having all the leverage. "We will give you money, we won't tax you, we wont make you be environmentally sound, we will sell out out our workers' benefits. Just close that factory in a different state and move here!!!"


You are kidding yourself if you believe they are not taxed or required to meet the same regulations.

How is creating new jobs selling out workers benefits?

Is this used to make businesses move,or to encourage new businesses+

Not that I would object to stealing from the damn Yankees;)

[jpillian]

Yes other states are free to do it. Unfortunately.

The practice is counterproductive to the economic health of the nation as a whole. It's a race to the bottom with the companies having all the leverage. "We will give you money, we won't tax you, we wont make you be environmentally sound, we will sell out out our workers' benefits. Just close that factory in a different state and move here!!!"

Henry Ford understood that the best engine for long term economic health was a well paid worker base that could afford to buy the products being produced by their employers. For most of a century, America prospered as its workers prospered. That lesson now appears to have been lost. The rule now is: Blame the workers. Screw health care. Eff pensions. Let them eat cake. Go bankrupt to screw over the retired workers.

And yes, Cali essentially does the opposite, which is also stupid.

Sorry to quote the whole tome, but I thought this was an excellent point. My long-winded way of saying: QFT.

I am of the opinion that drastic reform is needed of the very nature of corporations. Perhaps their size needs to be limited? Who the heck knows. But it sure doesn't seem like the current setup is in the citizenry's best interests.