The credit crisis is also not the fault of the automobilie industry. The cause of the credit crisis falls back on bad government that allowed the stock market to be turned into an unregulated casino. The Federal Reserve, Treasury Department, Congress and regulators failure to apply basic regulation to the financial markets and money supply are to blame (even free marketer Alan Greenspan now admits this mistake) – but now Congress wants to put the blame on the auto industry rather than accept responsibility for their failure and clean up the mess.
The third cause, inefficient 20th Century automobiles rather than forward looking efficient 21st Century green cars is a shared error of government and the auto industry. The Congress did not have the political will to demand energy efficiency, indeed they provided a tax credit for SUV purchases, and the auto industry lobbied to prevent such standards.
All there of these causes have the same source: corporate controlled government. The health insurance industry did not want the more efficient single payer national health insurance. The finance industry wanted to be free to treat the stock market like a casino, liked the Fed’s easy money and did not want to be regulated. And, the auto industry did not want to be told to build more efficient cars. Corporate-government is the root of the problems we face today.
While the CEO’s who flew in on private jets to beg for money will pay a price if their businesses fail, a bigger price will be paid by their workers, their families and retirees. The Congress has no problem giving $700 billion to white collar Wall Street, but when it comes to blue collar Main Street, the coffers are closed, or more difficult to pry open, even with the risk of a deepening recession and even a depression before them.
Solutions That Can Build a New Economy and Begin to End Corporate-Government
Solving the auto industry financial shortfall is an opportunity to begin to re-make the relationship between corporations and government. While the bailout of Wall Street has rightly enraged Americans, the reality is that hundreds of billions annually is given in corporate welfare to big business every year. The bailout is business as usual brought out in the open. Even wealthy, highly profitable businesses like the oil and pharmaceutical industries are doled out billions in tax payer dollars annually.
Taxpayer support – the common wealth of Americans – has not resulted in a fair sharing of the profits. As a result the wealth divide between the rich and the poor, between CEO’s and employees has grown grotesquely wide. President Obama talked about “sharing the wealth.” President Bush talked about an “ownership society.” In fact, we have neither an ownership society nor equitable sharing of wealth when we should have both.
Corporate welfare needs to be transformed into an equity investment by taxpayers. That is a first step to creating a real ownership society. And, taxpayers need to be treated like major investors. This means a role in setting the direction of the company and a return on their investment, in dividends. Indeed, Chrysler issued a statement on November 17th saying that it expected any loan package to come with conditions "including taxpayers having equity. . . . The Company is open to further discussions with Congress." Some have suggested in the automobile case, “a government-appointed receiver—someone hard-nosed and nonpolitical—should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible.”
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