Sunday, December 21, 2008

#8: Micro-Suggestions about the economic crisis

The new Congress will gather on January 6 and immediately set to work in a two-week whirlwind, hoping to get something cogent and useful on President Obama’s desk, for him to sign as soon as the Innauguration festivities are over.  Meanwhile, with a month to go until a change of administrations, the outgoing Congress is working hard with Bush officials to enact interim measures.

While we can take some pride in this flurry of urgent action, there are also causes for concern.

1) Current Secretary of the Treasury Paulson, having blown through the first 350 billion dollars of $700B emergency TARP funding, is now asking the outgoing legislature to release the second lump.  Congress must not do this. Not without a steep price.

That price should be early installation of Obama’s own tean in offices just down the hall from Paulson at Treasury and at every other economic agency, with informal but decisively effective veto power over all future expenditure of TARP funds.  The reason is simple.  We the People have a right to protection from seeing this treasure trove distributed willy-nilly by -- at best -- self-admitted incompetents.  At worst, by leaders of a clade that seems deeply untrustworthy.

2) A further price.  Demand equity and restitution. Use TARP to buy only items that might offer good returns, when things turn around.

Those who long howled that “government should be run like a business” have no right to complain when the United States takes advantage of an opportunity to buy, low, in order to sell high later on. Whiners who don’t like this are hypocrites .

 Note that the Big Three automakers qualify under this condition, while distressed derivative wagers, held by foolish aristocrats, do not.

3) Require that beneficiary companies make good faith efforts toward reclaiming unfair and absurd executive compensation.  In fact, all future aided companies that have experienced outrageous executive compensation should be asked to file a lawsuit against those past executives, at least on a pro forma basis, in order to establish a legal basis for discovery processes.

Similar principles should guide the new economic stimulus plan, involving up to $850B that soon-to-be President Obama and Congressional leaders plan to spend, largely on public infrastructure projects.  Among the guiding principles ought to be:

* Spend quickly, so that a maximum number of unemployed get to work... but...

* Spend in ways that also maximize national benefit -- the purpose of concentrating on infrastructure.

* Do not stimulate with tax or other changes that will be hard to rescind, once the crisis is over.
(Unless this is part of an overall plan, e.g. reducing FICA payroll taxes in exchange for a permanent percentage based fuels tax or a windfall bonus tax.)

* Do not fall for “emergency” scams that favor specific companies, cronies or Congressional districts.
(This was done by the Bush Group, using 9/11 and Iraq as excuses to sign “emergency” bypasses to contracting laws, favoring pals to the tune of tens or even hundreds of billions of dollars.  This is, in fact, history’s largest loophole-for-theft, and it’s gon unmentioned in the press.)

* Establish a principle that no region of the country will benefit more than 10% more than the tax-proportion they contribute.
Yes, Red America will howl, and Obama might have to back down on this one.  But even broaching it would be a great way to make a political point:-- to drill into peoples’ minds how hypocritical it has been to bash the blue zones, while they have been carrying more than their fair share of the burden.  Ironically, this could help ease “culture war” by making clear where Red America’s self interest lies... in toning down the bitterness.


Finally, I feel I really need to reiterate my assertion that any bailout of the Big Three U.S. automakers ought to entail a imaginative compromise deal with the workers.

Neither side has been either up-front, or right, in the tussle over further UAW concessions.  The Unions must realize that their present deal is archaic, brittle and contributing to the collapse of a U.S. motor industry.  On the other hand, those troglodyte Southern senators who demanded concessions simply in the form of across the board pay and benefits cuts are at-best waging civil war on behalf of the South and Toyota and the horrifically stupid managerial caste that ran Detroit into the ground.

Common sense demands that the workers accept that a third or more of their rigid wages and benefits should change its form... but not necessarily go away!  It is time for labor and pensioners to accept the blatantly obvious, that their enforceable obligations make them the top creditors of Ford, GM and Chrysler.

For once George W. Bush said something right. Treat this as a bankruptcy!  With present shareholders and management dropping to the bottom of priority, that would leave the workers and pensioners - effectively - the owners of the Big Three. 

Live with it.  Yes, both labor and management have struggled desperately, for decades, to avoid facing this inevitable day.  But the era employee ownership has arrived. 
 So?  Turn lemons into lemonade.

Show what you are made of, by turning these companies profitable!  And then pass out those profits to member owners.  That ought to make up for bringing formal, line wages down to competitive levels.  Think about it.  As both workers and owners, UAW folk ought to come out ahead!  That is, if they believe in themselves and in their products and potential.

Continue to Suggestion #9: Act swiftly to restore the Army, the Reserves and the National Guard..


B. Dewhirst said...

Pity the new team is just as much comprised of "10,000 world-dominating golf-buddies" as the old team.

B. Dewhirst said...

On the UAW:

Asking a slave to compromise with his master is barbaric.

David Brin said...

Gadzook what cock, BD.

I wish I were paid what those "slaves" make. And show me the Clintonites in prison... which Bush et al certainly would have LOVED to do and tried desperately to do, with a billion dollar witch hunt.

You are armwaving stories. Just stories.

Acacia H. said...

I have sincere doubts that Obama will be even half as bad as the Shrub was. That, in and of itself, will help the country out. Add in the fact that we've seen, time and time again, that business unregulated has a tendency to self-destruct, and I suspect we'll see a lot of the damage done by Republicans will be fixed in the next four years.

I say this as a civil libertarian, mind you. I don't want government telling me what to do... but I've seen that we need government telling the so-called entity known as corporations what they can and cannot do. (And whoever came up with the concept of corporation as a form of person should have been institutionalized. Corporations are institutions run by people and should be treated as such, rather than as entities in and of themselves.)

Rob H.

Ilithi Dragon said...

The purpose of government is to protect the people, and market regulations are simply the government's means of protecting the people from crooks and cheaters who want to scam the people, or just follow piss-poor, short-sighted policies to get rich quick without any concern for the short- and long-term consequences, and the occasional honest but terribly bad decision.

The idea that a free market system doesn't need regulation, and that it balances itself out is a nice ideal, and in theory, it would work. However, that theory requires that EVERYONE involved in that system behave ethically, and make intelligent decisions based on the long-term best interests of the company, the people and the nation. If more than a scant handful of people try to cheat, or just make honest mistakes and bad decisions, the unregulated free market system falls apart. And if a LOT of people are being dishonest, unethical and generally trying to cheat the system, it falls apart spectacularly, as we are now witnessing.

Simply put, the regulations are there not for the government to tell us what to do, but to protect the people from cheaters and honest mistakes, and that's how they should be structured.

JuhnDonn said...

Robert said... And whoever came up with the concept of corporation as a form of person should have been institutionalized. Corporations are institutions run by people and should be treated as such, rather than as entities in and of themselves.

I like how Royal Dutch Shell claimed that, as a corporation, they had no moral obligation to interfere with Nigeria's execution of Ken Saro-Wiwa, for protesting the environmental mess Shell was making in Nigeria. As the primary money flowing in to Nigeria, Shell would have had some pull with the government but argued that, as a corporation, they're only responsible for generating profits.

Anonymous said...

Dr. Brin?

You wish you made 60-110K a year, the upper number reflecting 60+ hour weeks for senior employees?

Ilithi Dragon said...

I don't know about Dr. Brin, but I'd love to make even the lower-end figure - that's almost tripple my current pay.

JuhnDonn said...

Jester said... You wish you made 60-110K a year...

Yeah, while the lower number wouldn't quite double my income, it would come close. And this is after working in my field for 12 years. Sad thing is, I'm only making a $1.00/hour more than I did when I started tech support work, right out of the military. Talk about stagnant wages. Still, now that I'm married and wife is making almost as much as me (and two desks over), we're doing ok. Helps that we have paid for used cars, paid off credit cards and only debt is mortgage and school loans. Should have everything paid off just in time for daughter to hit college. And then there's taking care of Mom. Should be totally debt free sometime around 2068. Granted, I'll be 101 but hopefully, prolong treatments or head-in-a-jar therapy will let me retire around then.

Ilithi Dragon said...

Double-posting, but I have to say...

110,000 a year with a 60-hour work week? Unless you've got something like 12 kids or some outrageous medical bills or something, if you're making 110k a year with only 60 hours a week, you're pretty damn well off. Not necessarily rich and rolling in it, but pretty damn well off. My dad brought home some 60-70k a year, working 80+ hours a week, while raising 4 kids (and he's the Shop Manager at his work place, fairly high up on the totem pole). We all WISHED he brought home another 40k and could spend another 20 hours at home.

Anonymous said...

That lower figure is a bit below what I made as non-union truck driver working 65 hour weeks, untill I was laid off earlier this year.

It's not an astronomical figure for someone doing skilled and moderately dangerous work.

Tony Fisk said...

That's American dollars?

Yes please! (Of course, I don't know what the cost of living is in US)

(from someone who is about to get a lot of time on their hands... where's that Baen subscription password!?)

lurust: a syndrome arising from too much reading material in the toilet

B. Dewhirst said...

You're operating under the assumption that courts jail powerful, guilty men?

Get real.

How many people from Citibank are in the new administration again?

You're happy with an attorney general who didn't bat an eye over defending Chiquita for paying to have thousands of peasants shot to keep the price of bananas down, using his DoJ contacts to do so?

As for what UAW workers get paid... $3/hour more than a worker in Alabama working for Toyota.

The -executives- of GM etc, of course, make 10 times what their Japanese counterparts make.

Do some goddamn research.

Anonymous said...

It is time for labor and pensioners to accept the blatantly obvious, that their enforceable obligations make them the top creditors of Ford, GM and Chrysler.

Sadly, this is not the case.

In a bankruptcy proceeding, pensioners are considered unsecured creditors, and are pretty much near the end of the list when it comes to getting a piece of whatever assets the company has left.

If one of the Big 3 goes into bankruptcy, UAW loses, and loses big.

David Brin said...

Tony Yipes. Hope things work out.

Here's that Universe Magazine deal: Type in coupon code EE329517B2 - which is good for $5 off any subscription!

Remember, I accept feedback and nitpicks!

BD, you are strawmanning me. I despise the executives and their caste and ask from the UAW only that they take part of their current compensation as OWNERS. WTF is your problem. There is no better way to ensure the corrupt managers stop stealing than by eliminating their caste from GM altogether.

David Brin said...

Reminder: that I have an article comparing Net optimists to Net pessimists in today's online issue of Salon Magazine:

Also, catch me on "The Universe" Tuesday night on the History Channel.