More on Auto Makers, Auto Workers, Execs

[dun]

Ivan and Boris again

By Thomas Sowell









http://www.JewishWorldReview.com | There is an old Russian fable, with different versions in other countries, about two poor peasants, Ivan and Boris. The only difference between them was that Boris had a goat and Ivan didn't. One day, Ivan came upon a strange-looking lamp and, when he rubbed it, a genie appeared. She told him that she could grant him just one wish, but it could be anything in the world.


Ivan said, "I want Boris' goat to die."


Variations on this story in other countries suggest that this tells us something about human beings, not just Russians.


It may tell us something painful about many Americans today, when so many people are preoccupied with the pay of corporate CEOs. It is not that the corporate CEOs' pay affects them so much. If every oil company executive in America agreed to work for nothing, that would not be enough to lower the price of a gallon of gasoline by a dime. If every General Motors executive agreed to work for nothing, that would not lower the price of a Cadillac or a Chevrolet by one percent.

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Too many people are like Ivan, who wanted Boris' goat to die.


It is not even that the average corporate CEO makes as much money as any number of professional athletes and entertainers. The average pay of a CEO of a corporation big enough to be included in the Standard & Poor's index is less than one-third of what Alex Rodriguez makes, about one-tenth of what Tiger Woods makes and less than one-thirtieth of what Oprah Winfrey makes.


But when has anyone ever accused athletes or entertainers of "greed"?


It is not the general public that singles out corporate CEOs for so much attention. Politicians and the media have focused on business leaders, and the public has been led along, like sheep.


The logic is simple: Demonize those whose place or power you plan to usurp.


Politicians who want the power to micro-manage business and the economy know that demonizing those who currently run businesses is the opening salvo in the battle to take over their roles.


There is no way that politicians can take over the roles of Alex Rodriguez, Tiger Woods or Oprah Winfrey. So they can make any amount of money they want and it doesn't matter politically.


Those who want more power have known for centuries that giving the people somebody to hate and fear is the key.


In 18th century France, promoting hatred of the aristocracy was the key to Robespierre's acquiring more dictatorial power than the aristocracy had ever had, and using that power to create a bigger bloodbath than anything under the old regime.


In the 20th century, it was both the czars and the capitalists in Russia who were made the targets of public hatred by the Communists on their road to power. That power created more havoc in the lives of more people than czars and capitalists ever had combined.


As in other countries and other times, today it is not just a question of which elites win out in a tug of war in America. It is the people at large who have the most at stake.


We have just seen one of the biggest free home demonstrations of what happens in an economy when politicians tell businesses what decisions to make.


For years, using the powers of the Community Reinvestment Act and other regulatory powers, along with threats of legal action if the loan approval rates varied from the population profile, politicians have pressured banks and other lending institutions into lending to people they would not lend to otherwise.


Yet, when all this blows up in our faces and the economy turns down, what is the answer? To have more economic decisions made by politicians, because they choose to say that "deregulation" is the cause of our problems.


Regardless of how much suffocating regulation may have been responsible for an economic debacle, politicians have learned that they can get away with it if they call it "deregulation."


No matter what happens, for politicians it is "heads I win and tails you lose." If we keep listening to the politicians and their media allies, we are all going to keep losing, big time. Keeping our attention focused on CEO pay— Boris' goat— is all part of this game. We are all goats if we fall for it.

 

[Ryder]

This post about Boris' goat is one of the best I have seen on these boards.

 

[Jim62]

But when has anyone ever accused athletes or entertainers of "greed"?

I think that this is a symptom of a very sick society. If people had to actually WORK for what they "earn", we probably wouldn't be throwing $billions around like it was popcorn. Unfortunately, people who actually work for a living seldom seem to get beyond the poverty level of income.

The financial crisis is good fodder for the radio and tv news programs, and it really does sound bad. But, as a whole, it really has no effect at all on Mr. Average Joe who is living in the real world, except for the crunch of higher prices as compared to a same income.

It may not make any difference in prices of goods if the executives worked for nothing, but I still fail to see how the executives running a company facing bankruptcy would be worth more than maybe 100 or 200 grand per year.

Greed is the name of the game in this modern world.

 

[CKC1586]

Personally, I think if CEO's are taking huge salaries from companies that are thriving more power to them. But the one's that are taking huge salaries and then asking the government to use our tax dollars to bail them out when their companies are failing because of their greed and mismanagement is truly disgusting.

 

[hurleyjd]

Good strticle on the wagews for auto workers.

http://news.yahoo.com/s/huffpost/200811 ... .Fr9ms0NUE

 

[HerefordSire]

Executive compensation may not be high depending upon how you look at it. If GM executives make $50,000,000 per year without stock options, which is rare for an executive, 20 years would accumulate to $1,000,000,000 not counting compound interest. The root of the issue is executive compensation. Also, the hidden comps falling under expenses do not help.

 

[KenB]

Good strticle on the wagews for auto workers.

http://news.yahoo.com/s/huffpost/200811 ... .Fr9ms0NUE

Very interesting. :tiphat:

 

[Caustic Burno]

Just yesterday a guy called a radio station I listen to. He said he has buddy working at the big 3 who sits and puts stickers on frames as they come down the line. He has been there around 15 years. He is making $80/hour doing this. This is NOT the burdened rate. I suspect the published ~$30/hour is the average for new hires to the old timers. He said due to the union the most senior get the jobs by just applying. If they don't know how they have to train him to do it.

Now this is hearsay as it was just a caller but back in the 80's I had a cousin working at one of the big 3 with an air gun running nuts on bumpers making $33/hour.

Do ya think maybe these guys aren't really worth all that? Heck they come down here a lot retired on pensions making more than I do working my normal job and the farm.

HOw much is anyone really worth? All depends on who you ask I guess.

Funny how mad everyone gets at a guy for doing what everyone on the board is trying to do. Provide the best living for their family. We gladly support the foreign worker and execs but are jealous of our neighbor.
Another thing Americans don't look at there are several economies in our on country there are huge differences in different regions of the country. In my area you are a doctor,lawyer or Indian chief making 50k a year, you would starve to death on that wage in the Houston area.

 

[backhoeboogie]

We gladly support the foreign worker and execs but are jealous of our neighbor.

Not this 'un. If I have to buy something made overseas, it pains me. Not as much pain as going to WallyWorld tho. My household does its very best to buy American made when possible.

 

[flaboy]

Funny how mad everyone gets at a guy for doing what everyone on the board is trying to do. Provide the best living for their family. We gladly support the foreign worker and execs but are jealous of our neighbor.
Another thing Americans don't look at there are several economies in our on country there are huge differences in different regions of the country. In my area you are a doctor,lawyer or Indian chief making 50k a year, you would starve to death on that wage in the Houston area.

Not really mad Caustic just wondering why we should even entertain bailing out these folks and the CEO's that have retirement benefits that run into the millions.

What about the $15/hour person who lost their jobs? Where is their bailout packages?

 

[john250]

Funny how mad everyone gets at a guy for doing what everyone on the board is trying to do. Provide the best living for their family. We gladly support the foreign worker and execs but are jealous of our neighbor.
Another thing Americans don't look at there are several economies in our on country there are huge differences in different regions of the country. In my area you are a doctor,lawyer or Indian chief making 50k a year, you would starve to death on that wage in the Houston area.

Not really mad Caustic just wondering why we should even entertain bailing out these folks and the CEO's that have retirement benefits that run into the millions.

What about the $15/hour person who lost their jobs? Where is their bailout packages?

The UAW has negotiated itself into this position, with the help of paid politicians, and it was bound to come to this. The way I see it, they had a good run and really improved the lot of their members. All I get out of it is higher prices for trucks and tractors. I want those workers to do well, but I want them to produce a price and quality competitive product--just like us cowfolk. If my costs are $150/cow higher than yours, like the Big 3 vs Toyota, you know who will stay in business. Unless those contracts are re-negotiated, no amount of government money will save the Big 3.
I don't see myself as envious. I don't want Boris' goat dead, to quote another post. But plain and simple the Government is going to tax (or inflate the currency) to pay for this, and it has no chance of working. It is pure and simple a transfer from non-UAW members to UAW members and bosses.

 

[Caustic Burno]

Funny how mad everyone gets at a guy for doing what everyone on the board is trying to do. Provide the best living for their family. We gladly support the foreign worker and execs but are jealous of our neighbor.
Another thing Americans don't look at there are several economies in our on country there are huge differences in different regions of the country. In my area you are a doctor,lawyer or Indian chief making 50k a year, you would starve to death on that wage in the Houston area.

Not really mad Caustic just wondering why we should even entertain bailing out these folks and the CEO's that have retirement benefits that run into the millions.

What about the $15/hour person who lost their jobs? Where is their bailout packages?

Because not bailing out our heavy industry carries consequenses we don't want to even consider.
There are certain industries that if they fail a lot more jobs will be lost than the assembly worker the infrastructure in the auto industry is huge. This is a downhill slide that has to be stopped or the depression in the 30's will look like a picnic, 80% of population was on the farm in 1930. Today they are in the city and burbs we can not afford to let these jobs fail in mass.
It still gets back to be jealous of our neighbor for doing better than "me" . To the guy making 15 bucks an hour is his fault the only person you have to blame is the one staring at you in the mirror. He is satisfied or he he would get a better education to get a better job or move to a better location for work. Little towns are little because they have little money. You stop where you become comfortable or satisfied and whine about the other guy.

 

[KenB]

Funny how mad everyone gets at a guy for doing what everyone on the board is trying to do. Provide the best living for their family. We gladly support the foreign worker and execs but are jealous of our neighbor.
Another thing Americans don't look at there are several economies in our on country there are huge differences in different regions of the country. In my area you are a doctor,lawyer or Indian chief making 50k a year, you would starve to death on that wage in the Houston area.

Not really mad Caustic just wondering why we should even entertain bailing out these folks and the CEO's that have retirement benefits that run into the millions.

What about the $15/hour person who lost their jobs? Where is their bailout packages?

The UAW has negotiated itself into this position, with the help of paid politicians, and it was bound to come to this. The way I see it, they had a good run and really improved the lot of their members. All I get out of it is higher prices for trucks and tractors. I want those workers to do well, but I want them to produce a price and quality competitive product--just like us cowfolk. If my costs are $150/cow higher than yours, like the Big 3 vs Toyota, you know who will stay in business. Unless those contracts are re-negotiated, no amount of government money will save the Big 3.
I don't see myself as envious. I don't want Boris' goat dead, to quote another post. But plain and simple the Government is going to tax (or inflate the currency) to pay for this, and it has no chance of working. It is pure and simple a transfer from non-UAW members to UAW members and bosses.

This is copied from the link that hurleyjd posted above.

Line workers in Toyota and Honda plants do not earn less. In 2007, the Center for Automotive Research in Ann Arbor, Mich. found that for the first time a non-union plant, Toyota's largest U.S. plant in Georgetown, Ky., paid better than plants with UAW contracts, averaging $30 per hour with bonuses, and estimates that wages at Toyota's other plants as well as at Honda and Nissan plants in the U.S. were comparable. The source of the difference in labor costs comes in the costs of benefits, especially "legacy costs." It is critical to recognize that the $72/hour figure does not just include benefits to the workers being paid, it includes benefits to retirees. GM, the largest private purchaser of healthcare in the U.S., spent $4.75 billion in 2007 on retirees' medical coverage. Those legacy costs -- including benefits for a lot of workers who went to work as teenagers and took 30-year retirement while they were still young -- is a primary reason that GM is $48 billion in debt. So the "cost" of an hour of labor for GM may be $72, but that does not mean that $72 is going to the worker performing the hour of work.


Toyota USA has fewer than 300 retirees; it will not see its first 30-year veteran workers start to retire until 2018. 25 years ago GM had 425,000 employees. Today it has fewer than 80,000 employees... and 500,000 retirees.
Now what? Is the solution simply for the unions to stop being so greedy, stop demanding luxury wages and health plans? We have already seen that the wages paid to unionized U.S. auto workers are not actually any higher than those paid to non-union workers, but that is only part of the story. The other part has to do with the steps UAW has taken to help out the companies in their last periods of crisis: 2005 and 2007. Bob Herbert (New York Times, November 29th) points out that in 2007 the UAW agreed to a contract that froze wages for existing workers for the four year life of the agreement and cut wages for new hires to $14 to $14.61. Herbert could have said a lot more about that contract. Under its terms new hires would also not receive traditional company pensions; instead they would be given access to a 401(k), face hither co-pays on their health care, and give up paid holidays and other benefits that had previously been negotiated in earlier contracts. Money that would have gone to cost of living adjustments; those increases would be diverted to help the company pay for rising health care costs for active workers. In other words, the workers accepted declining salaries in order to help pay for health care. Most importantly, the agreement provided for the union to take over employee health care through a privately managed trust fund to be called the Voluntary Employee Benefits Agreement (VEBA), starting with $29.9 billion in seed money from the company and to be transferred entirely to union control -- and responsibility -- in 2010.
In return, the union got what its members cared about most: continued benefits for current retirees, and job security. More than 3,000 temporary workers were given permanent jobs with traditional wages, and the company committed itself to a moratorium on outsourcing and plant closings. In other words, the UAW did what the U.S. government and GM management has thus far refused to do: insisted on long-term planning, emphasized security over short-term profitability, found a way to relieve an automaker of a significant portion of its health care costs, and demonstrated a willingness to make sacrifices for the sake of the overall enterprise

 

[flaboy]

Not really mad Caustic just wondering why we should even entertain bailing out these folks and the CEO's that have retirement benefits that run into the millions.

What about the $15/hour person who lost their jobs? Where is their bailout packages?

Because not bailing out our heavy industry carries consequenses we don't want to even consider.
There are certain industries that if they fail a lot more jobs will be lost than the assembly worker the infrastructure in the auto industry is huge. This is a downhill slide that has to be stopped or the depression in the 30's will look like a picnic, 80% of population was on the farm in 1930. Today they are in the city and burbs we can not afford to let these jobs fail in mass.
It still gets back to be jealous of our neighbor for doing better than "me" . To the guy making 15 bucks an hour is his fault the only person you have to blame is the one staring at you in the mirror. He is satisfied or he he would get a better education to get a better job or move to a better location for work. Little towns are little because they have little money. You stop where you become comfortable or satisfied and whine about the other guy.

Caustic, I am a bit slow being from the south and all so bear with me.

R U saying these autoworkers are highly educated and this is why they make so much money? Surely your don't think that. I know of two high school grads that retired from GM as assembly line workers at 45. They went to work right out of high school for GM.

Here are some of my thoughts.

No bail out.
Let the cards fall where they may.
Fix the problem by substaintially lowering the executives golden parachute retirement packages. Let then help.
Business is slow? Workers take a pay cut or work part time till things come around.
I don't want my tax money helping to bail them out.
Make cuts, get tough, fewer chiefs, lower paid workers. My business has done this when things get bad.
Lower salaries, lower or no golden parachute packages will inevitably lower the price of US made autos. This will in turn increase sales.

These guys have had it too good for too long IMHO. Time for them to streamline like my business has done many times and like I have had to do with the farm when things were down. Things are not always rosy and you do what ya have to do without asking mom and pop for help to bail ya out.

Me thinks $75/hr workers = $50,000 trucks.

 

[jcummins]

I know of two high school grads that retired from GM as assembly line workers at 45. They went to work right out of high school for GM.

GM will be paying them longer in retirement than they worked...plus the healthcare.

WHY...would I allow MY tax dollars to bailout a company AND workers AND retirees.....when GM's retirement is far better than what my retirment is right now. They made their bed...they got to lie in it. The same way I have to live with mine.

GM needs to lose the pension, go to 401K, IRA, etc. Our government needs to do the same.

 

[Jim62]

It really says something about this country when $4.75 billion sounds like pocket change, don't it?

Wonder why they don't do a 1/2 price sale on current inventories of vehicles? That should motivate some people to buy, and they's likely to still make a few bucks on them, rather than having them just sitting on the lots.

 

[backhoeboogie]

Wonder why they don't do a 1/2 price sale on current inventories of vehicles?

Some are already or almost.

One of the foreign car sales in Dallas is offering a buy one get one free.

I've considered buying a new truck (a real truck) and parking it until I need it. Prices are great except for folks trying to sell used items. New trucks are cheaper than used trucks being sold by individuals. Check CarMax prices. You can go buy a new cheaper than used at CarMax.

 

[1982vett]

When I can drive that $50k MSRP truck off the lot for about $16k I just might be interested. :tiphat:

 

[jcummins]

Me too....w/200,000 miles on the current one. But right now, being retired, I'm not sure I could even swing $16K.

 

[HerefordSire]

I have two paid off Lincoln Town cars. About 4 years ago, I parked @ work in the morning and didn't drive the rest of the day. Secretary called me about 4:00 PM and said car was on fire. I thought it was a prank, so I started walking to front door, then started running. Grabbed fire extinguisher out of one of the plant buildings hanging on a wall. Put fire out. About an hour later, a co-worker showed me on USA Today's (the national newspaper) web site, on the front page, where Ford products where catching on fire related to a faulty cruise control switch. I surfed the net and found many Ford products with the same thing happening. Wrote Ford a letter and they declined to pay replacement costs. Now read the following:

"November U.S. auto sales results were dismal. On year-over-year basis, sales plunged 41% at GM, 31% at Ford, 47% at Chrysler and 34% at Toyota (TM 62.00, +3.44)."

Moral to the story....If you want to stay in business, always, always, take care of your customers! Let me ask you a question.......how many Ford products do you think I will buy the rest of my life (I am 47 now) and how many people do you think I will tell, and how many people, I will tell, will not purchase a Ford product because I what I am telling here?

How do you spell Toyota?