Friday, December 12, 2008

Government - Just Print Money, Build Cars?

As a continuation of his assertion that a diversity of religions militated against the danger of one that might become a political party, James Madison wrote in Federalist #10 in November 1787: "A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project, will be less apt to pervade the whole body of the Union than a particular member of it; in the same proportion as such a malady is more likely to taint a particular county or district, than an entire State." Madison obviously could not have conceived of a whole nation raging for paper money and an abolition of debts, acting through the people's elected officials. One state? Yes. The nation? No, but that's what seems to be happening.

It is instructive that the Constitution forbids states from being operated beyond their means of taxpayer or other support, as in line with Madison's thinking, while at the same time the nation, driven by its elected officials into red ink, is intent upon printing money and allowing huge corporations to willy-nilly become debt-free at the same time those "little people" unable to make mortgage payments are introduced to the street, many if not most of them at the behest of the banking systems bailed out by the government. The unfairness of this is palpable, especially since that same government (Congress) made it possible for this very thing to happen, first by establishing institutions such as Fannie Mae and Freddie Mac, then encouraging them to award mortgages to people who couldn't afford them, and then completely ignoring its responsibility of oversight. This is disgusting. Madison must be spinning.

As if the current state of affairs is not bad enough, the current Congressional clamor led by the democrats is that the Congress must also bail out automobile companies (okay, American automobile companies), notwithstanding that they choose not to insist on conditions that will allow those companies a chance to compete on a level playing-field with foreign-owned companies, the only way they can repay any government loan. By extension, of course, this can mean any company. Strangely, however, the lawmakers sat idly by while practically all manufacturing entities other than the car industry farmed out their production to foreign countries – everything from shoes to wearing apparel to electronic gadgets and on and on over the last decades.

A tragic figure in this mess is Senate Minority Leader Mitch McConnell, in whose Kentucky is located not only the huge Toyota plant in Georgetown, as well as American Toyota headquarters in northern Kentucky, the huge Ford truck-plant in Louisville, and many small privately-owned suppliers to these plants and others. He understands the problem associated with a unionized GM worker realizing a total package of $69.00 ($29.78 in salary) per hour while his un-unionized counterpart at Toyota receives $48.00 ($30.00 in salary), as reported by the Associated Press. The GM worker makes 44% more than the Toyota worker. A differential this huge is intolerable if General Motors is to operate competitively. McConnell, in an act of actual statesmanship, has taken the high road, demanding that the auto companies and UAW get their acts together. This could be costly politically, so he can be thankful that he's just been reelected. The wonder is, however, that American companies have been able to do as well as they have.

This country needs desperately to recapture its manufacturing base. In order to do this, both workers and management will be required to scale back. In this regard, it should be noted that many if not most auto- workers are paid nearly their working-wage while they are laid off. In other industries, such as the railroads, this is not the case, this fact known in this corner personally. The unreal bonuses and golden parachutes must become a thing of the past. The clothing and electronic industries need to come home. Toyota has proven that companies who do well by their workers do not have to be unionized and thus be constricted by often intolerable labor contracts. Unionized workers need to bring their hierarchies under control, since union honchos are no different from those in management – out to drain the "little people" for every possible dollar.

This is a turning point in the nation's existence. The incoming administration is heavily socialist-oriented and can seize this recession as the tool for getting its way, especially as coupled with a democrat-controlled Congress. Incoming president Obama's chief of staff, Rahm Emanuel, recently said this: "You never want a serious crisis to go to waste." That's not even subtle. The government is already into banking. Democrats are clamoring for a "car czar," meaning government control of the auto industry. The citizens will wind up "eating cake" if wise heads do not prevail and if statesmanship is not allowed to trump petty partisan politics and flawed governance determined to make the state and not the individual the be-all and end-all of everything.

And so it goes.

Jim Clark

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