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Superficial and Root Problems Involving the Big 3 Auto Companies

Nov 20, 2008

The Big 3 auto executives seem to have lost favor with the image-conscious Congress. After all, how could they feasibly give taxpayer money to bonus-rich executives who each come to Washington in private jets, while holding out their tin cans? That's enough to make a taxpayer's blood boil.

Unfortunately, the fate of thousands of hard working people are firmly tied to these same executives. If they get thrown out the window, the auto employees--who are also taxpayers, I might add--get dragged down with them. There is no way to avoid that problem.

The following article says that an auto worker makes $73/hour BEFORE all the deductions. Obviously he takes home a whole lot less than that.


Yet we are told also that their Japanese counterparts make 50% less money, and that this is a big reason for Detroit's lack of competitiveness. I'm sure that is a factor, and the executives fight back by sending jobs to lower-paid workers overseas. But when the production of cars are outsourced to Poopooland, paying wages of $1.00 an hour, the theory is that the Big 3 companies could make huge profits on auto sales in America. Result? Fewer American jobs, but higher wages for those who were able to stay employed. The wonders of free trade! Isn't that wonderful for the American economy?

Well, it would be good for stockholders in the Big 3, I suppose, as long as there are enough Americans who have the money (or credit) to buy those cars. But then all the other American companies have to outsource their production facilities to other countries to stay competitive. Gradually, we lose jobs to workers overseas who are more interested in saving money than in spending it to buy American products.

Soon Americans might find themselves short of cash to buy those cars. Then what? Well, they get lots of credit to make up for the shortage of cash. Soon they are up to their ears in debt. But no problem--we can create more money and inflate the housing market, so people can use their home equity to buy more of those imports.

But eventually, the bubble bursts, and we are left with a big dose of reality. The Big 3 auto companies go broke because they can't sell cars to people who are broke and who have reached the limits of their credit. So should those short-changed Americans be required to GIVE money to the Big 3 in order to retain what jobs yet remain in this country?

It's a complicated mess. The surface problem might be the relatively high wages for the auto workers, or it might be the obscene salaries and bonuses of the executives. The article above mentions the CEO of Goldman-Sachs who was paid a $70 million bonus last year, while this year the self-righteous bankers "just said no." He only got his normal $600,000 salary. Whoever heard of such a huge discrepancy between salary and bonus? Isn't a bonus supposed to be the gravy, rather than the meat and potatoes?

Auto workers have a right to be mad at their own executives--and many of them are. They fight back in the only way they know how--through the unions, demanding more of the financial pie before it goes into the bank accounts of the executives in obscene amounts. That may not be the best way to fight the problem, but it's hard to figure out another way to do it.

The 600 pound gorilla that everyone ignores is that it is the government itself that created the "free trade" policies which have allowed American companies to send the production work overseas and then ship it back to sell it to Americans. Once the first company does it, they gain a competitive edge over all their competitors and force everyone to do the same. Only a few jobs are left at home to keep a "presence" in America and make the company look American.

Our original Constitution--remember that old document, anyone?--set up provision for the federal government to gain most of its revenue from tariffs and excise taxes. That is how America was built in the first hundred years. Then the bankers took over the government and grabbed the power to create money. Next thing we know, we had an IRS, and the main source of federal income would be taxes on wages.

Finally, to cement this in place, they convinced us of the virtues of "free trade," in order to reduce or eliminate tariffs--the federal government's primary income-- shifting the tax burden to the American workers.

It is just a coincidence that the GATT treaty, based upon "free trade," was passed on Nov. 29, 1994 (in the Clinton administration)? and that GATT was passed precisely 12 months after the primary date of the Jubilee Prayer Campaign (Nov. 29, 1993)? If you recall what I wrote months ago, Washington was de-Foley-ated on that day, when Speaker of the House Tom Foley resigned after the GATT treaty was passed. It followed the pattern found in Daniel 4.

I'm saying that this shows one of the great underlying issues of the overthrow of Babylon today. It appears to me that the passage of GATT in 1994 was an initial sign of the overthrow of Babylon. The Babylonian "tree" was defoliated and then cut down with a "lower cut" (George Nethercutt, who defeated Tom Foley in thee 1994 election).

We are now seeing this "tree" hitting the ground 14 years later. So is the problem that the auto workers are making too much money? Or the executives? Or is there a deeper political problem where Congress passed an economic chicken-bill that is now coming home to roost?

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Category: Financial

Dr. Stephen Jones

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