Socialsm in the US Government?
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I think this is a disingenuous article for a few reasons.
Firstly, its important to define ownership in a broader sense than what is being used here. When you control something, you own it. The definition of property ownership is intrinsically linked to sole excercize of control of that property.
Socialism isn't limited to strict public ownership of resources. Socialism can be thought of as a form of statism where the state represents (allegedly) the people and any individuals or groups are suppressed or controlled if it is in the interest of the state (i.e. the people).
Consider something like CAFE regulations. Suppose I am a small auto manufacturer. I've got the factory, the engineers, the steel, and so on. I'd like to build a particular kind of car. CAFE laws, ostensibly put in place to serve the people, will tend to tell me that I can build this car but I cannot sell it for use on US roadways. It's my car, I made it, but I'm not allowed to sell it to you. Why? Because the government says I cannot.
The government doesn't "own" any of my assets, but in a very real sense they own part of my production. I can make a perfectly good car that you and 200 other people want but the government wont let me sell it and won't let you buy it.
Why are my basic freedoms regarding producing what i want to produce and selling it for a price i want to set and to a person who wants to buy it constrained? Ostensibly, for the good of society.
This is socialism.
I think of any action of government that suppresses the freedoms of the individual for the claimed benefit of the masses as socialism. The entire united states government was founded on one principle only: to protect individualism. We are NOT a democracy; we are a republic. And the laws of our republic are designed to protect individuals and minorities from the unchecked will of the majority.
So to the extent that Obama is increasing federal power, he is making the nation more statist. To the extent that he is doing this for what he'd call a public good, he is a socialist.
Whatever he wants to do with healthcare moves the health sector to a more socialist model. But the healthcare system in the US is already heavily socialist.
Most of the things that today look like the hallmarks of modern socialism originated in the US under the administration of FDR.
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I can't find many flaws, if any, in your statement thrash. I'd say that there are many different degrees of socialism much like the article points out (I skimmed it, didn't read it thoroughly)....and much of what we take for granted as everyday things are part of that program (Fire, Police, Highway Systems, etc...) Do you want that to be unsocialized? Maybe you do, but I don't.
To clarify my position on the previous thread about regulation and what I meant by it:
I think monopoly laws exist for a reason as do other laws that prohibit certain behaviors of business/commerce....I believe the intent is good on most of them, though often it becomes abusive. I never stated I wanted a well regulated business, just one that helps curb predatory practices and follows the laws of the land.
Speaking of laws, nearly any law you can find would/could be defined as a socialist practice. Example: Speed limits. My car has been proven to be able to travel at over double the speed limit, yet there are laws preventing me from traveling at that rate of speed. It seems to me that if my car is capable of high speed endeavors and the government prevents me from doing this by imposing an artificial limit on how fast they say I am allowed to travel that they are infringing on my rights.
Now, I don't think ANY of us want people flying through our neighborhoods at 120mph on their vehicles...especially those of us that have young kids playing outside, so I think that we have agreed just now that some regulations are necessary for the overall good.
Again, I'm not a huge fan of GM/Chrysler being majority owned by the US gov't/taxpayers, but I do understand why some think it is necessary for their survival. Just as there is a public backlash for Obama pumping money into them to keep them around long enough to file chapter 11, I think there would have been an even greater outcry (even from the right) that if we had just "let them fail" that there would have been a HUGE amount of jobs lost nationwide, and not just at the factories. My understanding is that had they filed chapter 7, the majority (if not all) of the dealerships would have had their inventories froze and had to lay off/fire their staffs....which would have lead to a huge amount of new people filing for unemployment benefits which would have also had an effect on the economy with virtually no chance of recouping the money given for such benefits.
There are about 3,298,330 total auto industry jobs in the US (according to usa today). Lets say that 1/5 of those would have been lost had GM/Chrysler filed chapter 7 and they had the average of $292/week in benefits ($1200/month approx) ...so ....
about 660,000 people at $1200/month each on average and you would see checks going out at the tune of 792,000,000 per month. The data I can find says the average person is unemployed for 17.5 weeks now...so lets just call that 4 months and you will see that we would have had an average payout of $3,168,000,000 with no chance of recouping said money.
Just throwing it out for fodder, feel free to take apart the comments as they were made hastily as I head out for supper with a friend.
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I think a misconception about bankruptcy is that all of that stuff just evaporates.
It doesn't. What happens is that the company's problems are dispensed with and the valuable assets are parceled out and restructured to the (partial) benefit people who paid in [i.e. bond holders and other investors... people who lent GM money and owned it]. But during the entire bankruptcy process it is typically business as usual. The company essentially gets restructured, and some stuff goes away, but it's not some massive work stoppage.
For all of the GM factories and jobs and dealerships and everything else to simply evaporate, you'd have to beleive that there was simply no value there. That's not true: there's value in the factories and the know how to run them, and somebody is willing to pay to keep them. It's the job of GM's current owners to figure out who those people are and how they're going to divy it all up.
The Obama move was a circumvention of bankruptcy court precisely because the normal bankruptcy proceedings would have killed some of the cancer that was eating GM -- the unrealistic UAW situation. The factories, many of the jobs, etc, would have survived largely unchanged and would have had entirely new managing and owning interests (which everyone wants).
What Obama's move says is that he knows more about running GM than the entire bankruptcy process and all of the private and institutional investors and experts involved. And that the political promises he made the UAW are more important than the concept of law and property rights. That's why the whole thing is so ugly.
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thrash;277712 wrote:
I think a misconception about bankruptcy is that all of that stuff just evaporates.It doesn't. What happens is that the company's problems are dispensed with and the valuable assets are parceled out and restructured to the (partial) benefit people who paid in [i.e. bond holders and other investors... people who lent GM money and owned it]. But during the entire bankruptcy process it is typically business as usual. The company essentially gets restructured, and some stuff goes away, but it's not some massive work stoppage.
For all of the GM factories and jobs and dealerships and everything else to simply evaporate, you'd have to beleive that there was simply no value there. That's not true: there's value in the factories and the know how to run them, and somebody is willing to pay to keep them. It's the job of GM's current owners to figure out who those people are and how they're going to divy it all up.
The Obama move was a circumvention of bankruptcy court precisely because the normal bankruptcy proceedings would have killed some of the cancer that was eating GM -- the unrealistic UAW situation. The factories, many of the jobs, etc, would have survived largely unchanged and would have had entirely new managing and owning interests (which everyone wants).
What Obama's move says is that he knows more about running GM than the entire bankruptcy process and all of the private and institutional investors and experts involved. And that the political promises he made the UAW are more important than the concept of law and property rights. That's why the whole thing is so ugly.
NAIL ON HEAD
If anyone else is starting to worry, I invite you to look at your big company to the east of you whom recently went through Bankruptcy and "restructure" and then borrowed more money then ever before....
Northwest Airlines.
Last time I checked, they are still operating business as usual.
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thrash;277712 wrote:
I think a misconception about bankruptcy is that all of that stuff just evaporates.It doesn't. What happens is that the company's problems are dispensed with and the valuable assets are parceled out and restructured to the (partial) benefit people who paid in [i.e. bond holders and other investors... people who lent GM money and owned it]. But during the entire bankruptcy process it is typically business as usual. The company essentially gets restructured, and some stuff goes away, but it's not some massive work stoppage.
For all of the GM factories and jobs and dealerships and everything else to simply evaporate, you'd have to beleive that there was simply no value there. That's not true: there's value in the factories and the know how to run them, and somebody is willing to pay to keep them. It's the job of GM's current owners to figure out who those people are and how they're going to divy it all up.
The Obama move was a circumvention of bankruptcy court precisely because the normal bankruptcy proceedings would have killed some of the cancer that was eating GM -- the unrealistic UAW situation. The factories, many of the jobs, etc, would have survived largely unchanged and would have had entirely new managing and owning interests (which everyone wants).
What Obama's move says is that he knows more about running GM than the entire bankruptcy process and all of the private and institutional investors and experts involved. And that the political promises he made the UAW are more important than the concept of law and property rights. That's why the whole thing is so ugly.
Chapter 7 vs Chapter 11 are two completely different animals. Chapter 7 filings (which from my understanding is where GM/Chrysler were heading) would have liquidated the company, and all of its contracts with vendors and dealers could have been completely voided...again, leaving a HUGE assortment unemployed/laid off until the assets were purchased by other companies...and then there is no guarantee that any of the existing employees would have had jobs. Chapter 11 is a restructuring process aimed at keeping the company operational while working to find a resolution to its creditors/investors. With either one, the bankruptcy judge can void/alter contracts and debt obligations, but (generally) with Chapter 11 the company comes out of bankruptcy and pays back the debt that the bankruptcy judge has determined they are liable for.
The question I have (and don't know the answer to) is did Obama's administration work the deal to make the UAW part owners or was this something that was negotiated prior to bankruptcy filings (which from what I understand is NOT uncommon to do). Listening to the UAW WORKERS you would think that Obama was far too conservative and not following through with his promises to help the union, whereas listening to the Conservatives you would think that he handed the UAW a company on a golden platter. I'm sure the answer is somewhere in between.
And to compare Northwest, they filed a Chapter 11 bankruptcy, not a 7...so comparing the two is hardly fair/accurate. Based on the info that I have heard w/o the gov't help, GM/Chrysler were going to be filing chapter 7. Whether or not they should have been allowed to just go under is a matter of public debate for sure, but (as Jim and I have pointed out) it is not w/o precedent for the US to loan money to an industry/organization in exchange for non-voting ownership in stock....again, whether that is right/wrong is always up for debate as well.
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Chapter 7 bankruptcy is sometimes also called liquidation bankruptcy. Firms experiencing this form of bankruptcy are past the stage of reorganization and must sell off any un-exempt assets to pay creditors. In chapter 7, the creditors collect their debts according to how they loaned out the money to the firm (also referred to as the "absolute priority"). A trustee is appointed, who ensures that any assets that are secured are sold and that the proceeds are paid to the specific creditors.
For example, secured debt would be loans issued by banks or institutions based upon the value of a specific asset. Whatever assets and residual cash remain after all secured creditors are paid are pooled together to be paid to any outstanding creditors with unsecured loans: e.g. bondholders and preferred shareholders.
Chapter 11 bankruptcy can also be called rehabilitation bankruptcy. It's much more involved than chapter 7 as it allows the firm the opportunity to reorganize its debt and to try to re-emerge as a healthy organization. What this means is that the firm will contact its creditors in an attempt to change the terms on loans such as the interest rate and dollar value of payments. Like its cousin, chapter 11 requires that a trustee be appointed; however, rather than selling off all assets to pay back creditors, the trustee supervises the assets of the debtor and allows business to continue. It's important to note that debt is not absolved in chapter 11: the restructuring only changes the terms of the debt, and the firm must continue to pay it back through future earnings.
If a company is successful in chapter 11, it will typically be expected to continue operating in an efficient manner with its newly structured debt. If it is not successful, then it will file for chapter 7 and liquidate. In both instances, common shareholders will most likely see little (if any) return on their investments.
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http://www.slate.com/id/2219607/
Interesting take on the new role the UAW will have in its ownership of GM/Chrysler.
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It all came from the Obama administration. And the actual owners of GM have been fighting this tooth and nail. Obama told them to take 10 cents on the dollar, while giving the UAW something like 40 cents on the dollar. Except the actual owners are legally first in line to get the lions share of the proceeds of whatever divestment or restructuring happens.
I'm aware of different types of bankruptcy. The point is that GM isn't going to evaporate, because there are real assets there. You'd only be concerned about people losing tons of jobs if you thought all those people were worthless at what they do. In which case, they SHOULD lose their jobs.
Think of all of those machinists and line workers and engineers and janitors and everyone else, lending all of their efforts to a company that can't compete. Once you free them to do something else [whether that's in a new, leaner GM, a carved off subsidiary, or something altogether different], there's a good chance that it will be a more effective use of their talents than what was happening before, and at a more sustainable level.
Bankruptcy is the process by which the US economy re-shuffles investment -- both in terms of external capital and internally employed labor -- away from failed ventures and into activities that are more likely to succeed. It's a critical part of the strength of the American economy. We re-shuffled the "Deck" all the time, on an ongoing basis. It's also why, unlike europe, some of the top 10 companies and gabillionaire families in our economy didn't exist 30 years ago.
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Last I heard 7 wasn't being considered by GM or Chrysler, it was just the big shouting point for all the "give them our tax money" types. People hear bankruptcy and, if they don't know any better, automatically assume a company who files for it = extinct. That doesn't happen and obviously wouldn't have happened for GM or Chrysler.
One big flaw on my skim of this thread was Chucks $1200 a month figures for line workers for the companies. Last I heard, with benefits, most of those UAW workers were earning $75+ an hour...MUCH higher than they are "worth" by most standards. They were earning more than many with PhD's and doing work that required probably 25 functioning brain cells to do.
Hopefully something good comes out of all of this but at the moment it's sort of a waiting game. IIRC didn't we give a certain car company lots of money back around the 80's...?
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Last I heard 7 wasn't being considered by GM or Chrysler, it was just the big shouting point for all the "give them our tax money" types. People hear bankruptcy and, if they don't know any better, automatically assume a company who files for it = extinct. That doesn't happen and obviously wouldn't have happened for GM or Chrysler.
One big flaw on my skim of this thread was Chucks $1200 a month figures for line workers for the companies. Last I heard, with benefits, most of those UAW workers were earning $75+ an hour...MUCH higher than they are "worth" by most standards. They were earning more than many with PhD's and doing work that required probably 25 functioning brain cells to do.
Hopefully something good comes out of all of this but at the moment it's sort of a waiting game. IIRC didn't we give a certain car company lots of money back around the 80's...?
Ignoring all this and commenting specifically on the threads title though. Is anyone honestly surprised that the Government seems far more socialist now that Obama is president? I mean truly surprised? His whole running platform was basically Robin Hood and "Ask what your government can do for you!"
The phrase "Ask not what your country can do for you, ask what you can do for your country" no longer exists under Obama. Pretty soon everyone is going to expect a helping hand from Uncle Sam when they hit rough times.
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D S ohM;277779 wrote:
So I just read Jim's post...then scrolled through the rest of the thread without reading it and I have figured out that this is probably one of the most boring looking threads I have seen in a long time. WINTER IS OVER PEOPLE! Holy balls.Politicals goes year round Ohm
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if you dont like our president vote next time
ive waited eight years to say that
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thrash;277768 wrote:
It all came from the Obama administration. And the actual owners of GM have been fighting this tooth and nail. Obama told them to take 10 cents on the dollar, while giving the UAW something like 40 cents on the dollar. Except the actual owners are legally first in line to get the lions share of the proceeds of whatever divestment or restructuring happens.I'm aware of different types of bankruptcy. The point is that GM isn't going to evaporate, because there are real assets there. You'd only be concerned about people losing tons of jobs if you thought all those people were worthless at what they do. In which case, they SHOULD lose their jobs.
Think of all of those machinists and line workers and engineers and janitors and everyone else, lending all of their efforts to a company that can't compete. Once you free them to do something else [whether that's in a new, leaner GM, a carved off subsidiary, or something altogether different], there's a good chance that it will be a more effective use of their talents than what was happening before, and at a more sustainable level.
Bankruptcy is the process by which the US economy re-shuffles investment -- both in terms of external capital and internally employed labor -- away from failed ventures and into activities that are more likely to succeed. It's a critical part of the strength of the American economy. We re-shuffled the "Deck" all the time, on an ongoing basis. It's also why, unlike europe, some of the top 10 companies and gabillionaire families in our economy didn't exist 30 years ago.
Ahh...but they DIDN'T take the $.10 on the dollar for the $27 billion which is why they now filed for Chapter 11 protection. AFAIK the UAW was given the stakes in the company as a concession (from both sides?) to modify their existing contract. Like the link I posted stated, that could be a double edge sword for the UAW. On one hand they might get a UAW friendly person on the board of directors because of it, however that person on the board might want to give the UAW a better deal, however they are probably going to have to make better decisions/compromises for both the employees that they represent AND the stocks/company that they have a legal obligation to ensure the well being of. It might actually work out good for all involved where everyone is trying to work toward the good of the company.
And Dustin, my understanding is that they were nearing filing Chapter 7 (whether that was a ploy to scare the gov't into investing in them....who knows?)
The UAW wages & benefits are ~$70/hour....the hourly paycheck is ~$28/hour (less if you are a new employee as they now have a 2 payscale workfloor...I want to say ~$14/hour) the pensions and other benefits add up to the rest of it....which is a LOT of cash for benefits, though I've never sat down and figured out my "hidden" paycheck at the past 2 jobs I've worked, at Simplex it was in the neighborhood of $30/hour extra in pension, 401k match, health/life/dental/vision insurance plus the use of a new automobile every 2 years.
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