Public Opposes Auto Bailout
The public opposes bailing out the Big 3 automakers by a wide margin because they believe the companies are responsible for their own failure and doubt that their going bankrupt will hurt the economy, a new WaPo-ABC poll finds.
Overall, 55 percent of those polled oppose the latest plan that Chrysler, Ford and General Motors executives pitched to Congress last week, on par with public opposition to earlier, pricier efforts. But with 42 percent support, the new request for up to $14 billion in emergency loans has more backers than previous proposals to secure up to $34 billion in loan guarantees. But as with the earlier bids, those who strongly oppose the measure greatly outnumber those who are strongly supportive.
Opposition to the automaker bailout is fueled by the widespread perception that the companies themselves are responsible for their predicament, not the faltering economy. In the new poll, three-quarters of Americans said Detroit’s woes are mainly the fault of its own management decisions, and a sizable majority of those who blame the front office object to government help.
Nor have Detroit’s Big Three made significant progress persuading the public that bankruptcy proceedings would deepen the broader economic slowdown. Sixty percent said it would make no difference or would be good for the economy if one or more of the companies were forced to restructure under the protection of bankruptcy laws.
This is an example of public opinion polling at its most useless. What the public has here is attitudes, not opinions. The world’s best economists can only make educated guesses as to how a bailout — or the lack of one — will impact the economy; the general public — myself included — haven’t the foggiest clue.
Now, I happen to think the bailout is a bad idea. Then again, I thought all the bailouts were a bad idea. Whether I was right is unknowable. They clearly didn’t “work,” if the object was to stop the freefall of the stock market, boost consumer confidence, and get credit flowing again. But it’s entirely possible that things would be calamitously worse had we done, as I counseled, nothing.
The bottom line is that we’re making this up as we go along. The House approved the bailout and a majority in the Senate purportedly favored it but a strong minority stopped it using procedural rules. It looks like President Bush will circumvent that result by use of the giant slush fund created to bail out the financial sector. I’ve got a strong guess that Chrysler and GM will fail, anyway, but nobody really knows.
I wouldn’t say clueless. Every one of us has spent a lifetime considering, shopping for, buying, and experiencing their products. We’ve contrasted them with the alternatives.
The customer is not always right? 😉
On the bailout itself, I think we are all looking for the bright line between what “needs” saving and what does not. Unfortunately there isn’t that bright line. I lean toward Chapter 11 for the failing auto companies, but I think it might be a harder road for the economy than most expect.
But then that’s the whole question, when is the medicine worse than the disease.
Given the track record of economists, I’m not so sure their educated guesses are much more valuable than attitudes. And since the public are the one’s who will foot the bill, it kind of makes sense to take their “attitude” seriously.
I think for a lot of people the question is: why did the banks get a bailout and now possibly the auto industry, but not the average small business owner? There’s a definite feeling that the government is about welfare for the rich and letting the poor fend for themselves, and it shows up in the resentment you see in polls like this.
Not to mention a feeling that both democrats and republicans are more interested in helping out powerful friends than in helping the country as a whole. In terms of people’s belief in free enterprise, the bank bailout was a big mistake, which is going to have repercussions for a long time … the term “free enterprise” is becoming a source for jokes.
As I noted in my most recent post on the bailout, I think we should think very carefully about what, precisely, we’re bailing out and why.
I see no reason whatever to bail out GM and Chrysler top management or stockholders. Those who want to preserve jobs should think more quantitatively about it. How many jobs do they want to save? GM’s and Chrysler’s survival strategies are in part based on eliminating jobs and reducing output. Eliminating jobs in order to save jobs is like burning a village in order to save it.
There are more efficient ways to use $5 billion a month to keep people from falling into penury. We could eliminate the middle man for one thing.
Consider, too, that giving a handout to GM and Chrysler necessarily and unfairly puts companies that aren’t in as dire straits as those two at a disadvantage relative to where they would be if the handout hadn’t been awarded. Are we advocating giving handouts to every auto company that builds cars domestically or just two of them?
Useless?
I guess that to depend on what you want to use it FOR.
Attitudes, and not facts are what get used most often in the voting booth, for example. Primary example; the most recent election.
That depends on what you think the primary purpose of the car company is, Dave. You seem to be operating under the misconception that a company’s primary task is to create jobs. I’m sure the union will agree with your stand, there, but it’s not true.
Extra points for “penury.”
Absolutely untrue and I challenge you to support that from my comment. The purpose of a car company is, like that of any company, to maximize shareholder value. Management has failed at that utterly and, consequently, should already have been fired by the shareholders.
What I said was that those who want to give GM and Chrysler a bailout want to do so to save jobs (in management’s case, their own). Do I really need to substantiate that? That’s what every politician, columnist, blogger, and commenter I’ve seen who supports a bailout has said.
Where’s the poll question asking if the UAW is culpable in these failures and should make substantial concessions?
Absolutely. This bailout would basically punish Ford for not hating car buyers (rather than SUV/truck buyers) quite as much as GM and Chrysler did for not quite so long.
Steve, I think the word “culpable” is misplaced in this context and to understand why you need to consider fiduciary responsibility. As noted above corporate managers have a fiduciary responsibility to the stockholders; union leaders have a fiduciary responsibility to union members to get the best possible deal for them. Managers have, obviously, failed. Union leaders have succeeded.
I agree that in order for the companies to survive that concessions from the union will be necessary. That’s not the same thing as saying that the unions did anything wrong. All that happened is that management thought they could get by without being negotiators as tough as the union negotiators.
I say bail the big 3 out. I need more reasons to buy foreign.
Can we take as point one that yuor statement here mirrors what the Unions have been saying for generations?
While I agree with the sentiment, it’s not so clean cut as this. That relationship gets distored to the exact degree the unions are being supported by the government. A situation develops where there’s no way you’re going to get by without dealing with the unions on their terms. So what then is to be gained by the stockholders dismissing management?
Exactly so, Steve. Exactly. That’s the center of this whole thing. Absent that being dealt with first the rest of this is, as Jethro Tull would put it, ‘love in the sink’.
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(Sigh) More detachment from reality. You’re still stuck in the small car fantasy, are you?
Explain to us why the F150 is the best selling vehicle in the world.
In which case the bailout should not be done, since the purpose of a business is not to create or support jobs. The purpose of business is to provide return on investment. These businesses are not doing that and the bailout, in itself, will not make that happen. There is a very big question whether or not it will lead th that happening in the long run.
The purpose of an automaker is a) to build cars, or b) to provide jobs? Rhetorical question: if it was b they would be called “job makers” not “automakers.” Since nobody is buying their cars it makes absolutely no sense to spend money continuing their ability to produce them.
The money could, perhaps, be more effectively spent converting that capacity to producing items which people are buying which are no longer made in this country.
A is like B, therefore A is B. It’s fallacious.
Note that I oppose bailing out the car companies.
Steve; To your point about the UAW, observe:
(Emph is mine.)
Further:
In short, the way the press is dealing with this has a great deal to do with the reax we’re seeing in the polling data.
What Gallup doesn’t break out, here, is the number of union members represented in the poll. Gee, ya think that would change the results of the poll?
Not what I was questioning.
If you’re questioning the purpose of the bailout, and I think you’re quite correct in doing so, it seems to me critical that the purposes of what we’re bailing out be established FIRST, (As in what are the car companies for?) …so as to correctly determine what the bailout itself is for.
That you echo what the unions have to say on the matter seems to me to expose a major flaw in your thought process… the first indication of logic trouble.
All these bailouts are based on the same crazy crony-capitalism ideals that got us into this mess in the first place. It’s time to either try something really bold (like cut the crap out of taxes) — or allow market forces correct themselves (which could be painful – politicians can’t have that.)
Dave,
The auto industry has been an uneasy partnership between the owners (represented by management) and the labor (represented by the UAW). Each party had and has an interest in seeing the success of the company. Like the owner of the goose that laid the golden eggs the union should have understood that wanting too much too quickly could lead to problems. That’s the culpability that I see. I see your point as well. I would also argue we are not talking about the big three but rather the big four. Ford, GM, Chrysler, and the UAW. They are all in trouble.
We’ll be talking about the auto bailout at 5 PM New York time today on News Talk Online on Paltalk.com.
Please go to http://www.garybaumgarten.com and click on the Join The Show link to participate.
Thanks,
Gary