Losing Taxpayer Money to Detroit: It's Auto-matic!!!

So Detroit is bleeding money... so much so that GM and Chrysler could be bankrupt in a matter of months if Government action isn't taken to keep them afloat until they can re-tool.

This is something that was probably written on the wall for a while now. Even while GM was at the top of its game (which actually wasn't all that long ago: 2003, to be exact), several groups were concerned about the implications of where the sales were coming from: namely, trucks and SUV's. When gas was cheap (before the price surge... and subsequent drop) SUV's were THE big-ticket item. Everybody wanted one... and everyone was buying one.

Fast-forward 5 years, and nobody is buying them because nobody has the money. That is an outcome brought about by two factors: 1) the economy as a whole, and 2) the lack of foresight of auto-executives, who put all their eggs in the one SUV/Truck basket. But the two factors are both at work, make no mistake. Factor # 2 would likely not be an issue if the economy as a whole were in better shape. Remember that.

Now, here we are, watching our legislators in Washington debate whether or not to float short-term loans to the "Big 3" auto-makers in an attempt to help them "re-tool" their business before they run out of cash.

We have two sides to this issue -- Those who say something along these lines: "Detroit has not changed with the times, and has not been competitive with foreign auto-makers. Their current predicament is their own fault. We should let them go bankrupt!"; and those who say something along these lines: "Detroit is such an integral part in our economy, that letting these companies fail would have devestating consequences for so many Americans that we HAVE to do something to ensure their survival."

Now, granted, those are probably grossly over-simplified versions of the arguments, but this is a blog... if you want to get the full picture, you can find it elsewhere!

This argument has so many different factors, I could spend all day talking about it... but I want to point out something which I think is important to note: Whether or not Washington gives the $15 billion, we the taxpayers will lose $15 billion. The difference is whether we lose it in the short-term or the long-term. In the short-term, we lose it in the form of a loan to the auto-industry. In he long-term we lose it in the form of lost tax revenue (through sales taxes, income taxes, etc.), unemployment insurance, food stamps, etc.

The difference also could be much worse for the long-term scenario...

Critics of the Big 3 like to point out that foreign-owned companies operating in the USA are doing just fine. America's "other" auto-industry is located in the South, and is largely non-union. These companies (like Kia, Honda, Toyota) are not having the troubles of the American auto-industry, and critics of the American industry point to the UAW and the costs of labor associated with the union's contract as being to blame for the difference.

This came to a head yesterday in the Senate, when Senate Republicans demanded that the UAW make steep wage cuts to bring them in-line with the foreign auto-makers located in the American south. At first glance, this line of reasoning by the Senate Republicans could make sense -- after all, if the problem truly IS the wage disparity between UAW workers and non-union workers, then bringing the cost of labor down for the Big 3 would clearly make them more competitive with the foreign auto-makers. Problem solved, right?

Not so fast. Remember what I said earlier -- GM was making their largest profits EVER just 5 years ago. The difference in wages has not dramatically changed since then... only our economic conditions as a whole. I posit that GM and the other US auto-makers would be doing just fine today if they had the foresight to produce more economically viable products for consumers like their foreign competitors.

This doesn't even touch on what would happen to the labor movement as a whole if UAW were to do what the Senate Republicans suggest. Here is a nice link from the Economic Policy Institute which talks about what exactly unions do for workers. Something which is easy to forget is that unions not only help the workers who are a part of the union, but also provide benefits for non-union workers -- because they set a standard for wages and compensation to which other employers have to respond.

IF the UAW were to agree to lower wage levels such as those of the foreign auto-makers, then it wouldn't be long before those foreign auto-makers would lower their starting wages considerably, as well. The dynamic between union and non-union would stay the same, but wages of all workers would drop.

This brings me to my question to you, and gets to a deeper philosophical outlook on confronting economic troubles. Is it more prudent to bring down wages in order to help business recover, or is it more prudent to ensure that workers are making a living wage and can afford to buy the things they need. After all -- if nobody has any money to spend, then they can't buy any products... and a vicious cycle ensues.

I am of the belief that it is DEMAND which drives the economy, not the other way around. When people have money in their pockets, they buy things. It's that simple. Lowering wages for all workers simply lowers their ability to buy products and services... which, in turn, lowers demand... and leads businesses to cut production (i.e. -- layoff workers.) This is NOT the way to go, and I am going to be squarely behind the UAW on this one.

A while back I wrote about the bailout of the financial services industry and my opposition to it. I am on the other side of the fence on this current issue, and find it perplexing that congress is so willing to hand over $700 Billion to banks and financial institutions, but balk at giving $14 billion to companies which actually employ hundreds of thousands of Americans and who actually build tangible products.

As John Stewart put it on The Daily Show: at least when Detroit loses money, we actually get a product out of it.

Energy Plans Running Dry- Problem or Deliverance?

So the word from the Los Angeles Times today comes down from San Pierre, Indiana, a town of 156 in the northwestern part of the state. Prior to the credit crunch and economic slowdown, San Pierre was due to be the site of an ethanol processing plant, promising jobs, income and opportunity to a town that is rapidly losing population to nearby cities. Instead, the credit crunch and wildly fluctuating commodities markets have left the plans dead in the water:

But last month, the developers of the San Pierre plant announced that the $62-million deal was dead. Banks involved in the project had cut off their lines of credit. Desperate calls to dozens of other financial institutions led to the same answer: No.

Already battered by other market forces, the ethanol industry has been hit hard by the banking world's credit crunch, and the seemingly bright future of corn-based biofuel has been cast in doubt.

In Pratt, Kan., the grinding mill machinery stands silent inside the Gateway Ethanol plant. It was open for less than six months before running out of money, and there were no bank loans available to keep it going. The firm recently filed for bankruptcy.

In Royal, Ill., developers abandoned efforts to build a plant there and in six other locations, citing an inability to get financing. Plants have been shuttered, or plans for new ones halted, in Mead, Neb.; Belle Fourche, S.D.; Blairstown, Iowa; and Melrose, Minn.

It's sad, no doubt about it. I never like to hear stories about dreams postponed or canceled, especially when opportunities for some of these communities are few and far between. But I have to ask this question- are these industrial outlets truly the kind of development that rural America needs?

For all the promise of being a green industry and an answer to the fuel crisis (although who worries about that now with prices so low?), let's call ethanol processing for what it is- extractive industry. It is dependent on processing raw materials into a more finished form by way of labor- and capital-intensive industrial processes. There are significant byproducts to this process, such as large amounts of emissions and regions turned into monocultures, as well as massive inputs such as fuel to operate harvesters and chemicals for fertilizer. What is the difference between that and any other extractive industry? Mining, logging, fishing? They all make use of raw materials in a low-skill, relatively low-wage job.

Ethanol production is more of the same. It is clear how many of these projects have turned out in America- witness the ghost towns that are shells of their former selves once the boom has gone bust, littered throughout the west, watching commodities prices to turn their resources profitable again. Much like other extractive industries, ethanol production also needs intense government intervention to turn a profit. So let's put to bed the notion that ethanol is some new, green-collar wonderland. It's what we call 'same sh*t, different day.'

I'm not keeping score, but that's quite a few strikes against this plan.

It just seems to me, from where I sit, that we are hitching our horse to the wrong wagon, both as a country and as individual towns. As towns, we must be able to find other ways to spur economic growth. Sure, this is easy to say; in times of trouble, you can't fault someone for jumping at an opportunity as it comes along. To tell the truth, I kind of feel like an ass for saying it. But if we are going to get serious about building our rural communities into self-sufficient ones that are players in a regional and global economy, we have to move past the outmoded models of development for decades past.

So I'm pulling for you, San Pierre, and everyone else that is hurting in this bust. It's going to be hard. But I also want to try, TRY, to see this as an opportunity to reimagine ourselves and our various locales, wherever you find yourself, loyal reader, to compete in the new century and new economy. We can't do that if we stick to the old models.

Do I have ideas, you ask? Sure. They aren't perfect, but what ideas are? If I were the government, I would invest in electronic communications infrastructure for a lot of places in the USA. From where I sit, a lot of these high tech workers would jump at the chance to live in a place like San Pierre, to live away from the madness and heat and crowding of the city high-tech hubs. They would be perfect locations for continuity of operations sites, if the connections could be built reliably enough. Imagine the jobs available both at these facilities, and the multiplier effects on the local economy.

That's my humble idea off the top of my head. If you have anything else... or want to call me out... well, fire away!

Our New Electoral Map

So, after our collective exhale, I think it is interesting to look a little deeper into some of the electoral trends we witnessed this last Tuesday.

I ran across this very cool map on NPR's website. What is does is this: It takes our map of the USA and turns it into a cartogram -- a representation of population rather than geographic size.

What is striking to me (but not surprising, being that we here at Mid-America Calling are all about bi-partisianship!) is the amount of purple you see.

We truly are a nation of people who want to see our country be all it can be... we may have differences of opinion on how to make it so, but as you can see from the map, our population is NOT divided by partisian bickering.

Let's hope our elected leaders take that cue, and get to work with a bi-partisian spirit.

OK, Collective Exhale...

A couple days late, sure, but isn't that symbolic in itself? It's been a pretty wild and wooly election, one of the most hardly fought in history, and to be perfectly honest I could not tear my eyes away from it in order to update this ole project. Sorry. But truth be told, not sure if we can compete with the big dogs, trying as we are to refrain from partisanship, which is kind of the order of the day.

That said:

It is truly a fantastic time to be an American. For a long time now, our mainstream media has been pummeling us with assumptions, that the result on Election Day would never have been possible with a divided, latently racist, lazy, disinterested and moronic electorate. We've been told that we'd never elect a black man. We've been told that he's scary, he's a mystery, that he has secret plans and secret friends and is definitely not a friend of us. Even his name became ambiguously threatening.

But like Fox News' Brit Hume said, all those accusations didn't add up to what we saw on the screen. Not by a longshot. And by a notable margin, we the people showed those that make a living telling us about ourselves that they really don't know a damn thing. People came together across ideological, racial and class divides to cast a vote in favor of a truly amorphous idea- change. What does it mean? There's as many answers to that as there are people. But with that vote, Americans nationwide put their foot down in favor of change, and in essence declared their great faith in themselves and their countrymen to come together. We demand it of our government, and each other, so that we all may prosper.

For all the subplots and deeper meanings, that's what this election meant to me. It meant an open opportunity to get to work. It means a president who is open and willing to hearing what everyone has to say, as opposed to one who seeks the approval of 50% plus one. If you have an idea, the president-elect wants to hear it. So bend his ear. Let him know. We are all in this together, now. It's all on us.

So I ask you all, let's get ready to roll up our sleeves. Don't retreat back into the living room, whether you knocked on doors for either candidate, in self-satisfied elation or bitterness. We need to get to work. There's a lot of things that need fixing in our beautiful land, and there is no time to lose. I, for one, am chomping at the bit to get down with it. Let's go.

National Gas Prices

I just stumbled across this tool for getting a comparison of gas prices between locations in the US. Hopefully not sounding like a shill, Gas Buddy has the linked "temperature map" so you can gauge how high the prices are in your area. The map is remarkably interactive, and you just might learn something that can save you some money. For instance, Kansas City has one of the lowest price/gallon costs in the nation- indeed, most the of Great Plains is uniformly cheap. In comparison, North Carolina and Georgia come in almost uniformly expensive, nearing the $4.00/gallon mark.

Here's hoping you find this a useful or interesting tool. I know I am. Let's see if I can make that move to KC, start saving some money.

Mid-American Musings, Vol. 1

OK, I've been MIA for quite some time, I know. Been out to Utah, Colorado, Kansas and Missouri since I last posted, killed a computer, bought a computer, was shoveled a heavier workload at the job, and finally got internet reconnected. Excuses excuses. Please accept this meager post, with the aims of stoking the fires and getting back to work. Thanks all.

I had a discussion with a friend last night about... truthfully, I don't remember what, but somehow the topic of whaling came up. He explained to me that he didn't care what happened to whales, because the issue didn't directly impact him, and what has a whale ever done for him anyways? I pointed out that the whaling industry was integral to building several industries and markets in its heyday, be it shipbuilding, foundries, undergarments or perfume, but that's neither here nor there. I was rather surprised at his flippant attitude in dismissing the issue because it wasn't a "direct impact" on his daily life. A direct impact? What is that, exactly?

I'm going to submit that everything impacts you. When our neighbors cannot pay their mortgages, does it not affect you? Does the prospect of abandoned homes, a gutted neighborhood and a hollowed-out community sound appealing? When graduation rates go down, the available pool of labor shrinks, and either the local economy shrinks with it or imports labor from elsewhere. What does this mean for your town? You can't just tighten up a cordon around your life and ignore things because they are not in-your-face issues. Problems, much like opportunities, are never contained in a little sphere, only touching those that deal with them directly. Think of them as gases, following the winds, wafting over everything they come across, leaving a residue or a smell to remember them by, be it poisonous or pleasing.

It's not a big deal for me if you are pro- or anti- something; we're all entitled to our opinions and our conceptions of the world we want to live in. The point of contention for me is taking up an issue based on how heavily it directly impacts you. Naturally, we will feel most passionate about issues that we deal with daily, much as we care much more for our family than the wellbeing of some stranger on the street. This is unavoidable, and if you weren't like this, I'd say you were a little off in the head. But here is the question- does it really not affect you? When you write off some pressing social issue, be it schools, public safety, healthcare, any of the non-sexy causes that are paid lip-service by politicians, are you really insulated from the impacts? What is the standard of 'impact?'

As much as we want to trumpet the ideal of total individuality, that someone else's problems are never our own, we cannot ignore what happens in our circles of family, friends and community. Generally speaking, we know problems when we see them, and know that we want to dispose of them. We need to have a hope for the world, and work towards achieving it, be it through doing our jobs, raising our families, voting, getting involved in the community, or volunteering. My conception of the world is an ideal, I'll be the first to tell you, but it is definitely worth working and fighting for. It's based on the idea that if you do wrong by my friend, my neighbor, my community, you do wrong by me, because we're all in this together. Everything is an impact. It all needs to be addressed.

What does your ideal world look like? Inquiring minds want to know, or to at least raise the question in your heads, for you to chew on. Have at it.

Censorship in America

Project Censored has recently published its list of the top 25 censored stories for 2009 (yeah, I don't know why they say 2009, but whatever...)

You can see the list here: http://www.projectcensored.org/top-stories/category/y-2009/