The Week's Econ Adventures
There's plenty enough to worry about, with the possible depth of this economic crisis, and the dubious credentials of some of those charged with ending it. But there are also plenty of doubts to dismiss, like whether the federal government ought to be acting.
Doesn't anybody here read the Constitution? Does "regulate commerce" ring a bell? (Hint: Article 1, Section 8.)
I'm hardly an expert on the financial system but this stuff the Obama administration proposed last week seems reasonable. Between the ideal and the possible may fall the shadow, but I don't think even the shadow knows what actually will work. I'll go with Barack, and apparently I'm not alone in that sentiment.
The auto company stuff is a little more within my comfort zone to talk about. There's been a lot of angst since President Obama announced that GM and Chrysler have a couple of months more to get it together, which also meant the head of GM had to go, and Chrysler is likely to have a new owner soon. (For those with short memories, heads have rolled before.) While some cooler heads approved the overall approach, there was a lot of emotion over Detroit and the car industry.
But what I noted was everything that President Obama did before he spoke on GM. He extended unemployment benefits, got seed money in the stim to retool industry for clean energy tech, supported unions, etc.
If GM shrinks and the U.S. auto industry contracts, it will have hard consequences. In a sense, I've seen it before, when Big Steel collapsed in Pittsburgh in the 70s and 80s. The city is half the population it was at its industrial height, and one reason that the Steelers have so many fans all over the country is the diaspora that followed the steel industry collapse. A lot of western PA relocated.
A lot of lives were changed, and some of those changes were truly tragic. Unions were really weakened then, and that was a big factor in stalling and shrinking the middle class all over the country.
But Obama is first of all trying to save GM, so the US has an auto industry, and above all, a manufacturing capacity. He is intent on creating new manufacturing possibilities making clean energy technology, including cars. Those auto plants and steel plants saved this country in World War II when they retooled for war. Now when they retool for clean technologies for the future, they can help save the world.
I believe Obama is also intent on making sure those jobs are union jobs.
This isn't a lot of comfort to people who may lose their jobs now, especially those who are not so young. Young people perhaps have figured out that jobs or businesses aren't as long-term as they used to be, in any field.
And there have been problems for Detroit for a long time. The demise of the steel industry was also a long time coming, or so some analysts said. One book on the subject was titled And Then the Wolf Finally Came.
Pittsburgh is a different city now, but it changed, and it is weathering this economy better than a lot of other cities. There is perhaps even a brighter future for manufacturing in America, even for a better car industry. Anybody got a better idea?
Update: Michael Moore sees the firing of the GM CEO a victory for the workers the company screwed over the years.
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