Posted by
Andrews on Thursday, December 04, 2008 6:32:30 PM
I am tiring of yet another silly argument by the economically illiterate, sadly including a number of elected officials. And that is the spurious argument that the automakers don't deserve a bailout because "they flew there in private jets!"
First, do these geniuses think they bought the jets just to fly to the hearings? These jets have been owned for a long time, and, honestly, once they are owned,t eh cost of operating them is comparable to flying first class, and the requisite hotel stays caused by commercial flight. And, more important, a private jet ensures the executives will be on time, not having to worry about connecting flights, and possibly missing a hearing on billions of dollars just to save a thousand or two, if that. So, is it not a bit penny wise and pound foolish to force these executives to fly coach just for show? (Of course, now that the charges have been raised, I am sure they will be ostentatiously doing so.)
Even if we ignore that, let me raise a similar question. Back when I worked in social services, people would come to apply for welfare, driving a car. Should I have denied them welfare because they owned a car? Shouldn't they have sold the car to buy food rather than applying for food stamps? After all, they could walk or ride the bus. But if I asked that about the poor, I would have been called heartless, or they would allege I didn't understand. However, when I argue that executives may need the flexibility a private jet provides that they cannot get from commercial flight, yet no one is even willing to listen tot hat argument.
Of course, none of this should be taken to mean that I favor a bailout for the auto makers. They have many problems, some imposed upon them, some their own fault. But none of that means that we should give them any money. If we truly want to help, perhaps I could suggest a much bigger aid, one that would not only help the automakers but many other industries, as well as reducing unemployment in many states. That would be passing a nationwide right to work law, as well as disbanding the NLRB and declaring any contract negotiated under its aegis to be void in one year.
Such a move would put the auto industry on a fair footing, they would no longer be tied to outrageous union demands. Yes, they would still be saddled with some absurd pension payments, but that would be all, they could start looking forward to the benefits of a competitive labor market. And, better yet, by removing the unions form the equation, small automakers would have a chance breaking into the market, without having to face the massive UAW handicap which kept the big three as the virtual monopolists of the US auto industry.
Oddly, due to that last point, I have a feeling the automakers would actually fight my bailout plan.Thanks to union political clout, automakers know they will never face bankruptcy, and massive union costs ensure they will never face a domestic competitor. And should they ever come to fear foreign competition too much, they can rely on the unions once again to fight for trade barriers which would ensure them a captive market for undesirable, overpriced cars. In short, automakers benefit from the unions as much as the workers do. The only real losers are the consumers. And those who would compete with the big three. And people who would work int he auto industry but for union seniority rules, feather bedding, nepotism, corruption and closed shops.
But that is the topic for another essay. For now, let me just say, please do not complain about CEOs having private jets. Just as with
complaints about CEO compensation, the arguments simply display a remarkable lack of economic understanding or even rational thought about the question, and tell us nothing about the state of the industry, nor the quality of their management. The CEOs certainly did not buy the planes just for this meeting, and whatever the difference in cost between using that plane and flying commercial is well worth it, as imagine the cost if a CEO failed to appear on time for a hearing, or worse yet, missed important meetings while he waited for his connecting flight to get him home.I know it is fashionable to imagine CEOs are useless figure heads, but they actually do important things, their time is very valuable, and having them waiting in Houston for Contenintal to make their connecting flight really does cost their employer a lot more than it does to fuel up the corporate jet.