Everyone Wants To Keep Their Cake

If you didn’t know, we’re in some pretty tough economic times.  Oh, you’ve heard?  Because, obviously, many people have not… or at least that’s the conclusion you could draw, if you’ve been following some of the big developments, lately.  Exhibit A:  The auto follies.  The headlines this week tell of how GM and Chrysler will now have to defend their decisions on dealership closings before the senate.

Because the federal government is slated to own most of General Motors and 8 percent of Chrysler, some of the senators said they have a responsibility, as major shareholders do, to review company decisions.

Oh, sure.  And “as major shareholders do,” I’m sure you’ll be considering what’s best for the company, rather than what’s going to help you look good for voters in your state. Hey folks, welcome to reality!  GM and Chrysler are bankrupt.  They are restructuring, under the direction of the courts and the federal government.  They were told to trim their product lines, eliminate brands, and ratchet down their operations, in order to achieve something like sustainability.  This has to happen.  If it doesn’t, GM and Chrysler die.  And then ALL of their dealers will be out of luck.

“Let me be very clear — I don’t believe that companies should be allowed to take taxpayer funds for a bailout and then leave local dealers and their customers to fend for themselves with no real notice and no real help. It’s just plain wrong,” [Sen. Rockefeller] said.

Just plain wrong?  The whole idea here is to try to save an American industry so that it can again become a job creator, and so that it can again support the businesses built up around it (parts suppliers, tool makers, dealerships, etc).  Is there to be no pain?  Should we be bailing out the auto dealerships, too?  Yeah, let’s send ‘em all a check for the money they would have made had GM and Chrysler not gone belly-up.  The Fed can print more money.  Who cares?

Exhibit B:  The (Once) Golden State.  California is on the brink of bankruptcy.  Years of free spending in fat times have finally caught up to the state, and now, if it is to have any hope of avoiding a financial collapse, meaningful cuts have got to be made.  But, surprise surprise, no one wants to be on the receiving end of those cuts.  The California state government worked out a plan that would have involved trimming the state contribution to home healthcare workers’ wages, and the SEIU (which represents those workers) rebelled, taking the case to Washington.  The Obama administration decided to use the stimulus money slated for California as a stick (another big surprise) to bully the state into undoing the wage cutbacks.  So, instead of a $2 per hour cut, the SEIU would prefer to have the state go bankrupt.  Another example comes with California’s decision to close ~220 state parks — people are rallying against it.  Sure, there’s a potentially legitimate argument to be made that shutting down the parks will impact economic activity to such an extent that the move defeats its own purpose.  But there are still plenty of reasons for tourists to visit the state — and something has to be cut.  If California cannot close it’s budget gap, destroys its credit rating, and cannot secure the funds it need to keep operating, more than just the state parks will be closing.

I hate to resort to generational generalizations, but it’s hard not to see that Americans have become incredibly spoiled.  We can’t all have everything we want, all the time.  We can’t always expect things to be the same as they are during the best of economic times.  The government can’t artificially support the fat living that we’ve grown accustomed to, when times are lean.  The economy and the financial system have to go through a necessary process to right themselves.  The process can be painful, but if it doesn’t happen, nothing gets fixed.  We simply cannot have our cake and eat it, too.

Because the federal government is slated to own most of General Motors and 8 percent of Chrysler, some of the senators said they have a responsibility, as major shareholders do, to review company decisions.