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Mar. 11, 2006 Ask most knowledgeable people what are the significant contributors to the downfall of the American auto industry and one of the answers will certainly be short-sighted management. For decades, the domestic manufacturers had complete control over the U.S. auto market--what they produced the public bought and loved. White collar workers did well; unions created more and more jobs and wielded increasing power and everyone took a turn at the trough. All was well with the world. New vehicle design ideas were often shot down by management inside the walls of the auto empires because nobody wanted to upset the apple cart. Why change the formula for what was working well? There was no reason to take unnecessary risks with untested design concepts---not on a large scale anyway. As a result, many domestic styles became humdrum and boring. When it came time to negotiate new labor agreements with the United Auto Workers, management repeatedly signed up for more expensive wages, benefits and work rules as opposed to risking a union strike, which would shut down the company and stop the gravy train. Surely, these highly educated and experienced captains of business knew the long-term impact of these agreements; yet few if any of them wanted to be the ones seen guilty of shutting it down. So deals which were harmful in the long term were more than adequate in the short term. Sign now and let tomorrow take care of itself. Competition, of course, reared its head in the form of Honda, Toyota and, to a lesser extent German manufacturers. The domestic makers found themselves under increasing competitive pressure--from styling, to quality to overall efficiency and they were simply not prepared for the challenge. The years of leaders making decisions purely for short-term benefit had taken its toll and the U.S. auto industry, which helped catapult this nation into the economic forefront of the world, has been struggling ever since. Today Ford and GM are shedding workers and cost by the thousands and are still in a market share tailspin. I believe they will pull out of this; however, there will be plenty of carnage before the dust settles. Unfortunately, I see quite eerie similarities in our modern day political leadership to those displayed by auto industry bosses throughout the decades. And I fear, unless something changes, we as a nation could be in for a similar fate. Increasingly, politicians are making decisions for reasons that are much different than the overall welfare of the country. Some may say this has always been the case, and that may be true to a degree. It is quite difficult to believe this myopic attitude has always been present at the level in which it is now displayed. For instance, the state of Michigan legislature recently approved an increase in the minimum wage from $5.15 to $6.95 per hour this year (a 35% increase) which would take place later this fall. Additional bump-ups would be mandated in 2007 and 2008 up to $7.40/hr. This means, in less than two years time, the required minimum wage in that state would increase about 44%. For those who are unaware, Michigan (thanks significantly to an ill-managed auto industry) is currently saddled with one of the worst unemployment rates in the nation--well over 7% at last measurement. Those who feel increases in minimum wages are great for the "working poor," should explain how increasing the cost to employers of low-paying jobs is going to improve the unemployment rate in a state which already does not provide enough jobs for its population. Nobody should hold their breath waiting for this explanation. Historical evidence, in fact, shows that there will actually be fewer jobs available at these pay levels once the required increases take effect. This is primarily because it is small businesses which tend to pay minimum wage--the mom and pop shops that so many left wingers love to protect from Wal-Mart. Yet, it is these businesses that can least afford an increase in their costs of 44%. These establishments will be forced to either cut back on the number of employees or cut their hours--or both. A small business employing just three minimum wage workers at 30 hours a week each will see its costs increase over $800 a month from the current level--and that is before the impact of the additional payroll taxes that will be due on their extra payroll. Many of these businesses simply cannot afford this and will cut back--bank on it. And, it is unfortunately, that the job losses from the minimum wage increases will come at the bottom of the pay scale. So there will indeed be fewer working poor because fewer of them will be working! So why did the Michigan legislature, led by Republicans no less, vote in such a usurious increase in mandatory wages, even at the potential expense of job security of low income wage earners, particularly in a state that is trying to find new jobs? It's short-sighted politics pure and simple. The Democrats in the state were, and are, pressing for a significant step up in minimum wage in this election year to score points for themselves and to attempt to save the Democrat governors job; she is also up for reelection. It's fact that talking minimum wage increases scores political points amongst a working-class population which does not understand Economics 101. So, the Democrats were doing what Democrats do--pander to the poor and working class, even when they know what they are supporting is not necessarily a good idea. Republicans feared that, if they fought against this issue too hard, once again they would come across looking like the heartless bad guys (a position the Democrats and willing media are all too willing to help enforce). Further, Republicans were afraid that if the issue were put on the November ballot (as threatened) it would result in more Democrat voters showing up at the polls and voting for other Democrat issues and candidates. The Republicans caved and the issue was passed. An example of bad law produced for entirely the wrong reasons--and, ironically, the working poor and the state of Michigan will ultimately suffer the results. The examples of political leadership making decisions for short-term gains at the expense of our long-term outlook does not begin and end with a minimum wage battle in one state. It's evident throughout the political process. The Dubai port deal is an example of Democrats seeing and seizing an opportunity to look tough on a national defense issue and embarrass the president in the process. Many of the Republicans in Congress were against this deal merely because they did not want to attach themselves to a president with falling approval ratings. (I'm not saying everyone who was against this deal had a hidden agenda; however, a plurality of the total certainly did.) The result? The U.S. may just have thrown out the baby with the bathwater and risked a relationship with a Mideast Ally. In retrospect, we look like bigots who rejected a legitimate offer based on the nationality of those involved. I doubt there are many of us who can clearly say the right decision was made in this case and that it was made for the right reasons. Similarly, in relation to the Iraq War, dissension is fine. However, there is no doubt that the best course of action for this nation is to have all leaders work together, to manage the war in the best manner possible to reduce casualties and help instill democracy in Iraq. Working together is what will bring our men and women home faster and this is what will help plant the seeds of lasting peace in that region. It certainly is a daunting task, one which requires that--even if leaders disagree--they at least need to be on the same page to succeed. Yet, since the going has gotten tougher in Iraq, all that is heard from too many in Washington, D.C. is one shot after another at the president. Has this country ever seen a period of time when there was such a directed effort to discredit and embarrass, at all cost, a sitting president--be it peacetime or time of war? I don't think so. And what is to be gained from all of the rhetoric? Power, plain and simply. The party that is currently out of power wants it back, that's the short-term objective. Whether or not the U.S. succeeds in the Iraq mission is secondary to that objective. So, even those who voted in favor of the war, now see a chance at personal gain from its potential failure. And, if that endeavor in Iraq does not succeed, rest assured in no way, shape or form will this nation be better off for it, regardless who happens to live in the White House. Unless we the people wake up and place more pressure on the leadership we put in office to use more foresight and abandon the short-term management outlook, this nation will go the way of the American auto industry. People who always walk with their heads down are bound to bump into something at some point. Leaders who are managing their own careers at the expense of this nation are putting us and our children all at risk. And shame on all of us for allowing that to happen. ------------ About the author: Ed Abraham is a concerned citizen living in flyover country, U.S.A., who happens to be truly disgusted by the loss of common sense in our society and is doing all he can to try to reinstall it. Email: eabra@myway.com Comment on this article here! ------------ All articles are EXCLUSIVE to Useless-Knowledge.com. Please link to this article rather than copying and pasting it onto your site (which would be unauthorized and illegal). |
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