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President Obama's Bailout Plan Results in Job Losses at General Motors

April 23, 2009 - 3:08am
Jim Iannuzo by Jim Iannuzo


The White House touts their move towards "green" jobs as 1600 General Motors auto workers are fired.

The Obama Administration has failed to understand that markets not bureaucrats pick winners and losers.  Barack Obama should ask George Bush about ethanol subsidies before he spends $60 billion on "preferred" alternative energy sources.  In case you doubt their intentions, here is what Van Jones a member of the White House Council on Environmental Quality said about laid off workers, "You can think about a green-collar job as a blue-collar job that's been upgraded, or upskilled, to better respect the environment". He actually believes laid off auto workers should consider themselves lucky.

According to General Motors (GM) sources, many of the fired workers will come from plants located in the Midwest and Northeast, especially hard hit will be the Detroit area.  Government officials insist that the company reduce costs to qualify for more government aid. Tom Wilkinson a spokesman for GM said that these salaried employees will be provided assistance with resume writing and looking for a new job. They do not qualify for severance under the United Auto Workers (UAW) plan.

It is obvious that GM needs to reduce costs in order to compete but the current round of layoffs only affect salaried employees. The choices made at General Motors reflect too much government control due to strings attached to bailout funds. It is unlikely the Obama administration will force many union concessions. Especially as they relate to wage, pension and retiree health care benefits. Consider the fact that the government and unions may have a 75% equity stake in a restructured GM and Chrysler. This will result in a systemic drain on the U.S. Treasury as bits and pieces of these companies are put back into operation after the bankruptcy.

It is likely central planning rather than the market will drive new product introductions to reinforce the administration's "green agenda". This brings to mind the Zastava car plant which shut down its operation in November 2008.  Known for it's flagship Yugo GV model this auto maker could not compete due to poor quality and lack of consumer demand.  The car was the result of central government planning in the former communist Yugoslavia during the 1970's. The Zastava car plant will be bought and renovated by Fiat. Sound familiar?

Related Content:

Shame on you America, Freedom Comes With a Cost! - Jim Iannuzo
Government Doesn't Invest, They Waste - Nick Coons
GM Shows America that Bankruptcy is a New Beginning to the End - Jim Iannuzo

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