I must live in a different world. The world I live in involves working hard for what you earn. It involves having safety nets for those who need them. As a liberal-leaning Democrat, I still believe that people should be rewarded based on criteria that are open, accessible, and transparent.
When I heard that the CEO of Merrill Lynch asked for a $10 million bonus, despite the fact that it had been sold to Bank of America in an effort to prevent complete collapse, I nearly spit out my tea.
Now, bonuses are nice, and I believe anyone doing their job should get one. More often, in fact, than just once per year. However, to think that someone who has been at the helm of a company that was sold to another entity in this situation could presume that they somehow earned or were entitled to such an amount was, in my opinion, truly flabbergasting. According to some reports his rationale was that he saved investors money by selling out to Bank of America. After some resistance by the corporation, he finally withdrew his request for the bonus.
As I think about this situation, I begin to contemplate the auto industry as well. It seems to me that the lesson here is that one cannot expect money or compensation without producing something. The issue, as I understand it (and I am no expert here) is that the auto industry employs a good number of people. If they fail, then there will be many more out of work. But... I have to pose the question: What happens if they get bailed out without any conditions, and they simply fail 3-6 months later?
I suppose that many scenarios are possible. One is that this could happen, and then the inevitable is delayed. If, however, new programs are in place and new hiring is going on, then there may be a shift that keeps unemployment where it is at. The question is: Do the people in the auto industry have the skills necessary to compete in the marketplace, or will they require further training? The shift could be that those who are pursuing further education take new jobs, but that those who do not cannot qualify for these same jobs. I don't have the answer to this problem, but merely pose it as a possibility.
Other scenarios include an earlier collapse of the auto-makers, which may lead to the same set of issues. Of course, it could be that this "wake up call" will lead to restructuring in such a way to make the auto industry profitable and that a rebound will occur both in the auto industry and in the economy as a whole. In such a case, things would be back on track.
Would letting the industry crash result in a new, improved set of automakers in North America? Possibly, but who knows?
At any rate, many of us will be witnesses to these events as they unfold. Ultimately, whatever we do we must remember that the environment (including us, the customers) will select for the most advantageous companies. What goes into being an advantageous company in an economic recession is yet to be determined. Does it involve paring down the number of models one sells? Does it involve more market research into the preference for lower-priced, lower-gas-guzzling cars? Does it involve working with the workers and their unions to arrive at good labor practices and fair wages? It seems to me that ultimately the marketplace will make decisions - now, will the automakers be able to anticipate those decisions early enough to survive? That remains to be seen.
With all of this, it's time to get back to knitting for an hour or so. It will calm me in a time of change. Plus, I can knit and watch the news at the same time later on.
Why don't I knit sweaters that fit me?
5 years ago