Camaro speeds into Oshawa
they say. Wonderful news. It’s so great that GM is reviving its “iconic muscle car”. Good news for jobs for those in Michigan (parts) and Ontario (assembly). Great news for anyone who likes driving an “iconic muscle car”.
The Chairman of GM is smiling. Wouldn’t you be, if you’d persuaded the Canadians to part with nearly half a billion and Americans for hundreds of millions more? That’s one expensive car, baby.
GM executives, senior government officials and union leaders made the announcement at the No. 2 plant, where about 2,700 jobs are expected to be saved by the return of GM’s iconic muscle car.
GM said it will invest about $740-million to turn the plant into a more flexible operation.
The move came after the Canadian Auto Workers union agreed to 2,500 early retirements to reduce costs at the plant and win the job of making the new car. The plant had been scheduled to close in 2008.
So, reading between the lines, they’ll be job cuts of nearly 50%, and no new people hired. Great news I guess if you are an older worker, unionized. OK.
GM discontinued production of the car four years ago, putting 1,000 workers at a Ste-Therese, Que., plant out of work
Hmmm. St-Therese. Where did I hear that before? Oh that’s right. They received C$250m in government subsidies back in the late 80’s and early 1990’s to keep the plant open. (Sorry, no link, it was pre-internet. But I’m looking at dead-tree notes on the matter).
Looks like that was money well spent.
I’m glad this is just GM money being “invested” in the Oshawa plant this time. I mean… how dumb would it be for governments to make the same mistake, and pour in more millions, just to keep some jobs afloat for a few years?
Oh. Wait.
Last year, the federal government joined with Ontario to invest $435-million in the company’s Ontario auto plants.
What?
“invest”?
OK, look, when a company spends money to improve its own plants, that’s an investment. When a government takes money from you and me by the threat of force (that’s what taxation is), and gives it to a company without expecting goods and services in return… well I don’t know what the heck that is, but it sure as heck ain’t “investment”.
Stealing might better characterize it.
Let’s be clear, though. GM isn’t stealing. They’re doing nothing wrong, other than making crappy cars and bad business decision. It’s the government that’s at fault here. I don’t like what GM is doing, but greed is a sad part of the human makeup.
Why in the name of all that’s holy (and unholy) would governments be stupid enough to keep throwing good stolen money after bad stolen money when they know what the outcome will be?
They are subsidizing failure.
The decision to build a car that harkens back to GM’s heyday comes as the company struggles in a market beset by foreign competitors.
The company lost $3.2-billion (U.S.) in the second quarter alone, due mainly to employee buyouts and other restructuring costs.
I’ll repeat it. They are subsidizing failure.
And that which you subsidize, you get more of.
Here’s a handy little chart (source: 2005 Harbour Report, via CBC):
Average profit per North American-made vehicle (US$):
- Nissan: $1,603
- Toyota: $1,488
- Honda: $1,250
- Ford: $620
- DaimlerChrysler: $186
- General Motors: ($2,311)
In case you’re new to accounting, those brackets are the way financial people like to denote a negative. The red ink kind of hints at that too.
So. The taxpayers of Canada and Ontario are subsidizing gigantic failure and losses at General Motors in order to temporarily shore up a few thousand jobs.
Let’s say all 12,000 jobs in Oshawa are being ’saved’ by that subsidy of $435m. Applying a little seat-of-the-pants math, and we see that we’re paying $36,250 per job.
Cool. So, if you’re a young person, struggling to find work and pay off your student loans, you can be secure in the knowledge that you’re paying your share of 36 large to subsidize someone your parents’ age in an already 50% downsized environment to lose more money.
Awesome. And I thought gambling was bad.
Pierre-Joseph Proudhon, an early French anarchist, once famously asserted “La propriété, c’est le vol!” [Property is theft].
No.
More accurately, Taxation is theft.
And nothing proves it better than this asinine scheme to destructively redistribute wealth from students, the working poor, hardworking enterpreneurs, to aging and dwindling unionized employees, fat-cat GM management, and whoever’s still crazy enough to be holding GM stock.
This is your money they’re taking from you.
I chose the example of Canada because this is what popped up on my RSS news-feed today, and got my blood boiling over morning oatmeal.
But every North American government does it, and the Europeans make the North Americans look like pikers, in every sense of the word. Google “Airbus subsidies” for a laugh sometime. (Hint: if you live in the EU, don’t. You might get annoyed at where your tax dollars are going, unless you love socialism. In fairness, the US federal government has often offended as well, by giving military arms of civilian firms extremely friendly ‘deals’. More subtle, but equally objectionable).
Aus, NZ, and Asia are only partly OK on this. (NZ did end most of its subsidies; not so sure about Aus. And Asia? Two words: Structural mess.)
What’s the solution? Well, long-term, corporate subsidies have to stop. Pernicious ear-marks have to stop. Granted, easier said than done.
Now before you consider me a leftist-anti-corporate bleeding-heart, I also think income taxation of corporations should stop. Tax corporations on flow-through sales; tax their profits only when they are distributed to shareholders. Tax distributions that leave the country more highly than those that don’t but not much more highly. And have payroll taxes as you deem suitable to operate public services.
Have as few taxes as possible; make them as simple as possible to administer.
But end these corporate subsidies.
Stop subsidizing failure.
It’s great to see the Chairman of GM smile. But I’d like to see him smiling because his company actually started making good cars that people wanted to buy, and because GM started making a profit off of those cars.
