My feelings on bailing out the auto companies . . .
. . . expressed humorously by this "ad".
(Via Felix Salmon at Portfolio.com.)
For further discussion of the bailout, see this short video of Daniel Ikenson of Cato (link via Chris Moody), and this commentary by James Sherk of Heritage, who claims that the widely-cited $73/hour figure for labor costs does not include legacy medical and retirement benefits.
It should have used a picture of a Pontiac Aztek.
Posted by: Finance Lawyer | December 10, 2008 at 11:33 AM
I completely fail to follow Sherk's argument.
Sherk claims that they account for current cost of future benefits in the current wage data.
If that is true there would be nothing due currently to retired workers,or legacy costs.
What the auto makers did was game the system to not fully fund future benefits and shifted the difference into reported profits. By definition that is what legacy payments are.
The Big Three say they are not doing that currently and Shrek interprets that to mean that the legacy cost do not exist.
Shrek analysis look like a good example of someone playing with words to generate misleading numbers.
I do not deny that pay and benefits for the Big Three are very high.
But I am also very much in favor of honest analysis.
If conservatives believe the market is so great, and I agree,why do they consistently have to generate dishonest analysis to support their positions.
This si something I never understand. If I had to consistently use dishonest analysis to support my beliefs I would grow to question my conclusions. But that does not seem to bother conservatives. Why?
Posted by: spencer | December 10, 2008 at 11:39 AM
Spencer, Sherk is simply following the SEC filings and applying GAAP to the data. Accrual accounting, not cash basis.
And there is a difference between an income statement and a balance sheet (which is where you find the liabilities for retirees' benefits).
He makes a very good case that premium wages--overtime and night and week-end shifts--paid days off, PLUS gold plated health benefits can get the Big 3 to the BIG $70+. Contrary to the UAW spin that Dave Leonhardt is regurgitating in the NY Times today.
Posted by: Patrick R. Sullivan | December 10, 2008 at 04:57 PM
Ironic that Ford should be included in that ad, since we're the only ones who weren't asking for cash as part of the failed bill. Our statement here: http://media.ford.com/article_display.cfm?article_id=29549
Scott Monty
Global Digital Communications
Ford Motor Company
http://thefordstory.com
Posted by: Scott Monty | December 14, 2008 at 11:47 AM