Stop Glamorizing the Detroit “Bailouts” and Tell the Whole Story

Jeff is absolutely right on this (read below). And two big things that the people talking about how wonderful the bailouts were for the auto industry neglect to mention- Ford played by the rules, got its house in order before things got really ugly, and wasn’t bailed out. They’ve benefited from government loans and such in the past, but they never got to the impending bankruptcy and beyond doom point that GM and Chrysler did that precipitated their bailouts. So Ford shouldn’t be included in any of these “why we should be glad we didn’t let Detroit go bankrupt” graphics, if anything it should be compared against them. Second, Chrysler’s bailout led to them being a partially German owned company to now being almost 60% owned by an Italian company. Although they’re still huge in the US, calling them an American auto company is like calling Toyota’s American operations an American car company. Arguable, but the head honchos and the biggest shareholders aren’t in the US. I’m thrilled that GM, Ford, and even Chrysler are making better cars and getting their financial houses back in order. I love cars and love seeing “our” companies finally competing in a serious way with the best foreign makes. But graphics like this and convenient over simplifications of what actually happened are a good example of what’s wrong in politics right now.

-M

jeffmiller:

think-progress: 

Why we should be glad we didn’t let Detroit go bankrupt(like Mitt Romney wanted).

Perhaps the average person thinks that declaring bankruptcy means that you go out of business.  But informed people know that this is wrong.  Bankruptcy can be a method by which a company sheds itself of costly liabilities in an effort to become healthy.  Almost all of the airlines have gone through bankruptcy, and by any measure, they are all better for it.

When Romney (and the rest of us) were suggesting that the auto industry declare bankruptcy, we were suggesting that the automobile industry use the same renegotiation procedures utilized by countless other companies that have returned to profitability.  In other words, we were suggesting that creditors (who chose to deal with the auto industry) take the hit instead of taxpayers (who did not choose to deal with the automobile industry).  We were suggesting bankruptcy as a way to save the industry, not kill it.

All of those sales, jobs, etc., in the graphic above—all of them might have been had if the auto companies had gone through bankruptcy.  And it’s not unreasonable to suggest that the industry might have been better off in the long run if they had gone through bankruptcy.  

Whoever made the graphic above probably knows that the average person thinks that declaring “bankruptcy” means going out of business.  They probably also know that this is wrong, but they still made the graphic anyway.  And the shame of this is that it teaches politicians the worst lesson possible … namely, to lie and pander, rather than talk openly and honestly about real solutions to real problems.

Question from reader: Why Shouldn't Higher Education be Provided by the Taxpayers?

Q:I can't help but notice that you didn't actually give a reason why higher education shouldn't be provided for in the same manner as high school level education, you simply stated that at this point it's not (which is true, but not germane to the point that an educated public is valuable enough to merit taxation to pay for higher education for all).

 jonathan-cunningham

Sure, I’ll try to address that a little better. The primary reason it shouldn’t be provided by society (taxpayers) in its current form is partially what I already described- the dramatic system changes it would require and the reduced access to most for a higher tax cost to everyone. Some would say, well expand it all the way and don’t reduce access to contain costs. That’s what’s happening in Medicare and Medicaid and we see how well that’s working for the national budget. There is also no economic argument for everyone in the society having a college education, as we do not need bachelor’s degree holders running assembly lines, cleaning offices, etc. but it is also a matter of pure fiscal responsibility. The biggest reason people go to college is to get a better job and make more money over their lifetime. Plain and simple. If you can afford to go for recreational purposes or pure interest purposes, more power to you, but there’s no justifiable reason the society should pay for you to learn about your fields of interest in a formal setting just because you want to, and I don’t know of anywhere in the world that is really done. Either access is greatly limited to only the best students who are then given that option, or much more career focused overall. Nowhere I can find pays for anyone who wants to go to college to go, which is basically what people have been suggesting on here the past couple days. That said, since the biggest reason people go to college is to get a better job, a college education is an investment. It is not a strict necessity to make a living, do well, etc. It’s required for some fields of course (and probably in several it doesn’t need to be), but society does not view it as a requirement to live a decent life, as we do a high school education. Since it is an investment, the student and their family should plan ahead financially, decide how much to invest, and make sure it will pay off. If it’s no longer a fiscally responsible investment for the individual to go to college, there’s no real reason the society should want to invest in it for you either knowing you aren’t willing to.

All people really want is to have the debt and risk of debt removed from them so they can attend college without worrying about these things, but that simply can’t happen in the US system where access is wide open and options are so varied. There’s also no logical reason that the government should take on the risk of investing in your education and future productivity if you’re not willing to do so. That’s where this capitalist vs. socialist/communist argument is going to keep coming up… If you want to have a better job, obtain a higher level of knowledge that will enhance your success in life, etc. then why shouldn’t you be willing to invest in it yourself and take on the risk? So you can no longer afford the ivy league school or private liberal arts school you wanted because they raised tuition? Go somewhere you can afford that still offers a solid education. You don’t ask the government to buy you a nicer house than you’re willing to buy with your own money, or can afford because the housing prices went up, do you? (Okay, some people basically did in the past, but we saw how that turned out haha!) I wouldn’t be taking on about $200,000 in student loan debt for medical school if it was an impossible investment, and I would never ask the government to do that for me either. If students are smart about where they go to school cost wise, the career fields they consider, and work as hard as possible to find ways to reduce the cost of their education, then they should be comfortable taking on the debt or financial responsibility for their own future.

Hope that helps give some insight into my viewpoint.

-M

Why Can't Education Be Free? Because It Isn't.

There’s a lot of Tumblr-noise going on today about the cost of education and whether or not it should be free. I’m not going to argue that the cost of higher education shouldn’t be lower, I think it is growing at an unsustainable rate driven by a variety of forces, but it should be pretty obvious to anyone with basic financial skills why higher education can’t, and in the US system shouldn’t, be free. 

To state the obvious (channeling a little tautology here): Things that cost money cost money. Almost nothing in life, other than perhaps air, is free to provide and as such it’s illogical to say it should be free to use. Things have to be paid for by someone, and the capitalist/US system has long said that people that enjoy the benefits of something should pay to enjoy those benefits. That’s the inherent fairness of capitalism and also its weakness from the socialist/communist viewpoints.

Education is expensive to provide, and getting more expensive. There are ways those costs could be limited and even come down, but people suggesting education should be free are suggesting the government, the same entity already running trillion dollar plus deficits, can somehow take over higher education and provide it at no additional cost to the taxpayers. If that were to happen, access will have to be more limited (the taxpayers/government aren’t going to be as willing to let people go to college just because they want to or study things that have no economic benefit to the society), options will have to be more homogeneous (after all, where’s the fairness in sending student X to a fancy liberal arts school and student Y to a second tier public school if their families paid similar taxes into the system?), and the result of the first two requirements will mean less campuses and fewer students overall. For examples of how “free”, or greatly reduced cost, systems work a look at Germany’s education system would be very enlightening: http://en.wikipedia.org/wiki/Education_in_Germany . Although Germany’s system seems to works well for them and in several ways is the direction the US is silently heading in (the formation of career academies, etc. to replace traditional high schools is an example of this), the access to higher education is much more limited there than it is here largely because the German system demands higher standards overall to get into colleges and their whole education system is far more career focused. The system in the US would have to be totally and completely overhauled for anything like that to work here, and whether you think that’s a good or bad thing, it’s very unlikely and I don’t believe for a second people would be willing to take on a substantial tax increase to support a government run system that may turn them away. 

Whether you’re willing to admit it or not, education as a whole is a business. It provides people with the knowledge and skills not to improve their overall level of enlightenment, but to make more money and contribute more productivity to society. As such, it is an investment on behalf of whoever (whether that be the student or the government) is paying for the education with the understanding that it will result in increased income/productivity from the student in the long run. The government and the states have decided that completion of a high school education is so valuable to the country and the states that it is worth having society pay for through taxes. It has decided that higher education, particularly to low-income students or students studying certain fields, is worth subsidizing. What it has not decided is that the current system, where anyone can go and study whatever they want, is worthy of paying for through taxes all together, and I don’t see why they should. 

As always, your input, comments, etc. are welcome.

-M

Original posts:

somepolitics:

brosephstalin:

giantsteps360:

This is a naive notion. Granted, I don’t like America’s ubiquitous military presence in the world. We spend far too much money on it and our overreach tends to bite us in the ass in the absolute worst ways (one need look no further than September 11, 2001). However, yes, it is very naive to think that we

1) Shouldn’t drop bombs on nations who are absolute aggressors and dangers to the public at large

2) That education should be free. 

Education shouldn’t be free, absolutely not. Not now, not ever, never ever ever should education be free. Never.

brosephstalin:

thalamtnafsee:

This is literally mind boggling: 

For the 2009–10 academic year, annual prices for undergraduate tuition, room, and board were estimated to be $12,804 at public institutions and $32,184 at private institutions.

Between 1999–2000 and 2009–10, prices for undergraduate tuition, room, and board at public institutions rose 37 percent, and prices at private institutions rose 25 percent, after adjustment for inflation.

[take a look at the chart here] 

In 2012, student debt because of loans will reach $1 Trillion, surpassing credit card debt as the largest group of debt. Private lenders (like Sallie Mae which holds the most loans, five times more than the second largest lender, Wells Fargo) are unregulated in their practices, resulting in things like charging fees to prove you’re unemployed and having abhorrent interest rates, even as high as 10% and beyond. 

The Student Labor Action Project and United States Student Association are beginning a campaign to help alleviate this one symptom in our failed education system. It is not the end-all of the education crisis, but it is a start, and an urgent one since student debt very well might be the next bubble to burst (one can’t discharge their student debt when declaring bankruptcy) 

Sign the petition here

Fight for not only no debt for students, but for a future with free education for all!

Define aggressive, since we are often the ones to shoot first, or our previous policies of imperialism make it so if we were in their situation, we’d probably want to attack us too. 

And I don’t see why it shouldn’t be free. It is not a business, it is an institution that betters the lives of anyone willing to put in the effort to study and put in the time to gain knowledge to make them a better person and so they can live a better life, it is not so companies can exploit people wanting to make their lives better.

God, giantsteps360 is really taking shit today.

With good reason.

Why shouldn’t education be free? Just answer that. Tell me your opinion. Please. I’m genuinely curious to know.

Source: desmonsters