Here’s the data for 1981-2005
http://www.taxfoundation.org/research/show/22685.html

Michigan averaged $0.81 cents for every dollar it sent to Washington, about $200 billion over that period. Most of the net flow was to the south, southwest and the D.C. suburbs in Virginia and Maryland. The southwest got water projects and infrastructure, the south got defense bases and plants, and Virginia and Maryland got all those GS-11s and above who mostly sit on their asses working for the Federal government. Meanwhile they closed two Air Force bases here in Michigan and consolidated tank production, taking it out of Michigan.

Maryland averaged $1.25 in Federal spending for every $1.00 in taxes paid to Washington. Their net gain was only slightly smaller, $190 billion, than Michigan’s net loss. Mississippi is over a buck and a half. Just about all the southern and sunbelt states are over a dollar. Louisiana averaged $1.14 and now we’re spending $200-$300 billion rebuilding New Orleans.

I don’t begrudge the people of New Orleans. They experienced a natural disaster and need assistance, but the magnitude of the damage and suffering was mostly due to a lot of bad mistakes by people, starting with locating a city under sea level and proceeding to poor levee design & maintenance, inadequate emergency preparedness and response, incompetence on the part of Mayor Nagin (and a big chunk of his police force) and Gov. Blanco (remember those flooded parking lots full of school buses), slow action by FEMA and, no doubt, some level of corruption in the rebuilding process.

You can point to mistakes made by Detroit if you want, but they aren’t the only ones who have made bad decisions.

…I’m a Michigan resident, we’ve sent billions and billions more to Washington than it’s spent here, so they’ve already raided our wallets.

How does one find this information? I’m not being mean or anything, but I’d really like to know if this statement is factual; and the only way to do it is to find out the real numbers, in and out, yes?

On second thought, I think EVERY single state has sent more money to Washington than what came back. Why? Because government is by its very nature…inefficient; wasteful even!

About 15 years ago, the figure was that on average, each dollar sent to Washington would only result in 28 cents being passed on to the people in the form of program/benefit.

There’s little evidence to me that this has changed in the last decande and a half.

Ronnie Schreiber I want to help you. I want to come to your house and take $300 out of your wallet.

You must be a “progressive”, then. Besides, I’m a Michigan resident, we’ve sent billions and billions more to Washington than it’s spent here, so they’ve already raided our wallets.

Once again, I’m agnostic and ambivalent about any bailout. The editorial takes no stance either way, just lays out some possible negative implications for consumers if the Detroit 3 fold.

You see, it’s possible to look at both sides of an issue, whether or not one endorses one position or the other. Paper, plastic or reusable cotton grocery bags? Well, they all have their benefits and they all have some environmental impact.

I will spend it on what I believe is best for you. You will be soooo much better off. You will thank me for this in the long run.

Send me your home address.

But, assuming arguendo that Mr. Schrieber is correct, is there not a silver lining here, too? After all, higher prices on new cars = higher prices on used cars as well, right? And since most of us own a car now, at least some of the additional cost of new cars will be returned to us in the form of higher prices for our used cars when we sell them.

I just see the whole “higher prices” thing as ultimately coming out as a wash for most consumers.

Some of those magazines are from 1981-1982, and the stories are very interesting since – if you are old enough to remember/lived through it – 1981-1982 was a mini-depression (full blown depression in Michigan), gas prices had spiked recently shocking the industry, there were rumblings about keeping out the furrin (foreign) cars to “help Detroit”, and in fact there was a “gentlemen’s agreement” limiting the number of imports (mostly from Japan) which back-fired on Detroit – BADLY. Because Japan Inc simply started sending higher priced, larger cars to the US, limiting sales of smaller economy cars (thus making them more difficult to get/keeping their values new and used at higher levels), and then started manufacturing cars in America, too…

So interestingly enough, the more things change, the more they stay the same. Likewise the story lines in the 1990 magazines “Best Cars To Buy To Get Through The Gas Shocks” etc.

I also have to say that one of the car writers in the 1982 Road & Track “Annual” issue used the B-word re: Detroit inc. He opined that unless Detroit learned to build better cars (learning from both the Europeans and Japanese), they’d all end up bankrupt.

I’d say having the US brands go from some 75% of the US market to less than 50% in a couple of decades could be described as effectively going bankrupt.

Looking at the balance sheets of the Detroit 3, when available, I’d have to say they should be declaring actual Chapter 11 any time now, if they’re smart. Otherwise, it’ll be chapter 7, total closure.

So, a bailout will save the D3 so they can produce price competitive, content rich cars at the right price?

Okie dokie.

Some of the high end gear is designed here and produced in Taiwan (HK and Taiwan have plenty of audiophiles). I’m pretty sure that my DAC from MSB Technologies was produced that way.

One irony is that because of improved performance of ICs, a lot of the really cheap junk actually sounds pretty good. A friend and I have both used the same $16 Sylvania (I’ve seen the same model sold with a Craig brand) portable cd player as the source for our systems and agree that it sounds pretty decent. As good as my dvd player/DAC setup? No, but pretty damn good for less than $20.

I was always a Sam Telig best bang for the buck kind of guy. Too bad Stereophile decided politics was more important than music or I might still subscribe. It’s their right to politicize their magazine with snarky political comments in equipment reviews or publish album reviews of artists with a particular point of view that always happens to slant in one particular direction. It’s my right not to buy their magazine. If I want to read politics, I can read The New Republic or National Review. Besides, as expensive as Stereophile and TAS are, I’d rather buy music.

I remember my first big meeting as a financial analyst. We were going to be taking a company public, and yours truly would be one of three people assigned to market the company. It was an amazing thrill for a very naive 23 year old… for about five minutes.

That first meeting we had with management wasn’t about how to market the company’s equity to private placement firms or financial institutions.

It wasn’t about what new areas of business the company would expand into once a recent acquisition had been integrated with the firm’s activities.

It wasn’t even about the due diligence we would have to do, day and night, to make the company marketable.

Nope, not even close. The first meeting was about how to make money off the company’s employees. This was an aviation security company that quite literally did a mirror test to hire people. If they fogged the mirror, they got the job. No background check. No real training. No problem. In fact later on the company would be fined a million dollars by the Feds for billing the airlines and the government on fictitious employees at a Philadelphia airport.

Getting back to the meeting, the powers that be wanted to make the employees pay for the uniforms (most of whom earned $5 to $8 an hour and were NEVER given overtime), pay $10 for dry cleaning, charge $50 if they wanted the check that week instead of the regular two week cycle, and at least six or seven other items that were designed to separate the subservient from their money. I crunched the numbers and it projected to a $3 million profit. Just about equal to what the CEO was going to earn in options if the IPO was successful.

Would you believe that nearly half of these managers either worked for the big three at one time, or consulted for them at some point in their careers? Yep, these folks were true vets. I wouldn’t have trusted them with my dog.

The process not product crew. Six Sigma is all about individuals’ careers, not improving quality. The “black belts” can pretty much move to any company that uses Six Sigma. I feel the same way about SAP experts.

Big businesses do crazy things. When I was in IT at DuPont, the senior VP who theoretically in charge of IT was in charge of something like 8 different business functions in the company. There’s no way to do that without delegating most of the work to others. They did the work, she got the credit. DuPont, in the 1990s, had one of the best corporate IT departments in the world. Everything worked, and we had some very sharp technical IT folks who kept it all working well. Then she (her name escapes me) decided that we could save turn fixed costs into variable costs by contracting for support from CSC and Accenture and moving most of our IT personnel to those companies. On paper it saved a lot of money and she was the fair haired girl of the hour, but it didn’t improve the quality of IT support. To the contrary.

She once got an award from Working Mother magazine. Easy to be a working mother when you have a full time personal staff and a nanny at home. The secretaries and female bench techs and engineers were not pleased with her award.

I did not say prices of cars would not rise in the short run. However, I maintain that in the long run, the failure of GM et al will have no significant impact on technological progress and the development of the market. Those high prices will simply provide an even higher incentive to enter the market. Simply because we cannot see today how the market will look tomorrow does not tell us that we should provide an enormous subsidy in order to increase the chance of tomorrow resembling today. That is, after all, the very opposite of progress.

Hyundai was able to buy back customers with its warranty and establish a decent name for quality, in part because their cars were only crappy for a few years and didn’t sell the number of units the domestics did back when they were pissing people off with poor quality.

It’s sort of an axiom that unhappy customers will do more damage to your company than happy customers will benefit you. I think the data is that unhappy customers will tell 10 people about their experience with a product compared to happy customers sharing their experience with one or two people.

Because of the entrenched perceptions of American cars as crap, it almost doesn’t matter what the quality and value of the domestic product is today. If they make a very competitive car like the Malibu, someone will say, well let’s see how it is in five or ten years or point to a lesser car like the Aveo. Look at the Cobalt and how it gets slagged online for the sin of not being a Honda Civic. Is the Cobalt a great car? No, but it’s a decent car and an ok value that will satisfy most of the folks who buy one. Is it a horrid car? Well, it ain’t no Ford Aspire. Now that was a horrid little shitbox.

At this point, with 25-40% of US consumers, they simply won’t consider a US made product.

I think the idea was that the polyolefins market was “mature” and too much of a commodity thing. DuPont likes having a market all to itself. They got out of pigments, I believe, but retained their titanium dioxide business because of their dominance. I remember when the DEA busted a shipment of TiPure from South America. Some of the containers contained a pure white powder, but it wasn’t TiO2. Also, the agricultural angle may be due to DuPont’s heavy involvement in that industry, selling a lot of agricultural chemicals and owning (still, I think) Pioneer seeds.

I don’t think it was the fact of their monopoly that made Bell Labs what it was. They had a culture of innovation and rock solid reliability.

The loss of Bell Labs due to the breakup of AT&T was a national tragedy. Penzias & Wilson won a Nobel prize for their work there concerning background radiation from the Big Bang.

I mentioned DuPont cutting its budget for basic, as opposed to applied, research. We sometimes forget the great scientific contributions made by private sector researchers. Xerox’ PARC in Menlo Park is a great example.

Blame the MBA-ization of North American business. Together with the M.Ed education degree the MBA will be our downfall. Both superficially represent themselves as teaching learners “how to” instead of instilling the basic knowledge required to successfully navigate endeavors. K-12 math teachers who know no mathematics are commonplace. We are overrun with industry managers without vision, particularly of foreign competitors. Excepting a single year in the early 90s, GM has never had a CEO with engineering, design, research and development, or manufacturing experience. They have all been bean counters. GM is losing $1 billion a month with bankruptcy weeks away. It bean counted itself to death. Many domestic corporations are speeding toward the same dead-end.

The recent winners in commodity polymers have been the polyolefins players. Dupont got out of that business a long time ago (i.e. alathon). Instead they choose to spend considerable sums on “green” polymers (derived from agricultural feed stocks) which seem to have been unable to produce a profitable product line for them.

As to your larger point about the more players the better for innovation: history tells us this is generally true (with a few exceptions like AT&T Bell Labs, a monopoly that produced stunning innovations decade after decade for the better part of a century.)

The example of a 240 or 740 series Volvo as a durable car is a case of using an exceptional item to prove a point. Those are among the most durable cars ever manufactured. I loved my 760 Turbo, but it eventually dropped a valve at 225K.

Even Volvos, though, have their problems. 1980s vintage ‘bricks’ had engine bay wiring harnesses that self destructed, and faulty Bosch air motors in the fuel injection / emissions system. Also, if you cranked too long, the FI system would flood the crankcase with fuel.

As is the case with all of the other pro-bailout op-ed pieces I’ve read, this is based upon a flawed presumption: that a bailout would succeed.

The headline is the editor’s not mine. I took no stance, pro or con, on the bailout. As a free marketeer, I’m ambivalent about bailing out Detroit. I’m leaning towards Ch 11 reorganization, but I don’ think people will buy a car from a bankrupt manufacturer. A car is not an airplane ticket that will be used in a few days.

In any case, the article is not based on a presumption that a bailout will succeed. On the contrary, the premise is that a collapse of the domestics will have implications for consumers, some of them negative.

I was simply looking at the competitive implications of the domestics going out of business.

I may live near Detroit so I suppose that means I’m stupid, lazy and on crack, but I’m pretty sure that the law of supply and demand still holds and that the effect of competitive pressure or the reduction thereof on markets remains the same as it always has been.

I thought competition was good for the consumer. The introduction of foreign competition to the domestics has been good for US automotive consumers.

I realize that a lot of people are pissed off at the domestics. It’s an emotional issue. Just as those dependent on the domestics don’t want to see their own livelihoods disappear.

I suspect, however, that if the shoe were on the other foot, that Toyota and Honda were on the cusp of disaster, we’d be seeing comments about the domestics itching to raise prices.

NoneMoreBlack :
November 16th, 2008 at 12:49 pm

Even if these companies vanished completely tomorrow (which is not what happens under bankruptcy) I argue that the impact would be minimal. There is not some fixed amount of market activity which is preordained to take place in the auto market, and by removing GM/Ford/Chrysler the pie shrinks. The incentive to produce new cars and improved technology will remain, and other actors will step in to provide it.

Of course there is no fixed level of market activity, but Toyondissandai doesn’t have the capacity, near term, to meet the demand of today’s 10.6 million unit market, let alone 16 or 17 million. The pie doesn’t shrink, the remaining bakers may not have enough dough and apples to fill the pie pan, or bake another pie.

Technology will still be improved, as Toyondissandai compete with each other. What I said was that with fewer competitors, the pace of that improvement will slow.

Allowing the companies to fail does not cause the market as a whole to fail, and so long as the market remains, progress remains.

I worked for DuPont for a long time and in the 1990s they cut spending on basic research. The buzzphrase from on high in Wilmington was “process not product”. DuPont, famous for technological innovation, game changers, like Nylon & Teflon, hasn’t hit a home run since. Have others stepped in? Perhaps, but it still makes sense that the more competitors there are doing r&d, the greater likelihood of technological advance.

Ronnie Schreiber

Clearly Europe and Japan have been automotive innovators. No one wants to harm their industry or eliminate competition. Saving Detroit will not harm them.

When we talk about quality of product, Detroit is paying for past sins. I think the design, quality, reliability and value is there now.
On the other hand, I know a lady at work who just bought a battleship gray hybrid Camry for over $40K. What a gawd awful ugly car. It reminds me of GM and the Aztec.

Even the mighty can screw up.