http://www.thecuttingedgenews.com/in...ename=Analysis
My apologies if this has been posted before.


http://www.thecuttingedgenews.com/in...ename=Analysis
My apologies if this has been posted before.





good analysis ... especially in regard to ONE VIEWPOINT about a detroit automaker bailout. The neglected viewpoint, however, is that there are also 115000 US direct auto manufacturing jobs that will not be helped (and will arguably be hurt by increased taxes) by this Detroit / UAW bailout ... but while the other auto plants are in the US the ownership is Japanese or German or Korean. Also, there are just as many US subsuppliers to these foreign owned US auto plants as there are to 'big 3' plants. In other words, the US gov't is picking winners and losers again.




I'm against all the govt's corporate welfare, but even I have to admit that if other countries are bailing out their auto industry, it creates an unlevel playing field.





I'll agree to a degree that other countries do in fact subsidize their auto industries directly i.e. the Japanese Gov' providing billions of yen worth of tax abatements and incentives to allow Japanese industries to develop hybrid vehicles. But the flip side is that, in the absence of gov't subsidies (for both the producer and for the buyer), extremely few people would ever buy hybrid vehicles at a price that accurately reflected their cost of production ! Liberals can't have their cake and eat it too on this issue.
I'll also agree that foreign gov'ts do indeed subsidize ALL of their manufacturing / export industries ... benefitting foreign auto producers as well as foreign producers of appliances and any other manufactured product. THESE general gov't subsidies typically consist of ...
- gov't manipulation of the currency exchange rates between the producing nation and the consuming nation. For years the Japanese depressed the exchange rate of the Yen, creating a de-facto 20% pricing advantage for Japanese cars being sold in America. However, lately, Japan is 'losing its grip' on the currency markets, resulting in a 15% strengthening of the yen thus a 15% reduction in profitability for companies like Toyota (which is now losing money with every US car sale)
- gov't assumption of 'employee benefit costs' via a national health care system, a 'dole' for unemployed workers etc. These represent indirect labor costs which loom very large for US manufacturers, but which do not exist for foreign manufacturers. Well, technically, foreign manufacturers supposedly pay such costs indirectly in the form of corporate taxes - but this does not help US manufacturers since the US corporate tax rate is just as high or higher than that of foreign countries WITHOUT including these costs.




And we support our industries. Find the link I posted about ADM, the largest producer of ethanol in the US. Thanks to US subsidies on alternative fuel, 50% of their profits come from you and me (in the form of govt payout).
I am referring strictly to the bail out our auto industry wants NOW. I am against it, but but if Germany, Japan, etc. are bailing out their auto companies in this downturn, we can't let ours fail on this uneven playing field..





^^^ then what do you propose to provide a 'level playing field' for the 115000 US auto workers who don't work for the 'big three' ... i.e. BMW employees in South Carolina, Subaru employees in Indiana, Toyota employees in Ohio, Nissan employees in Texas etc. ???
furthermore what do you propose to provide a 'level playing field' for the American employees of the 'big three', versus the Canadian employees of the 'big three' (where the Canadian gov't / taxpayer is subsidizing employee benefit costs compared to their American counterparts) ?
This s#!t gets deep in a big hurry !
As to specific US subsidies ... i.e. ethanol, solar, wind, corn and a host of others ... I'm all too aware of their existance. Unfortunately, few other Americans seem to be. For example, right now the pre-tax wholesale price of gasoline is hovering right around $1.00 per gallon on the NYMEX. Even with gov't subsidies, the market price of US ethanol is still around $4 per gallon. So besides paying for ethanol subsidies via income taxes, and besides paying the stealth 5.6 cent per gallon ethanol tax at the pump, the 10% ethanol fuel additive mandate is singlehandedly responsible for increasing the blended gasoline wholesale cost from $1.00 to ( 90 cents for .9 gal gasoline + 40 cents for .1 gal ethanol) = $1.30. And that mandated 30 cent per gallon price premium due to US ethanol mandates / subsidies is directly passed down to the consumer price at the pump.




Well, this is where technicalities come into play. Any money Germany gives to Daimler, Audi, etc., and that Japan gives Honda, etc., is going to benefit operations in other countries. Likewise, any money we give the Big 3 is going to benefit their operations in other countries.
Any 'level playing field' is support of the companies themselves, not a country specific operation.
As an example, if we just took over GM's over leveraged debt, all their operations would benefit, here and abroad. (Just an example, not that I want that.)
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