READERS WRITE: Auto Industry

Bailout would ultimately harm consumers

The AJC reported that President Bush and President-elect Obama say the economy would suffer a body blow from the loss of jobs if the auto industry collapses (“Auto talks halt over wage cuts,” Page 1, Dec. 12). In truth, the economy has been suffering damaging jabs for years as the automakers have had negative profits. The costs of land, labor and capital used to make cars are determined by the value of other things that those same resources could have produced.

Revenues from car sales, on the other hand, measure the value of the cars. So when costs are greater than revenues, the value of other things forgone when cars are produced is greater than the value of the cars —- a net loss to the economy as measured by the value of total production. To date, shareholders have been absorbing this loss of value, as they should in a market economy. If automaker losses are subsidized to protect jobs, the total output of the economy will continue to be below its potential and consumers will suffer.

WILLIAM O. SHROPSHIRE

Shropshire is professor emeritus of economics at Oglethorpe University.

Column right on about correct question

Before retirement, I spent my management consulting career predominantly helping senior executives change their large, intransigent organizations to succeed in a changed environment. I can only cheer David M. Herold’s points on the perils of the auto bailout (“Congress poses wrong question to the Big 3,” @issue, Dec. 11). As Herold so well put it, the hard part is not figuring out what to do. The hard part is getting an organization frozen in a time warp to actually do it.

The problem is that the caretakers rarely perceive the internal nature of the problem; they truly think they are doing great. True success comes when the leader possesses a combination of steely-eyed inquisitor and visionary leader, and can quickly align the organization with his vision. Herold is right on: It’s not a matter of whether to save these companies, it’s a matter of which ones are willing to really do what it will take to succeed.

JAMES FIELDS

Marietta

GOP doesn’t honor middle-class interests

We got what we voted for —- two wealthy Republican senators, neither of whom has empathy for the middle class. They argue that middle-class Americans in the auto industry should take drastic wage cuts while the wealthiest Americans (including themselves) should keep the huge Bush tax cuts.

Our two senators collect taxpayer-funded salaries, health care and retirement and are immune from the economic hardship facing millions of Americans. The American auto worker actually makes a product. Wall Street produces imaginary wealth based on unregulated speculation. Wall Street got $700 billion.

When will the middle class realize the Republican Party’s only interest in them is their vote once every two years?

DANIEL TAGARIELLO

Atlanta

Big 3 failure could make them stronger

Obama says that “we cannot simply stand by and watch this industry collapse.” Funny, that is precisely what Congress did for my industry, the airlines, in the earlier part of this decade. We too employ and generate millions of jobs. Those of us in airline labor, like our automaker brethren, bid our services out of the marketplace, couldn’t compete, collapsed, went through bankruptcy and came out stronger and able to compete effectively, all without costing the taxpayers a dime in public dole support. Nearly all of our former CEOs are gone, replaced with better leadership without inflated compensation. The airline industry collapse was but a blip on the national economic radar.

Let the auto industry fail —- it will survive the transition, come out stronger and more competitive, and, a few years down the road, will again employ numbers similar to today as they produce quality products at competitive prices under newer, effective leadership.

BRIAN WILSON

Atlanta