Saturday, November 22, 2008

An under-discussed potential tragedy if Detroit fails

For some, thoughts of a massive financial bailout for the American Automobile industry strike chords of unease that some might say, reward the lack of innovation and enterprise that has been exhibited by some foreign auto manufacturing competitors. Futher, the auto industry, at least on the surface, has appeared to be in bed with 'big oil' by continuously producing oversized automobiles, ala SUV's and the like, cars that only encouraged a glutinous collective consumption of oil, as if that fossil fuel were pouring from spigots of plenty throughout the world. And, to top things off, executives flew in private jets to plea with leaders in Washington, furthering the epidemic of anger at what many see as a nation where greed and excess rule the day. And, its easy to understand why people subscribe to that image, thus, for vast swaths of America, it's become increasing hard to have sympathy for the legends of American industry and capital.

But there is another side that must be addressed with some sort of legislative mandate because if the auto world of Detroit is allowed to fail and sink behind the veil of protection that bankruptcy provides, the potential for great human tragedy becomes increasingly real for large groups of vulnerable Americans.

Last week, I entered had a conversation with a woman in Alabama, who's husband worked for many years in a union job at a public utility in that state. While she had misgivings about bailing a large industry like automakers, worrying that perhaps, it would lead to a rash of bailouts for other companies in trouble, or at least, calls for more, she also expressed deep worry about people in the same position she's in. She said, who's to say other companies might seek bankruptcy protection and legally do away with 'obligations' to its former employees.

Being the wife of a union retiree, she and her husband are able to survive in tough economic times thanks to a small pension and company healthcare benefits. This Alabama couple's drug costs would bankrupt many, and the struggle to pay bills, simply get by, is cushioned by the benefits negotiated and fought for years ago. Her husband and thousands of other's paid union dues, labor negotiations and more than a few days on picket lines which allowed them to earn a decent living and retire with a sense of security. While there's little chance a public utility will ever be in the same boat as automakers, there is still the fear among those people, those older union family Americans who thought contracts between the union and company was sacred and would always be there once they reached the golden years. The point is, in bankruptcy, the fear is that almost anything is possible, in this case, there is a chance that if the automakers of Detroit are allowed to fail, thousands, if not millions could see their pensions, health insurance and other benefits greatly diminished or simply go away because a judge or arbiter might rule the company can no longer afford to pay for them. That the company's survival is more important than the older people no longer producing product for profit.

It could be that this is the under-discussed potential tragedy of an auto-industry failure.

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