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Wednesday, December 10, 2008

Boycott Alabama? New website encourages support for automaker bailout

The bailouts in the U.S. and around the world are disastrous. Not only are they going to, I predict, fail at stabilizing or otherwise helping the economy, they are also a dangerous precedent. The camel's nose is in the tent, and once it gets its nose in there, the rest of it will surely stumble in.

It's no surprise that the mortgage bailout has generated calls for a Big 3 automaker bailout (and is a journalist bailout coming as well? No, I'm not joking. The New York Times is in big trouble. And so are other newspapers and media outlets in the U.S. and Canada. If the state is going to dump a bunch of money on the mortgage industry, and on the automakers, why not dump it on journalists and truck drivers and butchers and candlestick makers and so on? Camel's nose...).

But the automakers are getting a lot more resistance than the mortgage giants (the vote on the bailout is today). And a few people in Detroit are incensed about it. Like Joe Babiasz, a 34-year employee of General Motors.

Babiasz has put together a Boycott Alabama Now website to encourage people to, uhm, boycott the state of Alabama. The website explains:

This site has been developed by a grassroots number of true Americans who have had enough with uninformed politicians who are not helping the domestic auto industry, in this case Senator Richard Shelby of Alabama. Members of our website hold no grudges against all of the hard working people who live in the wonderful state of Alabama. However, it is time to fight back for America and the only way to do it is with our wallets. Our objective is to demonstrate to the senator what happens when a part of America is not supported; therefore we are launching a nationwide boycott of Alabama. It is clear to most Americans that the Big Three must obtain loans in an effort to get through this economic mess (much of which was caused by our illustrious Mr. Shelby, Mr. Barney Frank and many others who failed to prevent the banking industry from going belly up). And to the great people of Alabama, please keep in mind; we didn’t start this mess, our government did.

Why the anger at Richard Shelby, U.S. senator from Alabama? Because Shelby is giving thought to a filibuster:

Passage of the plan, however, is less certain and Senator Richard Shelby has hinted at a filibuster.

"This is a bridge loan to nowhere," Senator Shelby, senior Republican on the banking committee, said on "Fox News Sunday." "This is a down payment on many billions to come."

Good for Shelby. Filibuster that thing. Too bad you didn't have the courage of your convictions back when you were staring at that earlier bailout. Maybe Shelby awoke to see the camel-sized implications. Maybe. But how can you not sympathize with Babiasz and the Boycott Alabama website, in light of the wall street bailout?

More from the website:

Our mission is to demonstrate Senator Shelby what the result will be by not supporting the state of Alabama and its industries, (true American industries, not foreign companies that assemble products in the U.S.). We are starting a nationwide boycott of Alabama that will include any travel into the state well as boycotting the purchase of anything produced in any way within the state.

The sad but necessary part of this initiative is that many innocent hard working people will be hurt. Just as many innocent hard working people in the Big Three, their suppliers and many other direct and indirect businesses will be hurt by Senator Shelby’s rhetoric and lack of understanding and support of the domestic auto industry.

Posted by P.M. Jaworski on December 10, 2008 in U.S. politics | Permalink


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Sweet Home Alabama!
Where the skies are so blue!
Sweet Home Alabama!
Lord, I'm coming home to you!

Alabama: the Michigan of the South.

They're just jealous that Alabama's auto industry is doing well while Michigan's is at risk because of the collapse of the Big Three.

Posted by: Zebulon Pike | 2008-12-10 1:16:05 PM

Case Study of Auto Assembly Plants

"As the U.S. automakers have downsized their domestic manufacturing operations over the past two decades, foreign car makers have been opening one U.S. assembly plant after another . And in nearly every case, the Asian and European companies have received financial assistance from state and local governments eager for industrial jobs.

The first foreign automaker to set up shop in the United States was Volkswagen, which opened a plant in Pennsylvania in 1978. That venture, which fell victim to labor unrest, ended in 1988. The real invasion began in the early 1980s, at a time when Japanese producers were winning a steadily increasing share of the U.S. car market. To allay concern about the rising tide of auto imports, the Japanese decided to open production facilities in the U.S. This move was made all the more urgent by efforts in Congress to pass legislation mandating domestic content for cars sold in the U.S. market.

Honda began assembling Accords in Ohio in 1982. Nissan, which started producing trucks at its Smyrna, Tennessee plant in 1983, expanded to automobiles two years later. Toyota got involved in both a joint venture with General Motors in California and an operation of its own in Kentucky. Mazda announced plans in 1984 to build an assembly plant in Michigan, and Mitsubishi said it would produce cars in Illinois in a joint venture with Chrysler called Diamond-Star.

By the time of the Mitsubishi project, governments were lavishing large sums on the facilities, known as transplants. Illinois, hoping that the Diamond-Star plant would create a slew of additional jobs as nearby supplier companies sprang up, provided a package worth $249 million, the biggest in Illinois history and then the biggest package ever given an auto assembly plant in the U.S.

Such assistance was offered, even though many observers pointed out that the Japanese firms, concerned more about import controls than state and local taxes, would certainly proceed with their plans even in the absence of subsidies. Authors Martin and Susan Tolchin noted in their book Buying Into America: "There was nothing secret about these strategies: The Japanese encouraged their companies to invest abroad as enlightened policy, designed to stave off protectionism and save jobs."

By the 1990s the threat of protectionism had passed, yet foreign automakers continued to expand operations in the United States. The reason now was to bolster their ever-rising U.S. market share and to take advantage of what had become relatively inexpensive U.S. labor. The latter motivation prompted companies to shift their focus from the Midwest to "right to work" states in the South. Nonetheless, state and local governments continued to offer up lucrative subsidy packages, including the following:

* In 1992 South Carolina ushered in the new wave of investment by foreign carmakers in the South by offering BMW a package that was ultimately worth an estimated $150 million. A decade later, the state put up an additional $80 million in infrastructure aid when BMW decided to expand its operations in the state.

* In 1993 officials in Alabama lured a Mercedes-Benz facility, the first foreign auto plant in the state, with a package worth $258 million.

* In 1999 Alabama put together a $158 million subsidy deal to land a $400 million, 1.7 million-square-foot Honda plant. In 2002 state and local officials provided an additional package worth $90 million, including $33 million in tax breaks over 20 years, when Honda decided to expand the facility.

* In 2000 officials in Mississippi lured a $950 million Nissan plant with a $295 million subsidy deal. While the plant was still under construction, the company announced an expansion of the project that also involved an increase in the subsidy package to $363 million.

* When South Korean carmakers Hyundai staged a competition for a $1 billion plant, various states put together bids, but it was Alabama that won the contest in 2002 with a package worth $252 million.

* Commentators much made of the fact that when Toyota chose San Antonio, Texas in 2003 as the location for an $800 million assembly plant, the company had not selected the site with the most generous subsidy package. In another example of the fact that subsidies are not the most important factor in investment decisions, Toyota highlighted criteria such as access to the large Texas market for the pickup trucks that would be built at the plant. This is not to say that Toyota passed up all government assistance. The company received a package valued at $133 million, including $47 million in tax phase-ins and waived fees.

By the late 1990s there were signs that the big giveaway to BMW by South Carolina was exacerbating a fiscal crisis in the state. While the carmaker and other companies were enjoying minimal levels of corporate taxation, the state's schools were falling into greater disrepair and educational achievement was worsening. Funds for other government services such as highway maintenance and public safety were also in short supply, leading to tax increases for families. "The foreign companies that come in here don't care that the schools are terrible," one philanthropist told a reporter. "They just want the cheap labor. And the incentives are so extraordinary."

It is only a matter of time before the other states that have given nine-figure subsidy packages to foreign carmakers also begin to wonder if they made the right decision for the long-term prosperity of their citizens. They may also realize that giveaways are ultimately work against future corporate investments. A sign of this came in 2005 when Toyota rejected several subsidy-laden deals from U.S. communities and instead decided to build its next assembly plant in Ontario. The decision was said to be made because of the higher quality of the workforce in Canada."

Posted by: DJ | 2008-12-10 1:29:41 PM

Lets just subsidize everything and call it what it is...socialism. (A disease which will kill its host 100% of the time.)
Why not? The myth, the illusion that we live in a free enterprise society is pretty much dead anyhow. So lets just make the jump straight to State Banking, State run Autotmobile Manufacturers, State run Airlines, State run Railways, State run farms and bakeries...
And voila! No more bail outs.

We don't, because that would be communist right?
So why don't we see the communist camel's nose when it pokes its head into the tent?
I'll tell you why(IMO)...its because people are so dependent on this artificial money system they'll abide by damn near anything to keep it from crashing...even communism. People will remain wilfully ignorant of what is happening until they can no longer ignore it. And that will be when the money inflates until it explodes...
And a whellbarrow full of it won't buy a loaf of bread.

If the Big 3 can't produce vehicles people prefer...let them go under. Artificially propping them up will fix nothing.

Posted by: JC | 2008-12-10 1:48:04 PM

JC: it's not solely about economics; politics matters too. Ontario's auto workers make up a huge voting block for all three parties. So long as each party depends on them, they will get their money. Would Alberta ever get a bailout? I doubt it.

Posted by: Zebulon Pike | 2008-12-10 2:15:53 PM

Again, it's not about socialism but about denying the freedom to discriminate through state coercion.

"Richard Syron sponsored the disastrous 1993 Boston Fed "study" claiming discrimination against minorities that served as justification for a whole series of steps to funnel more mortgage dollars to minorities. He was rewarded for this by being appointed head of Freddie Mac, where he received $38 million in compensation.

Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm, hurt borrowers and generate more risky loans throughout the industry."

Posted by: DJ | 2008-12-10 2:22:57 PM

PM to announce huge mad cow aid package

Last Updated: Saturday, March 20, 2004 | 8:38 PM ET
CBC News

Battered Canadian cattle farmers will get close to $1 billion in aid from the federal government, senior government sources said Saturday.

The sources said Prime Minister Paul Martin will announce the package Monday at a farm outside of Lethbridge, Alberta.

It will include more than $500 million in direct aid to farmers hurt by the mad cow crisis.

Posted by: DJ | 2008-12-10 2:29:39 PM

JC: it's not solely about economics; politics matters too. Ontario's auto workers make up a huge voting block for all three parties. So long as each party depends on them, they will get their money. Would Alberta ever get a bailout? I doubt it.

Posted by: Zebulon Pike | 10-Dec-08 2:15:53 PM

Agreed. There is a tremendous amount of politics involved. And the people who are the most "dependent" will be the ones who vote for the parties that bring them the bail outs.
Dependence on government is still a core problem.

"Richard Syron sponsored the disastrous 1993 Boston Fed "study" claiming discrimination against minorities that served as justification for a whole series of steps to funnel more mortgage dollars to minorities....

Posted by: DJ | 10-Dec-08 2:22:57 PM

Thus the "birdfeeder" effect. When birds no longer have to forage for themselves they become dependent on you to feed them. Miss a day of feed and they'll make an awful mess of your deck! :)
In fact they do even when you are feeding them...so get rid of the bird feeder.

Battered Canadian cattle farmers will get close to $1 billion in aid from the federal government, senior government sources said Saturday.

Posted by: DJ | 10-Dec-08 2:29:39 PM

So the process of bailouts is not exclusive to banks and manufacturers. And since we have the government telling ranchers where and how much product they can sell they are unable to make free (enterprise) choices. So, turn them into dependents as well.

Anyone else recognize a pattern here?

If it moves tax it, If it keeps moving regulate it, If it stops moving, subsidize it.

Ronald Reagan on how (wrongly) the government works.

Posted by: JC | 2008-12-10 2:50:52 PM

"Thus the "birdfeeder" effect."

The difference being that feeding or not feeding birds is a choice. Not lending to minorities because they are, disproportionately, higher credit risks is not a choice but discrimination and subject to gov't coercion.

Posted by: DJ | 2008-12-10 3:03:29 PM

Not lending to minorities because they are, disproportionately, higher credit risks
Posted by: DJ | 10-Dec-08 3:03:29 PM

Why are they higher credit risks? As far as I know we are all free to pursue education and careers that might improve our life styles with or without credit or government coercion. It comes back to the choices we make, not our skin color.
Unfortunately though I see your point. I just don't agree with rewarding poor choices whether based on ethnicity or a manufacturer with your hand in the governments pocket. The behaviour of the government is immoral either way.
If the system will reward poor choices by minorities, majorities, manufacturers or banks,
then the system is wrong at its core.

Posted by: JC | 2008-12-10 3:29:52 PM

"If the system will reward poor choices by minorities, majorities, manufacturers or banks,
then the system is wrong at its core."

It's not just about rewarding poor choices. It's about forcing/coercing poor choices. Lenders did not make choices by skin colour or based on the fact that minorities, for whatever reason, were disproportionately higher credit risks. It was the gov't that placed the emphasis on race. If more minorities are denied loans it must be because the lenders are racist. Thus to ferret out the endemic racism of lenders we will end discrimination and force the lenders to take bad risks. And then we will insure those bad risks through gov't agencies.

Posted by: DJ | 2008-12-10 4:17:03 PM

Posted by: DJ | 10-Dec-08 4:17:03 PM

Re: you're above post.
I understand the point your making and how the one thing leads to the next...

And fair enough, if the government actually coerced the banks and other lending institutions into putting bad policy in place to be more poltically correct and keep the government itself from looking racist...then the government itself should be punished. Because they have have no rabbit to pull out of a magic hat to fix what has been done in the name of political correctness.
They have in fact damaged us all.
(I'm glad you brought this up)
In the end, in order to "help" a few people do a little better, many many of us and the economy in general have been very badly damaged.
Case in point: Government intervention does not work. Never has, Never will...

This is not an attack or an argument DJ. And help me out if you feel I've missed the point. But I do think you've helped me make my argument.

Posted by: JC | 2008-12-10 4:28:27 PM

The point is, I suppose, that the action is more rent seeking than socialism.

"Rent seeking generally implies the extraction of uncompensated value from others without making any contribution to productivity, such as by gaining control of land and other pre-existing natural resources, or by imposing burdensome regulations or other government decisions that may affect consumers or businesses. While there may be few people in modern industrialized countries who do not gain something, directly or indirectly, through some form or another of rent seeking, rent seeking in the aggregate may impose substantial losses on society."

Posted by: DJ | 2008-12-10 4:47:08 PM

Thanks DJ

Posted by: JC | 2008-12-10 5:07:37 PM

Hwy Chrysler should not get any money


Posted by: Barrie | 2008-12-10 6:50:38 PM

We don't need Michigan in Alabama! Go Mr. Shelby.
We can always buy cars that are made here.. The American people are not made of money... I don't get any help and I live on a limited income. Have a great day....BT

Posted by: Beth Turnipseed | 2008-12-11 6:34:25 AM

Alabama is not doing well as far as it's auto industry. The person who made that comment does not have all the facts. Alabama has three major manufacturers: Hyundai, Honda, and Mercedes. All of these automakers are reporting record triple digit declines (upwards of 30+ %) this year (the same as Detroit). These companies are also reliant on US based suppliers that will collapse when the largest of their clients (the big three) fail. The ripple through will hit Alabama even harder becasue of the resentment that will be felt towards foreign automakers. Any industry expert will tell you that a balance between domestics and transplants is the best business environment for all concerne4d parties. Alabama's auto industry will bust if Detroits does the same way that the recession is now a global entity. Interdependence is a powerful things and far reaching.

Posted by: Mike | 2008-12-11 8:29:53 AM

Interdependence is a powerful thing and far reaching.

Posted by: Mike | 11-Dec-08 8:29:53 AM

Yes it is. Which is why it should be avoided.
Globalism would, by design, put all of us and our economy under one controlling umbrella.
The ramifications of which are horrifying.
(picture a cashless Global society)
Hopefully out of the ashes will come an independence of the economies of other nations.
It goes back to the idea that we as nations should be responsible for our own. Which is not meant to discourage the idea of trading freely.

Posted by: JC | 2008-12-11 9:33:09 AM

Alabama is not doing well as far as it's auto industry.
Posted by: Mike | 11-Dec-08 8:29:53 AM

Alabama is not doing well by any measure. The population is poor, obese and have bad teeth. The state license plate logo is "Stars Fell on Alabama". Too bad an asteroid didn't fall on the place and obliterate it so they could start over.

Posted by: The Stig | 2008-12-11 11:05:42 AM

The Stig,

You got to put it in context. Poverty, obesity and periodontal disease are all disproportionately African American. Greene County, one of the poorest in AL is 80% black, where as Shelby County one of the wealthiest is 80% white.

Posted by: DJ | 2008-12-11 1:45:32 PM

Please do boycott us in Alabama. But remember, the natural gas used by many of you in the north comes from OUR wells in the Gulf of Mexico. Every winter I have to pay a 10% surcharge on my gas bill because you in the socialist states of the north have to be kept from freezing but won't allow your own sources of energy to be tapped.

We don't care if you boycott us. You aren't welcome here anyway. You ignore our traffic laws on the way to Florida. The only money you spend here is in the way of traffic fines. If you do accidentally end up staying at our fine beaches because you failed to find a place in Florida, you trash them just like you do your cities.

Shelby is doing the right thing, Why should the taxpayers bail out an antiquated production system that has been bled to death by the unions and senior management of the big three? I feel sorry for the members of the unions but at the same time they don't seem to notice their senior officials never suffer during a strike and all make far more than any worker who is a member of the union.

Transplanted Yankee

Posted by: R Palmedo | 2008-12-11 4:39:16 PM

Please do boycott us in Alabama.
Posted by: R Palmedo | 11-Dec-08 4:39:16 PM


Posted by: The Stig | 2008-12-11 5:38:22 PM

I think Babiasz's boycott effort could backfire, here's why.


Posted by: Sam | 2008-12-11 9:05:21 PM

Dont worry Sen.Shelby, Sen Corker, & Sen. McConnell your names are embedded in are heads as the 3 fools who are trying to bust up the unions and will not be forgotten. Hey Shelby, we know the real reason Hyundai, Honda and Mercedes came to your state, its because you threw billions in state tax breaks to lure them. You tried this almost 30 years ago with Chrysler, and what happened? You pretend to speak for the USA, yet you are only watching out for your own political party. Youll never bust the unions up.. President Bush, do the right thing, and youll go out a Hero!!!

Posted by: Bobby | 2008-12-14 2:13:41 PM

What's the difference between Alabama and Ontario? Alabama will have an auto industry next year, Ontario won't.

Posted by: Zebulon Pike | 2008-12-14 3:31:19 PM

meanwhile gm is steady spending the bailout money in mexico. none of this taxpayer bailout for the 2 went into america..they are lying!!


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