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Comment by yummyfajitas | Hacker News Reader

Person A, a waitress at Dennys, making about $8-10/hour with high deductible health care.

Person B, an auto worker at GM, making $30-40/hour with zero deductible health care.

[edit: see response to this post, auto worker gets $73/hour.]

The bailout: tax person A in order to help person B, with 3 large corporations taking a cut of the proceeds. Does this make any sense?

Incidentally, the original poster did not describe union workers as either lazy or overpaid.

[edit: forgot to mention, it's actually very likely that the waitress does not pay taxes at all. So more realistically, the waitress should be replaced by someone in the $20/hour neighborhood.]

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Actually the average UAW salary is around $73 an hour. But the executives are far worse and totally undeserving of any taxpayer help:

"While Uncle Sam debates a $25 billion rescue for the country's automakers, some 9,000 GM managers continue to enjoy one of the industry's best perks - a new car every six months for $250 a month, with repairs and insurance included. And they can write off gas on their expenses."

http://www.nypost.com/seven/11182008/news/politics/gm_honcho...

Can you site that $73/hour wage? A cursory glance around the internet indicated something around $30/hr as of last year. The only places I saw $73 were other forums, but maybe they all have a common, legit source.

I believe that $73/hour number includes all executive pay and obviously is an average chosen to misrepresent information. The average assembly line worker wage (and the median wage) is closer to $30.

I have seen the $73/hr number cited as non-executive compensation. That's total compensation, not just wages, which covers the cost of benefits and the like.

edit: This has some links:

http://mjperry.blogspot.com/2008/11/should-we-really-bail-ou...

I cannot say what the previous person was referencing, but NPR has a great comparison of GM and Toyota at http://www.npr.org/news/specials/gmvstoyota/

If you read the list, it looks like you're both (partially) correct. The average hourly salary for non-skilled assembly-line workers is a little over $31. However, GM's labor cost per hour exceeds $73/hour for those workers.

So, in terms of GM's costs, it's over $73/hour. I'm guessing the UAW has structured it in a way that benefits the employees, but I can't imagine what benefits would be worth more than my salary. Seems to me like more in salary and less in benefits would appeal to me more.

Well, the reason employer-sponsored health care took off was that WWII wage controls were still around for years of the post-war economy. Growing employers, auto manufacturers in particular, could not offer higher wages to attract workers. So they offered employer-sponsored health programs and attractive pensions. In the 1970s, when Nixon brought back wage controls, they improved their low-deductible health care plans to no-deductible plans.

Here's the scenario. From its boom era, Detroit ended up saddled with lots of pensions, expensive health care, and a special interest which fights cutbacks fiercely. It was basically building up an deficit that, when combined with horrible mismanagement, sent it into tremendous debt and would hobble it when it hit bad economic times and lost access to the capital markets.

Does that scenario look familiar? That's about what's happening to the United States. Hey wait, did a presidential hopeful write this op-ed? Hmm.

No, see, people have the figure wrong. It costs GM $73/hour for labor because GM is still supporting retirees (that retire early, at age 50) with health care and a 70% salary pension. To cover those costs, for some reason, they cover it as "labor costs",

This makes the union look bad, while simultaneously ignoring the fact that GM made tons of crap vehicles nobody wanted and has never tried to innovate.

http://www.prospect.org/csnc/blogs/beat_the_press_archive?mo...

$73 is labor cost, this includes many things on top of the $30 per hour. This is higher than their competitors but not by as much as it seems.

i love how people can't stand the guy who works on the line. This guy or gal works to make a car for you. The customer. This person puts up with all the same bs that you have to put up with on your daily job. He/she was smart to get into the automotive and have a great job. One because they can support their family put their kids through college so their child has more of an education then they do. (that helps out America) and their children can succeed in America and not rely on the automotive to support them. Second,because this person turns around and puts that money they made, right back into their fellow communities. Spending money so others can benefit off of their hard earn money.Thirdly, they can give to charities help out others and do good for their communities. So, why does everyone bug the guy on the line....becasue he makes good money and has no education, so what!!!??

What about the endless managers that leave the office and go golfing on company time that are educated? Or the endless lunches that they never return from that the company has to pay for? Or how they can micro manage everything and make it twice as worse then when they started it. Or the guy who works out of his house and only puts in 3 hours of work in a day. Please give me a break!!! this is not only automotive but it is with every corporation in America! When will the educated people quite ripping off the corporation's so that the people that can't get an education can make a decent living and survive in America and enjoy the American dream!! So please quit wasting your time to find out of much the average line guy makes and start looking into your own company and start making changes!! Why do you have to have a degree to flip hamburgers?? because that is what is happening to us. Quit pointing the fingers and start seeing what every manager and salary person is doing with the company money. Maybe its time to start working different in America, start working for the right reasons.

The problem is that person A doesn't pay any taxes. You're certainly taxing some people to pay for it, but it's not person A.

Also, the idea behind bailouts like this is that they are a loan. Ideally the government is profiting from this sort of thing, especially when you consider the overall economic impact of laying off thousands of GM employees, or allowing thousands of pensions to swirl down the drain.

I'm against the bailout, but it's overly simplistic and entirely useless (not to mention just plain incorrect) to say that it's morally wrong because someone at Denny's doesn't have health care.

Heh, I noticed that (and edited my post to reflect it), apparently while you were writing your post.

However, there are plenty of people who make less money than auto workers who do pay taxes. One reason the bailout is morally wrong is that it is a regressive tax. It takes from the (relatively) poor and gives to the (relatively) rich.

Well, a very high % of taxes come from either businesses or people who make more than the average GM worker. Plus a $25 billion dollar loan to GM isn't the same thing, from the taxpayers perspective, as giving them $25 billion. Presumably it will be paid back with interest. Of course, it won't get as much interest as people could earn investing their own money in the private sector, or they'd all be buying GM bonds already, but the actual loss is orders of magnitude less than $25 billion.

I don't think there's a lot of moral hazard there in terms of taking from the poor and giving to GM workers. The real issue is whether it's better for everyone involved than just allowing them to restructure in bankruptcy. I can't see how the answer to that could be yes.

Why do you think GM will survive long enough to pay us back?

I don't unless the loan comes with conditions ensuring that, which is why I'm against it. I'm just pointing out that the issue isn't as simple as its being made to sound.

Are you saying that it is morally wrong to take money from relatively rich people to give to relatively poor, but not the other way around? I think any (Government) wealth redistribution is morally wrong, but that's just my 2 cents!

Government cannot exist without redistributing wealth. You've been listening to too many Palin rallies.

Every time a government changes tax rates, wealth gets redistributed. Every time it builds a school or a road, wealth is redistributed. Every economic policy redistributes wealth.

I hope the I just redistributed your 2 cents :)

I think that he means explicit wealth redistribution. If government uses your tax money to to finance the police system, sure it is moving wealth around, but a healthy police is necessary for a free society and functioning economy, so in the end, everyone benefits. This is different from just taking from one group and giving to another.

Well, if the government takes some tax money and uses that to prop up an industry that directly or indirectly employs 6 million people, that too helps everyone. Those people while employed buy things, pay taxes, don't create an oversupply of workers that lowers wages for everyone, etc.

It's not as cut and dry as some Robinhoodesque vision of taking taxes from some and giving to another, which McCain and Palin wanted you to believe. It's quite possible that the $25 billion loaned will not only return the taxpayers more than $25 billion directly, but also create a net positive economic impact of more than that.

that too helps everyone - no it doesn't; not in the long run.

I honestly don't know what McCain & Palin have been saying about this (nor do I care) but corporate welfare undermines accountability at the corporate level. Accountability is absolutely essential to functioning of the market and handouts such as these have been undermining the US auto industry since the fifties. This is a very large part of the reason that they are in trouble today. If we are concerned about the employees, we should just give them the money directly, but giving the money to the corporate execs is essentially rewarding bad behavior and staving off the inevitable. Corporate handouts are like stimulants for the economy; they provide a short-term high, but they will be followed by a corresponding low and the longer you prolong treatment, the longer and more powerful the low.

BTW a labor surplus isn't necessarily so bad a thing; employment for the sake of employment is almost as bad an economic policy as corporate welfare (It's one of the more obvious failures of the New Deal.) and if the big three are no longer profitable, that is what this bailout amounts to.

The government could just print the money that they need to operate, thus there would be no redistribution! But that probably isn't a great idea!

I meant the explicit redistribution where the government takes money from one group, and then gives it to another, versus the government taxing in a fair a simple way (See the Fair Tax) and then spends the money the way the Constitution intended.

In other words, they spend money on 1) Paying Debts of the United States, 2) Provide for the Common Defense, 3) Promote the General Welfare (General meaning that it does not promote the welfare of individuals, or corporations, but promotes the welfare of the entire nation; also notice the word, 'promote', not 'provide') Article 1, Section 8.

As Jefferson said, it is "...the most sacred of the duties of a government, to do equal and impartial justice to all its citizens. To this a single observation shall yet be added. To take from one because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others who (or whose fathers) have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, 'the guarantee to every one of a free exercise of his industry, and the fruits acquired by it." (Note in Political Economy , p. 464-66)

I'd say that it's less wrong, to redistribute in this fashion as it is at least under the guise of charity.

The education person A's kids get along with the disproportionate share of SS/medicare benefits they get already mean they net gain from the tax system. So it is hardly fair to say:

>The bailout: tax person A in order to help person B

At least pick a person A who is net-net being taxed.

Person A might very well pay taxes, if they are a single individual with no children. They don't pay a lot of income tax, but they likely do pay some.

what about person C - a nonunion honda plant employee. he has beaten the competition fair and square, and now he must subsidize them. perversely, the harder he works, the more money he can potentially contribute to a government underwriting his competition.

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