Bailing Out Detroit

BAILING OUT DETROIT....David Leonhardt uses this graphic in the New York Times today to illustrate the labor costs of the Big Three auto makers vs. the Japanese companies who manufacture cars in nonunion plants. As he says, the $70+ per hour figure that gets tossed around so often is badly misleading: a big chunk of that figure comes from legacy retiree costs, and retiree costs are high not because retiree benefits are wildly stupendous, but simply because the Big Three are old companies and therefore have a lot of retirees. But even so:

[Defenders of the Big Three] are not right to suggest, as many have, that Detroit has solved its wage problem. General Motors, Ford and Chrysler workers make significantly more than their counterparts at Toyota, Honda and Nissan plants in this country. Last year's concessions by the United Automobile Workers, which mostly apply to new workers, will not change that anytime soon.

He's right. Even under the new contracts signed last year with the UAW, it will take years for Detroit's costs to come down to Japanese levels. But worker paychecks aren't Detroit's primary problem anyway:

Imagine that a Congressional bailout effectively pays for $10 an hour of the retiree benefits. That's roughly the gap between the Big Three's retiree costs and those of the Japanese-owned plants in this country. Imagine, also, that the U.A.W. agrees to reduce pay and benefits for current workers to $45 an hour — the same as at Honda and Toyota.

Do you know how much that would reduce the cost of producing a Big Three vehicle? Only about $800.

That's because labor costs, for all the attention they have been receiving, make up only about 10 percent of the cost of making a vehicle. An extra $800 per vehicle would certainly help Detroit, but the Big Three already often sell their cars for about $2,500 less than equivalent cars from Japanese companies, analysts at the International Motor Vehicle Program say. Even so, many Americans no longer want to own the cars being made by General Motors, Ford and Chrysler.

....It's a sad story, in many ways. But it can't really be undone at this point. If we had wanted to preserve the Big Three, we would have bought more of their cars.

Obviously I have mixed feelings about all this. No one wants to see hundreds of thousands of auto workers collecting unemployment, especially now, but at the same time it just doesn't make sense to keep GM and Chrysler alive as zombie companies for the next couple of years. And the idea of a "car czar" doesn't appeal much either. It's only systemic restructuring that's going to make a difference here, and the deal we've struck so far doesn't seem to really accomplish that. Like so many other things these days, there aren't any good solutions here. Just bad and slightly less bad.

Blimps!

BLIMPS!....Julian Barnes of the LA Times reports that Bob Gates's decision to stay on as Secretary of Defense will mean some procurement changes at the Pentagon:

The decision to keep Gates could spell the end of the Army's $160-billion Future Combat Systems program, and dim Air Force hopes for large numbers of new high-tech F-22 fighter jets. At the same time, smaller projects — perhaps blimps or light planes useful for ongoing conflicts — are likely to find new support.

Blimps? Seriously?

Some Army officials are pushing development of a small blimp equipped with an automated high-powered sniper rifle that could provide a form of inexpensive but effective air support for platoons in Afghanistan.

Can laser-equipped sharks be far behind?

800px-United_States_one_dollar_bill%2C_obverse.jpg The power of money. Obese people offered a financial reward for every pound lost shed more weight during a 16 week trial than those given diet advice. That's not all. Previous studies show that smokers and cocaine addicts can be weaned off their habits by paying them to stay drug-free. Kids in developing countries actually attend school more when their parents are paid for it. A study currently underway in New York is assessing whether cash incentives motivate parents to send their kids for regular health check ups.

The diet study from U Penn found that many participants put weight on again after the program ended. The authors suggest long lasting results need long lasting payments. The paper appears in the Journal of the American Medical Association.

So what would thinner people buy for the planet? How about fewer greenhouse gas emissions. And what else might we buy for the common good? Peace? Rational thinking? If all it takes is money and we're already running the presses overtime, why not print some more?

Julia Whitty is Mother Jones' environmental correspondent, lecturer, and 2008 winner of the PEN USA Literary Award, the Kiriyama Prize and the John Burroughs Medal.

Multiple Choice

MULTIPLE CHOICE....Robert Waldmann, who is currently residing in Rome, says he's happy that U.S. students are performing well in the TIMSS test of math and science, but then adds this:

However, I do have to note that the TIMSS test is mostly a multiple choice. Students in the USA have practice with the format. I teach in Italy and I can assure you that Italian students just don't know how to deal with multiple choice questions. It is a specific skill and not really related to knowledge about or understanding of math and science.

It's the italicized part that I'm interested in, not the part about whether multiple choice tests are fundamentally any good. Do Italian students really never take multiple choice tests? How about their equivalent of the SAT? (Do they have such a thing?) Also: Are multiple choice tests rare in the rest of Europe as well? (Perhaps. Here is a professor in London saying that "there is a British antipathy to multiple choice.") Why? And why then did they become so popular in the U.S.? (Don't say NCLB. We've been using them for a lot longer than that.)

Anyway, this is a curious little factoid that I didn't know before, so I thought I'd pass it along.

Infrastructure

INFRASTRUCTURE....What kind of infrastructure program is Barack Obama likely to support once he gets into office? Well, Obama's choice to head up the OMB is Peter Orszag, so Alex Tabarrok suggests looking at Orszag's previous statements on infrastructure when he was head of the Congressional Budget Office.

With that in mind, then, here's a chart from testimony he gave to Congress last May. For a range of activity, it shows that the infrastructure budget ought to be increased $20 billion to maintain current service levels, but that nearly $80 billion more could be economically justified. However, here's what he says about the highway portion:

[A]ccording to a detailed analysis that the FHWA provided to CBO, over the next five years, investments required to maintain current levels of highway service would represent 58 percent of the total spending for all economically justifiable investments for highways, but they would provide 83 percent of the net benefits.

More than likely, then, Orszag won't be pushing for lots of additional spending on roads and bridges, since he believes the net benefit is pretty small once you get past the initial boost needed just to maintain the current system.

Alex suggests that Obama should instead focus on congestion pricing and electricity infrastructure (the famous "smart grid" that everyone talks about but no one ever seems to make any progress on). Here at Mother Jones, in a piece that just went online today, James K. Galbraith proposes a long-term investment program (not just a "stimulus") that includes aid to states, increased Social Security benefits, a payroll tax holiday, and this:

Finally, we must change how we produce energy, how we consume it, and above all how much greenhouse gas we emit. That's a long-term proposition that will require research and reconstruction on a grand scale: support for universities, for national labs, for federal and state planning agencies, a new Department of Energy and Climate. It's the project around which the economy of the next generation must be designed. It's the key to future employment and future growth — and to our physical survival.

Obama's radio speech this weekend outlining his stimulus-related spending plans had some decent points but wasn't exactly a barnburner. After he rolls out his environment team later this week, hopefully green energy development and smart grids will get a little more attention.

CHART OF THE DAY....Adapted from Secular Right, here's a graph showing frequency of prayer plotted against strength of partisanship. The data is from the General Social Survey. Apparently, strong political partisans also tend to pray a lot. Weak partisans and independents, not so much. The effect is roughly the same if you confine the analysis to whites only.

Why? Is it just a reflection that some people are strong believers and others aren't, and this temperamental cast applies to everything they believe in? Or is it something else? Speculate away!

mojo-photo-coldplaysatriani.jpgThey just can't win. As reported here on Friday, UK ballad-producers and castoff-military-gear-sporters Coldplay had their highest-profile plagiarism accusation to date when guitarist Joe Satriani filed suit against the band, saying they'd ripped off one of his songs. Well, Coldplay have responded, calling any resemblance between "Viva La Vida" and Satriani's "If I Could Fly" "entirely coincidental":

"If there are any similarities between our two pieces of music, they are entirely coincidental, and just as surprising to us as to him," the band said in a posting on its website.
"Joe Satriani is a great musician, but he did not write or have any influence on the song 'Viva La Vida.' We respectfully ask him to accept our assurances of this and wish him well with all future endeavours."

So, take that, right? But Reuters can't help but have some fun, describing the band in a way that's gotta make Chris Martin wince:

Coldplay, whose soaring atmospheric tunes have been unfavourably compared to those of U2, brushed off the allegations.

"Unfavourably"? Is that really necessary? I mean, yes, totally, but that doesn't seem like, you know, reporting. But hey, if Reuters says it, it must be a fact. Either way, it's a good excuse for me to run my cute Photoshop collage again.

mojo-photo-blurband.jpgWhile I was over looking at NME's Top 10 Singles of 2008, I noticed another screaming headline, pictured on the cover of the new issue: BLUR REUNITED! For the uninitiated, the legendary London four-piece lost guitarist Graham Coxon in 2002 after he got really annoyed during the recording of their last album. Lead singer Damon Albarn went on to wild critical and commercial success with Gorillaz and The Good, The Bad and The Queen, so he's not exactly hurting for cash, but he and Coxon have apparently buried the hatchet (hooray!) so the reunited band can play some gigs in 2009:

"It just felt it was right again," declared Albarn of Blur's return. "It somehow feels like there's something for us to do again, we're not completely useless or pointless, we've got a reason to exist." Coxon agreed, explaining the band were "making public what's been going on a little bit privately. For the benefit of the fans and those interested we can say that something's on the cards."

A single show is currently planned at London's Hyde Park on July 3rd, and an appearance at Glastonbury is rumored. Hey, howabout Coachella?

After the jump: Blur, a YouTube history!

aig-lehman-fannie-freddie-gravestones-300x225.jpg

Congressional Republicans finally got their big chance to blame the financial crisis on the Democrats. Ever since the House Committee on Oversight and Government Reform began investigating the causes of the nation's current economic troubles in early October, the panel's Republican members have been agitating for a hearing on Fannie Mae and Freddie Mac. They charged that their Democratic colleagues failed to rein in the two government sponsored enterprises (GSEs), which were placed in receivership in September, frequently noting that Democrats had accepted significant campaign contributions from the companies. (Republican members of the committee also took in their fair share.) Many GOPers blame the financial crisis on the extension of mortgages to poor people and minorities who couldn't afford them, which they say was facilitated by lax oversight of Fannie and Freddie. On Tuesday, with the presidential election safely over, committee chairman Henry Waxman (D-Calif.) gave the GOP members their hearing.

Deluder in Chief

president-bush-150x110.jpgRod Blagojevich may well be the nation's ballsiest governor, but his delusions of grandeur pale in comparison to those of our sitting president. The LA Times has obtained a copy of a talking points memo, sent by the White House to cabinet members and top officials, highlighting successes in Bush's tenure.

From the Times:

Titled "Speech Topper on the Bush Record," the talking points state that Bush "kept the American people safe" after the Sept. 11 terrorist attacks, lifted the economy after 2001 through tax cuts, curbed AIDS in Africa and maintained "the honor and the dignity of his office."

The document presents the Bush record as an unalloyed success.

It mentions none of the episodes that detractors say have marred his presidency: the collapse of the housing market and major financial services companies, the flawed intelligence in the run-up to the Iraq war, the federal response to Hurricane Katrina or the abuse of prisoners at Abu Ghraib.

In a section on the economy, speakers are invited to say that Bush cut taxes after 2001, setting the stage for years of job growth.

As for the current economic crisis, the memo says that Bush "responded with bold measures to prevent an economic meltdown."

The document is otherwise silent on the recession, which claimed 533,000 jobs in November, the highest number in 34 years."

And the kicker: The memo concludes with a quote from Bush's 1999 memoir, A Charge to Keep:

"Above all, George W. Bush promised to uphold the honor and the dignity of his office. And through all the challenges and trials of his time in office, that is a charge that our president has kept."

For another perspective, Mother Jones's September/October issue features interviews with myriad historians, scientists, lawyers, and policy-makers on Bush's legacy and How to Fix a Post-Bush Nation. You can find all of their interviews here.

We want to hear from you, too: Did Bush succeed in upholding the "honor and dignity" of the office of president?

Photo used under Creative Commons license.