Why Rescue Automakers and Other Corporations that Have Been Bad Neighbors?
As Congress ponders whether to bail out the auto industry--and Treasury Secretary Hank Paulson opposes using the Big Finance rescue...
As Congress ponders whether to bail out the auto industry--and Treasury Secretary Hank Paulson opposes using the Big Finance rescue package to aid the Big Three automakers--a press release put out by a Democratic congressman from Wisconsin, Steve Kagen, illustrates the dilemmas at hand when it comes to assisting multinational corporations that have made their own now-falling-apart beds. Kagen asks why the taxpayers should help out Chrysler when the owner of Chrysler has screwed his constituents by shutting down paper mills in his district and refusing to sell those facilities to others.
Congressman Steve Kagen, M.D. says no taxpayer money should be given to Chrysler until after Wisconsin papermakers go back to work. Cerberus Capital Management, L.P., one of the largest private equity investment firms in the United States, owns many corporations including automaker Chrysler and NewPage Corporation, which recently closed two paper mills in Northeast Wisconsin putting over 750 people out of work.
"If Cerberus needs to raise cash to bailout Chrysler, then they should sell our idle paper mills in Kimberly and Niagara," said Kagen. "Local community leaders have given them opportunities to sell - they have turned them down - and now hard working families in Wisconsin are being asked to help the very people who have taken away their jobs. Outrageous. I am strongly against any taxpayer funds being given to Chrysler until their parent company gives us our jobs back. Cerberus already has millions of dollars of assets in these mills which they can sell tomorrow, putting my friends and neighbors back to work, and generating the capital necessary to keep Chrysler afloat."
Kagen spoke this weekend at the dedication of Camp Kimberly, an area set up across the street from the quiet NewPage paper mill. Former mill workers are holding daily vigils to urge NewPage executives to run the mill, or sell it.
....The closure of the mill in Kimberly caused the loss of over 450 papermaking jobs and the Niagara mill closing put over 300 people out of work. Both closures were due to unfair competition from foreign-made paper.
Whether Kagen is right or not about what Cerberus has done--or not done--regarding the paper mills in his district, this situation shows a fundamental problem. Troubled corporations deemed too big to fail are running to the government for handouts, and it may be best of bad options to use taxpayer dollars to prevent their collapse. But these same corporations have often showed disregard for their workers, their consumers, and the communities in which they have thrived. That is, they haven't made decisions to advance the greater good--after all, that's not been their mission. (Their top job has been to make money for the shareholders and owners.) Yet once they hit trouble, they plead that it serves the greater good to keep them afloat. It's a basic asymmetry. To compensate, taxpayers and legislators ought to apply public interest standards for any bailouts that do proceed.