Big Three Bailout?

[eagle1977 10]

It is simply amazing to me that we Americans are willing to place the blame for the current economy on anyone or everyone else. Look at the rise of the big box stores throughout this country. When was the last time you visited your local small hardware store to purchase the nuts and bolts you needed? When was the last time you shopped in a locally owned grocery or department store? We want to earn the highest salary and only pay the bare minimum for the goods and services we need to survive.

 

The rise of Wal-Mart, Lowe's, Home Depot, Kroger's and other nearly national chain stores providing our wants and needs at bargain basement prices have been the death knell for our economy. Wal-Mart used to be the bastion of the American made product. However, I dare you to find more that a dozen American made products in your local Wally's.

 

It is very easy for us to sit back and blame the management of the "Big Three" and the UAW for the trouble that they are experiencing. But the bottom line is that the consumers are not buying locally made products anymore. They are too expensive. It is better for us to buy the products produced in the sweatshops of the third world than to support our fellow American workers.

 

I, too, blame the greedy unions. I think they have long outlived the effectiveness. I think that happened when the front office personnel started earning the same salary as the owners of the companies. But I also blame the greedy owners (read the stock holders demanding ever higher dividends and stock splits)and the low life CEO's that earn as much as 255 times the average worker.

 

OGE mentioned Bethlehem Steel and its demise. I remember the Steel Curtain of Pittsburgh very well. The steel barons blamed the unions and the unions blamed the company. But there was little or no reinvestment in the industry which led to its downfall. The Japanese were on the forefront of innovation and now we buy our steel from them.

 

I personally find it abhorrent that any company will negotiate and promise a work force a certain retirement benefit then reneg on that deal after the worker has given them thirty or more years of faithful work. This happened to my father, he was left go from his sales job with a company after 19.5 years of work. No pension for you!

 

I think we all need to live the Scout Oath in our day to day lives. Perhaps that would solve ouy problems.

[eagle1977 10]

It is simply amazing to me that we Americans are willing to place the blame for the current economy on anyone or everyone else. Look at the rise of the big box stores throughout this country. When was the last time you visited your local small hardware store to purchase the nuts and bolts you needed? When was the last time you shopped in a locally owned grocery or department store? We want to earn the highest salary and only pay the bare minimum for the goods and services we need to survive.

 

The rise of Wal-Mart, Lowe's, Home Depot, Kroger's and other nearly national chain stores providing our wants and needs at bargain basement prices have been the death knell for our economy. Wal-Mart used to be the bastion of the American made product. However, I dare you to find more that a dozen American made products in your local Wally's.

 

It is very easy for us to sit back and blame the management of the "Big Three" and the UAW for the trouble that they are experiencing. But the bottom line is that the consumers are not buying locally made products anymore. They are too expensive. It is better for us to buy the products produced in the sweatshops of the third world than to support our fellow American workers.

 

I, too, blame the greedy unions. I think they have long outlived the effectiveness. I think that happened when the front office personnel started earning the same salary as the owners of the companies. But I also blame the greedy owners (read the stock holders demanding ever higher dividends and stock splits)and the low life CEO's that earn as much as 255 times the average worker.

 

OGE mentioned Bethlehem Steel and its demise. I remember the Steel Curtain of Pittsburgh very well. The steel barons blamed the unions and the unions blamed the company. But there was little or no reinvestment in the industry which led to its downfall. The Japanese were on the forefront of innovation and now we buy our steel from them.

 

I personally find it abhorrent that any company will negotiate and promise a work force a certain retirement benefit then reneg on that deal after the worker has given them thirty or more years of faithful work. This happened to my father, he was left go from his sales job with a company after 19.5 years of work. No pension for you!

 

I think we all need to live the Scout Oath in our day to day lives. Perhaps that would solve ouy problems.

[John-in-KC 311]

Lisa,

 

To me the issues of the Big 3 are four:

 

- I heard on NPR that GM has 4700 dealerships across the US. OTOH, Toyota has something around 1500. Both have about a 20% market share. The costs of doing business with the dealership network is a drain on the Big 3 bottom line, but the dealerships have their own lobby ... and in several states, the Big 3 simply cannot renegotiate those contracts without a Federal Judge doing the Chapter 11 gig.

 

- Someone else has already discussed the direct and the burdened costs of labor on the production line. Let's use the $32 an hour wage figure quoted: For a base 40 hour week, that's $66K a year. How sustainable is the wage base? It seems to me the UAW has to come to the table and say "the good times are done, we have to share the pain."

 

- Let's be honest, the "Flight of the Gulfstream G-5s" didn't help the perception by the American people that the Big 3 are serious about re-structuring. Do these folk understand that some of the rest of us want to see them with just a bit of skin in the game, like their entire personal fortunes ... every bloody cent???

 

- Finally, and this only applies to Chrsyler, but a privately held company wants Feddybux? Excuse me?!?!?!??? I've told my Congresscritter there has to be oversight, somehow, or not one red cent to Chrysler.(This message has been edited by John-in-KC)

[Eagle1982 10]

This one is a toughie. One thing is clear, the Detroit 3 gave up more than they should have years ago. However it's not so easy to just turn a battleship on a dime.

 

The Detroit 3 have been renegotiating contracts. They have been reducing dealerships. They have now a two tiered pay structure, new hires get paid less, and they are doing buyouts on the older ones. Their quality has gone up.

 

Although Toyota and Honda assemble cars in the U.S. - the latest data I saw, 2006 shows that for every Detroit 3 job, there are between 11 and 12 jobs that rely on it (people that don't work directly for the automakers, yet do work for them, like die shops, mold shops...) For the Transplants, the number is between 4 and 5.

 

Now, Japan is a very nationalist country. Let's say the global auto economy goes bad, and it is. If you think for one second that Japanese companies like Toyota will sacrifice Japanese workers to keep more U.S. workers employed, think again.

 

The Detroit 3 have to survive, I just don't know if a bailout is better than bankruptcy or not.

 

 

 

 

[mmhardy 10]

If you look at my profile you'll see that I'm from Michigan. I'll tell you that I also work for one of the "Big 3". Its my lunch hour and I've reviewed the comments of the past three days....how sad and ignorant so many of you are. As I write this more then 5,000 of my fellow employees are walking out the door never to return. That's 5,000 families affected by this, today..and friends this is just the start.

 

If you have family or friends working in any of the 7,700 companies that supply the Big 3 they too will take a hit. Email me your state I'll tell you the amount in millions that the smallest of the big three bought in it. Chances are its in the 10's of millions.

 

In all its estimated that 1 in 6 workers may be affected by a failure of the US automotive sector. That's 23,200,000 workers! This does not count the barber shops, flower shops, and countless other small businesses that will be dragged down.

 

Our favorite local columnist and author is Mitch Albom. He wrote Tuesdays with Morrie and The Five People You Meet in Heaven. Last Sunday he wrote a piece that hit it out of the park. I think he does a better job then I ever could to convey what Detroit is thinking...YIS

 

 

OK. It's a fantasy. But if I had five minutes in front of Congress last week, here's what I would've said:

 

 

Good morning. First of all, before you ask, I flew commercial. Northwest Airlines. Had a bag of peanuts for breakfast. Of course, that's Northwest, which just merged with Delta, a merger you, our government, approved -- and one that, inevitably, will lead to big bonuses for their executives and higher costs for us. You seem to be OK with that kind of business.

 

Which makes me wonder why you're so against our kind of business? The kind we do in Detroit. The kind that gets your fingernails dirty. The kind where people use hammers and drills, not keystrokes. The kind where you get paid for making something, not moving money around a board and skimming a percentage.

 

You've already given hundreds of billions to banking and finance companies -- and hardly demanded anything. Yet you balk at the very idea of giving $25 billion to the Detroit Three. Heck, you shoveled that exact amount to Citigroup -- $25 billion -- just weeks ago, and that place is about to crumble anyhow.

 

Does the word "hypocrisy" ring a bell?

 

Protecting the home turf?

 

Sen. Richard Shelby. Yes. You. From Alabama. You've been awfully vocal. You called the Detroit Three's leaders "failures." You said loans to them would be "wasted money." You said they should go bankrupt and "let the market work."

 

Why weren't you equally vocal when your state handed out hundreds of millions in tax breaks to Mercedes-Benz, Hyundai, Honda and others to open plants there? Why not "let the market work"? Or is it better for Alabama if the Detroit Three fold so that the foreign companies -- in your state -- can produce more?

 

Way to think of the nation first, senator.

 

And you, Sen. Jon Kyl of Arizona. You told reporters: "There's no reason to throw money at a problem that's not going to get solved."

 

That's funny, coming from such an avid supporter of the Iraq war. You've been gung ho on that for years. So how could you just sit there when, according to the New York Times, an Iraqi former chief investigator told Congress that $13 billion in U.S. reconstruction funds "had been lost to fraud, embezzlement, theft and waste" by the Iraqi government?

 

That's 13 billion, senator. More than half of what the auto industry is asking for. Thirteen billion? Gone? Wasted?

 

Where was your "throwing money at a problem that's not going to get solved" speech then?

 

Watching over the bankers?

 

And the rest of you lawmakers. The ones who insist the auto companies show you a plan before you help them. You've already handed over $150 billion of our tax money to AIG. How come you never demanded a plan from it? How come when AIG blew through its first $85 billion, you quickly gave it more? The car companies may be losing money, but they can explain it: They're paying workers too much and selling cars for too little.

 

AIG lost hundred of billions in credit default swaps -- which no one can explain and which make nothing, produce nothing, employ no one and are essentially bets on failure.

 

And you don't demand a paragraph from it?

 

Look. Nobody is saying the auto business is healthy. Its unions need to adjust more. Its models and dealerships need to shrink. Its top executives have to downsize their own importance.

 

But this is a business that has been around for more than a century. And some of its problems are because of that, because people get used to certain wages, manufacturers get used to certain business models. It's easy to point to foreign carmakers with tax breaks, no union costs and a cleaner slate -- not to mention help from their home countries -- and say "be more like them."

 

But if you let us die, you let our national spine collapse. America can't be a country of lawyers and financial analysts. We have to manufacture. We need that infrastructure. We need those jobs. We need that security. Have you forgotten who built equipment during the world wars?

 

Besides, let's be honest. When it comes to blowing budgets, being grossly inefficient and wallowing in debt, who's better than Congress?

 

So who are you to lecture anyone on how to run a business?

 

Ask fair questions. Demand accountability. But knock it off with the holier-than-thou crap, OK? You got us into this mess with greed, a bad Fed policy and too little regulation. Don't kick our tires to make yourselves look better.

 

 

[mmhardy 10]

 

BTW...here is the source for the total direct employment by the OEM and their Tier I&II suppliers.

 

http://trade.gov/static/auto_reports_jobloss.pdf

 

When I say 1 in six jobs is related to the auto industry I'm talking about a term called a "multiplier effect". More information is available here:

 

http://www.allbusiness.com/north-america/united-states-michigan-metro-areas-detroit/3987431-1.html

 

 

[packsaddle 753]

mmhardy, I suspect there are similar sentiments from people who are (were) with Lehman Bros. I have watched first hand as people formerly with the textile industry went through the same thing. A lot of them are still devastated. The country survived nicely.

 

I agree with the comment about hypocrisy. However, that can be applied liberally (no pun intended) to almost every player in the current fiasco. For example, I see hypocrisy where people whose votes say they want free-market economics nevertheless sidle up to the public trough, ready to put the whole country in greater debt.

 

The reality I see is very harsh and I see no way to say it in gentle terms. If the auto industry is the pivot around which the entire country revolves, then we have made some very large mistakes in strategic planning. However, if we have made such a mistake, and it is possible that we have, then the market is going to correct that mistake eventually, no matter what. If this country put all its eggs into THAT basket, we deserve harsh treatment because of our stupidity if nothing else.

 

I lived through an era in which people went directly into textile mills as teens, often without a high-school diploma, and planned to live a comfortable lifetime doffing bobbins or something similar. The mill owners invested in new equipment and appreciative labor in the early years. As the labor aged and became more expensive, the equipment aged and the owners pocketed profit instead of thinking strategically. The mill labor, in the meantime, voted for ideologies that supported free trade, open markets and competition. The disconnect between their reality and their ideology eventually separated them from their livelihoods. I've watched scores of mills close and eventually burn or be demolished. The workforce, untrained for anything else for the most part, didn't fare very well.

 

The states needed industrial capacity to replace these jobs and they successfully competed with other states by giving tax incentives. Mercedes, Honda, Toyota, Nissan, BMW...all have played the market skillfully and kept a strategic view. And not just auto manufacturers.

 

The president of Toyota only makes about $1 million. All the compassion in the world for US auto workers will not change the fact that both upper management and unions have been greedy and have not thought about the long term. When Mercedes dumped their interest in Chrysler while maintaining their plant in AL, THAT decision was the hint for smart people to either find another way of life or prepare for really, really bad times.

No one blinked when the textile industry moved to China. Few blinked when microchips and other electronics manufacturing moved overseas. We voted for it with our dollars every time we shopped for the cheapest price. And I note that if Ford-Europe could divorce itself from the US part, it would be doing just great. Just an example.

 

The market is doing exactly what it is supposed to do. It is exacting Darwinian consequences on everything and everyone involved in it. It doesn't care about you, your neighbors, the children, or even the future. If you are unable to compete or if you are part of an uncompetitive group, it will grind you into oblivion. From a market perspective, it is the outcome you have earned.

Even if the USA bankrupts itself doling out bailouts, the market is going to have its pound of flesh eventually anyway. One lesson I learned from watching the textile industry auger in was that prolonging the agony doesn't change the outcome. It just makes it more agonizing.

 

It is time to man up and face the harsh reality. Fact is, the market doesn't care. It will only reward someone if they are competitive. If there is any life left in the US auto industry, it is time for it to cut off the dead tissue and try to survive. In the long run a government handout isn't going to help. As OGE suggested obliquely, I'd rather see the handout go directly to unemployed workers as welfare checks than to support a management structure and business strategy that is as dead as its leaders' minds.

[Beavah 205]

Yah, sorry mmhardy. I know it's affectin' a lot of folks in your state, eh? But honestly, the big three are gettin' what they deserve.

 

You're in a business that depends on innovation. But yeh didn't innovate.

You're in a business that is cyclical. That means that durin' the up times, yeh need to save for the down times. But durin' the up times, the union leadership grabbed all they could, and management let 'em. Now the down times are goin' to wipe 'em out as a result.

You're in a business where quality really counts. People rely on your product for their lives and livelihood. Because a car is a big purchase for people, they remember problems, and they tell all their friends. Maybe for the rest of their lives. My last vehicle purchase was a Ford, and I expect I'll be dead before I consider buyin' anything from 'em again. The Big 3's reputation for mediocrity is deserved.

And as a capper, your business spent tens of millions on lobbying, and your Michigan congressional delegation blocked pollution and mileage standards which would have saved the auto industry from this mess while making the country more secure.

 

Why should my grandkids who had to deal with da seatbelt molding falling off on 'em, and the electric windows that jammed open on their vacation, have to pay for years and years so that the auto execs can make $100 million this year and so that the auto workers can make more than their dad? Why should their dad, who had to replace transmissions on two cars within 10,000 miles of warranty expiration have to pay an additional tax burden for the guys who built that junk?

 

It's goin' to be hard for everybody. Hard for workers and their families. Hard for one-industry states and towns. But packsaddle's right, eh? All a bailout does is redistribute wealth from the workin' middle class to the rich. And all that kind of misguided socialism does is make our nation and our industry weaker.

 

Chrysler should have ceased to exist years ago. It's gone, we just haven't had the funeral yet. I don't think there's a chance for GM. I'd be content with one major U.S. manufacturer survivin' strong enough to compete, but if they get a dime of my tax money the Ford family has to lose all of their shares and voting control of da company.

 

But yeh know what? If anybody has a brain in Michigan, they'll capture some of that workforce and those plants, and start a couple small auto companies makin' high-efficiency composite vehicles. Give it ten years, and the death of the Big Three will leave a lot of room for more nimble, innovative, small manufacturers to spring up. The nation and the industry will be stronger.

 

Bail 'em out, and we'll have all da innovation and efficiency of other socialist states, like da old Soviet Union. Complete with the cronyism of government wedded to big industry, much like da Michigan congressional delegation.

 

Beavah

 

[vol_scouter 365]

My solution would be a little different. I do not support a direct bail out for the Big 3. However, I agree with others that we make precious little and cannot afford to lose the auto industry. Our country is not capable today of building a large scale nuclear plant. We could not fight a WWII kind of war any longer because we do not have the infra-structure. So I would propose some sort of a hybrid bail out where the Big 3 are allowed to go into chapter 11 bankruptcy. This would allow restructuring contracts and debt. In the meantime, the government could assure the public that the corporations will remain in business and that warrantees will be honored. That way sales will not suffer as much.

 

I feel for Beevah. I have owned 6 Jeeps and 3 GMs with no significant problems in any of them. My son owns a Ford F-150 also without significant problems. IMHO, part of the Big 3's problem is that baby boomers have to rebel against anything that was their parents so they do not want to buy American cars (This is not in anyway meant to be an affront to Beevah, he did buy a Ford). I know many baby boomers who have terrible problems with their foreign car but will not consider buying an American car.

 

It is disconcerting to me that we have such a small industrial base. I do not believe that it is in the best interest of the country that the Big 3 go out of existence. Beevah, do you think that at this time anyone could borrow the capital to take old Big 3 plants and retool for hybrids? If gas stays cheap, do you think that hybrids will out sell larger, more powerful, cars and SUV's?

 

Just some thoughts. The congress is disgusting - both parties.

[Eagle1982 10]

While I can appreciate Mitch Albom's comments, he hardly speaks for Michigan, and there are a lot of Michiganders that would rather read the Motor City Madman (Ted Nugent) over Mitch Albom.

 

There is precedent for the U.S. allowing so many complete industries to leave the U.S. - hardly any electronics are manufactured here. The U.S. once made some of the best milling machines for manufacturing, now Japan and China own that market. Steel Industry, textile industry, so many others are not here any more. It might lead one to think perhaps we can manage without a domestic auto industry.

 

However, right now today, I believe we need to keep a domestic auto industry. Too many jobs are dependent on it, and if we give it up, we would lose more jobs in a auto sale recession. The question is really whether a govt bailout is the right solution or letting them go restructure under chapter 11.

 

One thing, if the govt bails them out, there should be some serious strings. GM outsourced all 3.4 liter V6 engines to China. If we taxpayers foot the bill to help them out, they better keep more and bring more manufacturing here.

[Beavah 205]

Yah, vol, I've always bought American. I dunno, the patriot in me, I guess. Next round I might look at Honda or Toyota, but I'll be lookin' to make sure it was assembled in da U.S.

 

I think we should try to hold onto or re-develop strong, modern, cost-effective, innovative manufacturing in da U.S. That's certainly in our long-term best interest, eh? I just don't see how propping up weak, aging, inefficient, bloated, poorly managed manufacturers can possibly get us there.

 

I don't think we're done with the bad financial markets news yet, despite somethin' like 7 Trillion dollars of money bein' thrown at the problem between the Fed and the Treasury. Europeans are noticing that the market for Treasuries is breakin' down now. That's scary, eh? See www.euromoney.com. You couldn't shovel enough money at GM or Chrysler right now to keep 'em out of bankruptcy in this market.

 

Da Big 3 might think they're Titanic, "too big to fail" and all that, eh? But they drove full speed into the iceberg.

 

Time to stop bailin' and start launching lifeboats.

 

Beavah

(This message has been edited by Beavah)

[vol_scouter 365]

Beevah,

 

As you, I always try to buy goods from American companies. I have looked at foreign car companies before. The attitude of the sales force has been that they are doing me a favor by selling me their car rather than I am helping them by buying the car. Needless to say that any interest in their product was killed by their attitude. A Toyota dealer said that I could only test drive their convertible after I had decided to purchase it!! I bought a Sebring convertible that was a great car.

 

I agree with you to some extent. My concern is that when competing with China in particular but many other nations that all of our industry will go the way of textiles, electronics, etc. I think that the free trade ideas work when trading with similar countries such as Canada and the EU countries. It doesn't work with China and Mexico. I am not an economist and didn't stay at a Holiday Inn last night but I do not think that we can have a long term sustainable economy unless we actually manufacture goods. Without manufacturing, we will loss things to sell. We are doing a worse job of funding research (Bush has shifted funds from research to the wars). This is important because what we are mainly selling is technology. If we do not have enough basic research to drive technology transfer, then we have nothing to sell. We cannot survive as a consumer only.

 

As you have noted, if the treasury market collapses then most of this discussion is moot. This is a scary time. I understand that the last several times that the US has sold large treasuries that the only countries buying them was Japan and China. If they decide not to show up, we collapse. Today, if we collapse then everyone else goes with us which encourages other countries to buy our treasuries.

 

I think that we agree that we need to maintain the automobile industry, it is just the way that they emerge. As to buying foreign cars, it seems to me more important than ever to buy products from US companies to try to keep our fellow citizens in their jobs. While buying cars or other products that are made here is better than a true import, the profits still go overseas. I have more than once watched a news program that claimed that Toyota doesn't pay US taxes because of the way they structure the several companies that they own, they always show a net corporate loss!! This was in the 80's and 90's. The report infuriated me. Apparently, many foreign companies are able to hide much of their corporate profits.

 

A scary time. Most of the people who caused this mess are still in congress and they want us to trust them!! Unfortunately, most of them are my fellow baby boomers - we are a disgusting generation. Both parties are so interested in their social agendas that they do not try to do what is best for the country. Hopefully, the generations coming up are an improvement because the greatest generation is essentially gone from power.

[packsaddle 753]

I think the cost of energy will shift a lot of things back to local economies. But I am adamant about my response when a person, or an industry tries to blackmail me into something I don't like.

In this case the only argument for the government handout is that too many jobs are at stake. In essence, the auto industry is saying, "if you don't keep us alive, we'll kill these jobs."

In the face of that kind of argument, I'd pull the plug immediately if I could. That kind of thoughtless greed needs to be punished and punished hard.

I have owned, let's see, three big American vans and four big American SUV's. I was happy with all of them. I'd be happy to keep them. But if the only argument a non-competitive company can make is that they'll hurt the country if they don't get what they want, then I conclude that it will likely hurt the country if we 'cave in' to their demands. That kind of argument is bad enough but when the public buys into it, it really tells me that we're in for well-deserved hard time.

[mmhardy 10]

My friends, make no mistake that Japan considers economic competition a modern form of warfare. When the Japanese government wanted their domestic automakers to lower tailpipe emissions the Diet included support and funding as part of the mandate. Did our govenment do the same with the CAFE standards. Nope.

 

The cooperation between the government, industry and the financial institutions in Japan is well documented. Japan views R&D as critical to long term success and supported R&D since the 1980s. Those government investments seem to be paying off as the Big 3 are now on their knees begging for mercy.

 

So much for the "Darwinian consequences" of a free market. That concept is a myth in a global economy. As long as our government and business bang heads the rest of the world will pass us by. Are we going to continue to to operate this way?

[packsaddle 753]

As I remember it, years ago the auto industry lobbied its way around proposed higher fuel mileage standards (CAFE) by threatening the Reagan administration with layoffs, etc. Sound familiar? There was similar resistance to safety standards, etc. over the years.

They could have been leaders in that technology. They declined that status.

Last December the federal government made $25 billion available for loan to the auto industry so it could do the R&D to meet CAFE 2020. That loan is still available. In chapter 11, they might even use it to slim down and retool as a real competitor. I predict stiff resistance to that idea by the auto industry.

 

GM had a prototype electric vehicle that was in production and in use (the EV-1) back in 1996 and then they discontinued the production in 1999. They switched from this direction to the pursuit of profit from gas guzzlers (among other things, they acquired Hummer). They then retrieved nearly all of the EV-1 cars and destroyed the last of them in 2003. The symbolism is unavoidable. Their apocalyptically stupid planning was quickly matched by Toyota and Honda which introduced the first, very successful, hybrids. The rest is the current sad history.

 

This is not 'rocket science'. It is taking a quick buck at risk of market punishment. The market is, in fact, doing what it is supposed to do: selecting against those who are not competitive and that IS a Darwinian consequence. The market doesn't care what mechanisms, political or otherwise, lead to innovations and clever strategies. The market merely rewards successful competition and selects against unsuccessful competitors. Our auto makers gambled on the quick buck approach and lost. They are paying for their arrogance and stupidity.

 

I'll venture a guess that somewhere in all that corporate morass is a nucleus of imagination and innovation that could re-form a new, competitive, smart auto industry. THAT might be worth some government encouragement.

In another thread I stated what my conditions would be for a bailout. It amounted to completion of the socialist contract. The industry would be owned (and to some extent run) by the American people through our elected government. I don't like that idea but it is the way I see the least damage from the folly of a bailout.

I am sorry that you and a lot of other people are going to pay for bad decisions by some very-highly-paid, but arrogant and stupid corporate leaders. But that is (or at least used to be) the American economic system.

The one irony I add to my collection of delicious ironies is that the political party that portrays itself as so-called 'conservative' has embraced socialism with such gusto, in the process rejecting true conservativism.