December 13, 2008  ·  Lessig

The United States Congress is toying with setting the wages of UAW workers.

This fact apparently surprises some (including Michael Moore). And the fact that I oppose the bailout surprises some (except those convinced I’ve been recaptured by my teenage (and Republican) self).

But the statistic most significant to me is as MAPLight.org nicely reports, “House members voting ‘yes’ on auto industry bailout received, on average, 65% more from auto industry interests than those voting ‘no.’”

Take the money out of politics (and here’s a specific proposal for doing that), and then come back to me to talk about the good, public regarding reasons why Congress is stepping in to “save the auto industry.”

  • Adrian Lopez

    Given the intimate relationship between banking and the overall economy, I wasn’t opposed to a conditional bailout of financial institutions, but this new bailout is ridiculous. Let’s not reward mismanagement and corporate greed by bailing out failing industries.

  • Tom M

    The MAPLight report has limited argumentative value since it fails to include money tied to more general union busting interests. That omission is serious since union busting is an important part of what’s at stake here.

    See also: http://www.salon.com/news/feature/2008/12/13/bailout/

  • http://www.astorandblack.com/ Suits

    I agree that money has taken a big role in politics however i do feel that there are many jobs that will be lost if we do not take action and these jobs are one of the last rungs that are holding the markets together.

  • http://www.socialsecuritybullshit.com Steve Baba

    Unlike Obama, I am in favor of public financing, but in this case, it’s likely that UNION VOTERS (special interest) voters would give the same result, a bailout. Obama’s support of the bailout is an example of this (unless you want to claim the Obama was influenced in this case by donations).

    I am not entirely comfortable with the automobile bailout, but since Obama did win the election, it might be fair to keep the automobile firms alive and hand the problem to Obama.

  • Tom Poe

    Newscasts always include shots of unbelievable numbers of autos sitting in lots of our country’s ports. Every one will have to have a mileage improvement kit installed. Add every car on the road to that list, and I suspect there will be enough work to keep every auto company busy with lots of labor. Instead, we see the auto industry asking for bailout money to continue operations as is. Hard to have sympathy from where I sit. Worse, the auto industry has replaced hundreds of thousands of jobs with robots, so that today, there are only a fraction of the assembly line workers of just a couple decades ago. What bothers me most, is, the bailout money won’t keep those left working. Plants are closing as we speak.

    So, the only good option is to go ahead with the bailout, and keep the labor unions alive, until Obama gets in office, and we can embark on a shift to alternative energy and jobs programs policy that benefits workers, not corporate welfare.

  • http://vigneshram.tumblr.com VIgnesh Ram

    I agree that the monetary considerations need to be removed from politics.

    That said, I support the bailout of Ford, and perhaps GM, considering the amount of jobs lost will kick the economy into freefall. Andrew Sullivan has cited extensive articles on how we may see the unemployment level reach double digits through 2011. However, this is with consideration with the economy at large and the employees of the Big Three. Chrysler is going under anyway, and GM either needs new management or needs to go under entirely. Their bailout plan did not consist of any new ideas, instead resting on the same old ‘hydrogen technology of the future’ for which there is no infrastructure.

    Ford however, has made the effort to turn their fleet around, and will survive the crisis, albeit badly bruised. If we want to continue American innovation, we should give them the bailout as they will use it best to expand operations and thereby account for some jobs lost by Chrysler.

  • http://www.mloknitting.com/ MLO

    Please stop calling this a bailout – it is an attempt to get a BRIDGE LOAN that the bailout of the banks was supposed to supply for. This is really about the banking industry, and you, sir, like most Americans are missing the bigger picture.

  • krishna

    Prof Lessig,
    I have a lot of respect for you and the work you have done, but I am beginning to believe that it was a good thing that you decided not to run for congress. I would rather not comment, especially when I have no good things to say, but I feel that your viewpoint is, in this particular case, wrong, and feel compelled to say so.
    First, I agree with MLO that this is not a bailout, but a loan to the auto industry. There is a difference between the two, what the financial industry was a bailout, with no requirement to pay anything back and no ownership rights handed over to the taxpayer. The money for the car industry is different, it has to be paid back with an annual rate of interest. So, it is a bit disingenuous to call it a bailout.
    Second, as you know, correlation does not imply causation. The fact that many of the auto industry’s supporters in Congress have gotten money from the industry does not mean that the industry does not deserve the help it needs to survive and restructure. *Every* major industry in the United States has bought people in Congress, and the fact that Congress would choose to support an issue based mostly on who is paying a majority is a statement of the craven and corrupt nature of most members of Congress-it has little to do with the merits or otherwise of the case for loaning money to the auto industry. I have a lot of sympathy for and support your campaign to increase public accountability and reduce the influence of money from special interests on the political classes, but this is a relatively long term goal, and I think, cannot be made to be grounds for opposing a specific current issue like that regarding the auto industry.
    Third, you make a valid point that congressional support for the loans to the auto industry is not disinterested support on the merits, but you fail to note that this is far more true of the moneys handed over to the financial industry. That bailout was done in a completely nontransparent manner without any oversight, with *every* branch of government participating, from the Federal Reserve to the office of the treasury, to Congress who authorized a blank cheque for the financial industry. I think that bailout is a transfer of wealth from the taxpayer without anything (not even ownership stakes in the banks who received this largess) in return.
    I agree with you and am also uncomfortable with the general idea of bailouts, but arguably the proposed loans to the auto industry are much smaller in value, and have to be paid back which is not true of the money handed over to the financial sector. Most importantly, such loans would give millions of workers a chance to avoid unemployment in an incredibly hostile economic climate, and I think this is the most important reason why loaning the auto industry money at this juncture is worthwhile.
    Given the jobs at stake and the very unusually hostile economic climate, it is remarkable that you choose to make the auto industry the target of your ire over bailouts, while ignoring the probably criminal malfeasance that has occurred in government dealings with the financial industry. It also appears to me that all the arguments you make against the auto industry loan proposals (including the angle that politicians are often paid off) can be made equally well, and probably with greater justice, against handing over money to the financial sector under the conditiojns under which such a transfer is currently taking place.

  • UserGoogol

    Steve Baba: Obama supports public financing. He co-sponsored the Durbin-Specter Fair Elections Now Act in the Senate.

  • Jardinero1

    I find the idea of public financing abhorrent. The foremost reason for my revulsion lies in the fact that I refuse to pay taxes which finance a candidate I do not support. To the public financing advocates I ask how do you square liberty and a free society with compulsory financing of a candidate? How do you decide how to divvy up the proceeds. Who chooses which candidates get money and which don’t?

  • http://www.socialsecuritybullshit.com Steve Baba

    “I find the idea of public financing abhorrent. The foremost reason for my revulsion lies in the fact that I refuse to pay taxes which finance a candidate I do not support”

    Today we just pay taxes fo fund people like Rezko who finance candidates we may or may not support – which I find worse. Might as well cut out the middleman (Rezkos).

  • Tom

    You forgot to include in our analysis how much money the Senators voting against Detroit took in from Detroit’s competitors. C’mon the two leading Senators voting to kill the union, I mean, Detroit, are from Nissan, oh, I mean Tennessee and Germany, oh, I mean South Carolina.

  • Tom

    You forgot to include in our analysis how much money the Senators voting against Detroit took in from Detroit’s competitors. C’mon the two leading Senators voting to kill the union, I mean, Detroit, are from Nissan, oh, I mean Tennessee and Germany, oh, I mean South Carolina.

  • http://mutualist.blogspot.com Kevin Carson

    krishna: Actually, the auto industry doesn’t “have to” pay back the loan with interest, if it becomes unable to and winds up declaring Chapter 11 after all. And my guess is, this is what will happen.

    Before the housing bubble burst, overbuilt American industry had a hard time disposing of its full output even with everyone maxing out their credit cards and tapping into home equity to replace every damned thing they owned every five years. And we’ll never see this level of demand again. So this business model–Sloan-style large-batch production combined with planned obsolescence and the rest of the “push distribution” paradigml–is as dead as Elvis. We just haven’t started smelling the corpse yet. In a few years, that superfluous plant and equipment will be rust.

    If the government is going to spend money on anything, it should be a “bridge” to a manufacturing economy organized on the Emilia-Romagna model, with small-scale production for local markets. That way, we might just barely escape turning into Somalia when gas is $12/gallon. But instead, Congress is dead set on expending its available resources on pumping more embalming fluid into Dead Elvis until it’s too late.

  • http://mutualist.blogspot.com Kevin Carson

    krishna: Actually, the auto industry doesn’t “have to” pay back the loan with interest, if it becomes unable to and winds up declaring Chapter 11 after all. And my guess is, this is what will happen.

    Before the housing bubble burst, overbuilt American industry had a hard time disposing of its full output even with everyone maxing out their credit cards and tapping into home equity to replace every damned thing they owned every five years. And we’ll never see this level of demand again. So this business model–Sloan-style large-batch production combined with planned obsolescence and the rest of the “push distribution” paradigml–is as dead as Elvis. We just haven’t started smelling the corpse yet. In a few years, that superfluous plant and equipment will be rust.

    If the government is going to spend money on anything, it should be a “bridge” to a manufacturing economy organized on the Emilia-Romagna model, with small-scale production for local markets. That way, we might just barely escape turning into Somalia when gas is $12/gallon. But instead, Congress is dead set on expending its available resources on pumping more embalming fluid into Dead Elvis until it’s too late.

  • http://www.socialsecuritybullshit.com Steve Baba

    Lessig, it’s time for a new web host that can prevent spam hackers and not be so slow that people, two people above, double post.

  • James Robertson

    “Take the money out of politics”

    Umm, sure. The federal government now influences huge segments of the economy, and it’s only going to get more power as it passes some form of health care “reform”. In an arena where power is so concentrated, just how much more naive could you be? Wherever there’s power, there’s going to be money. If the government has the power to save or kill industries, there’s simply no way that money won’t be spent trying to influence it. For a bright guy, you seem pretty naive about this.

    Let’s take the proposal here:

    Part 1 says, in part, that the government will fund the campaign of anyone who meets a specific support threshold. Well. If lobbyists can’t fund campaigns directly, what do you suppose they’ll start funding instead? Signature drives? Ads to drive up name recognition? Issue/Attack ads to drive down the support of people they don’t like?

    Fine, you say, limit the amount that can be spent there. Well. We’ve spent the last 30 years attempting to plug holes in that kind of system. How well has that worked out? How much of our right to free speech has been limited by that attempt? How much will have to be flushed away while well meaning people attempt to “take the money out of politics?”

    Let’s take (2), where it says any citizen can donate, but only up to $250. Hmm. I suppose you just aren’t familiar with the concept of bundling, because we’ve tried this limitation, and it doesn’t work.

    The sad reality – and one that tecnocrats like you are loathe to face up to – is that wherever there’s lots of power, there’s going to lobbying, with money and other inducements (promises of jobs, etc). You want less of that? Then what you really want is more decentralization, not more central control. Devolve power back to the States, and have the states devolve it back to smaller localities. That won’t eliminate corruption, but it will make the scope smaller and less damaging

  • http://blog.russnelson.com/ Russell Nelson

    As long as the government is able to interfere with business, business will find a way to interfere with government.

    Like 300,000 kilometers per second, it’s not a law you can break.