The Brian Sullivan Blog
  • November 18, 2008 10:42 AM EST by Brian Sullivan

    Auto Industry Video: The Scope of the Problem & Why Trickle Down Economics Suddenly Matters

    The U.S. auto industry (via GM) is going straight to the people in the form of a new video on YouTube.   It's designed to lay out a case for a government-sponsored cash infusion.    Conclusions are in the eye of the beholder, but there are two main takeways in my mind:

    1. The extent of the health care/benefits/pension problem is greater than previously thought.   Together GM, Ford and Chrysler employ 239,000 people yet as the video states around 2 million people rely on these companies for health care and other benefits, a nearly 10:1 ratio.

    2. The debate over whether trickle down economics is dead should be given a gravestone after watching this video.   The automakers make the case that millions of Americans would be impacted by their failure, even those only indirectly affiliated with the auto industry.    The argument is that if one or all of the "Big 3" go down, cars won't be sold and everyone in the chain (builders, sellers, distributors, mechanics, etc) would be injured economically.   The negative impact trickles down.   The inverse then must be at least partly true.   Benefit costs aren't the only reason the U.S. automakers got into this precarious position.  It is also slowing sales of large and profitable SUVs.   If sales didn't drop off a cliff as gas prices rose the financial condition of GM, Ford and Chrysler would be less weak.   Suddenly the buyer of that $45,000 GMC Yukon looks very important.    Many of the same organizations who shouted that trickle-down doesn't work are now using a "trickle-up" theory of defense.

N JAY GOLD

THE MARK UP ON AUTOMOBILES IS HUGE. THE OVERHEAD MUST COME DOWN. "END OF STORY" OVER HEAD MAY CONSIST OF: 30 MILLION IN BONUS' GOING TO PEOPLE THAT EARN MORE IN ONE DAY THAN THE "AVERAGE WORKER" MAKES IN A YEAR. WORKERS MAKING MORE THAN 3 1/2 TIMES(conservative) THE AVERAGE WORKER IN THE US. GREED, WASTE. I VOTE AGAINST ANY BAILOUT!!!!!!!!!!! comments@whitehouse.gov.

November 18, 2008 at 2:28 pm

Tony Gray

Great point about "trickle down". I have this argument with friends all the time (I suppose I'm the feisty type.) They can never understand the interrelation of economic forces and how prosperity CAN be raise for all. They live in a zero sum game mentality and no matter how many specifics I can raise to prove my point they retreat to a simplistic rich bashing, take care of the poor at all costs position. I spent 25 years in the Army traveling all over the world. The average American has absolutely no concept of what "poor" really is.

November 18, 2008 at 12:44 pm

dave

Well the financial industry is or was set to get the biggest bail out in history, and they were the ones who got into hot water by giving out money that they knew could never be paid back. So the people who work and pay the bills would have to pay instead of the people who took the loans and who made the loans. The car guys saw this and want in, it's lots easier to ask for the hand out instead of really running the company like it should be run. If i spend to much money and cant pay my bills they come take my stuff, turn off the power and unplug the cable..... Are we not all responsible for our actions? Or does that only count if you dont make enough money to have "friends" in DC?

November 18, 2008 at 12:23 pm

YouthDriver

Not for publishing though, Will hand it to you there Brian Sullivan, you seem to be alive there in all core aspects to journalism. All thoughts on NewsCorp / FBN aside, that's a good thing. Unless there is a slant I'm missing, seems to be great work there on offering up new ideas or new issues to focus on as of late. Such as - who's next, insurance sector ? What's odd is, we already DID AIG, and that they are NOW up to 150 billion ? sheesh that's pretty big- we can almost skip some of the rest of the insurance industry, but I do say - good idea if I recall it was you who asked who's next.

November 18, 2008 at 11:51 am

YouthDriver

repost - didn't show up. I will give FBN this. Washington Post seems to run more oil petro sector ads. I often judge the media on the quality of the advertisers. FBN is in a boatload of trouble on that. from the paid tv advertisements at night to the ads in the day - they're often these low brow fly by night companies with gimmicky products. ALMOST as if it's all fake. Those head on ads ? call me insane, but I find them to be JUST an excuse to abuse the ole right brain with all that flashing and repeated brain washing 'head on' flash - says it again 'head on ' flash - says it THIRD time. After one of those ads ? I tell ya, I might be just worn out enough to suck down whatever is put in front of me. It's like a slap in the face too. USELESS gimmick products to remove SERIOUS pain ? give me a break. Try Oxycontin or my fav. HydroMorph - 2,000 as potent as morphine. Your ads leave people frustrated for health care solutions after they find out all the products you support are phony. It's a slap in the face. Anyone over 250k a year has a doctor scripting OxyContin and Valium without regard to addiction to opiates or benzo's anyhoo. I don't get FBN's advertising spectrum AT ALL.

November 18, 2008 at 11:47 am

john

What is the bottom line for the automakers.. They are in trouble from the unions, the high cost of taxes.. health care... really poor business managment... But, I can tell you what I personally think the problem is ... How bout you build a better car!!.. I finally gave up on my last Chevy.. I've bought a Suzuki car. The difference is night and day. For the first time in my 20plus years of driving .. I've not had to replace thousands of dollars of parts on my car after every 40,000 miles. I've not had the door fall off because of faulty door hinges.. I've not had to put 3 alternators on the car before 75k miles.. I've not had to put ignition boxes in the car every 40k.. and on and on and on!... I would love to buy an American built car. With the heft investment in cars today.. the quality is what I'm looking for.. A message to the BIG 3.. BUILD A BETTER CAR..WE WILL COME BACK ....

November 18, 2008 at 11:45 am

YouthDriver

Forget aid I want a class action against Detroit and all who have taken part in destroying the pulmonary health of all children in the world. Hey, if the GOP can use the unborn to make a case- I'll use the BORN to make a case.

November 18, 2008 at 11:43 am

YouthDriver

I want to drive a car that will put me on Advair.

November 18, 2008 at 11:40 am

about this blog

  • Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block. Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.

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