By DAVID MOON, Moon Capital Management,
December 21, 2008
I've written about
and poked fun at politicians, industry captains, fat people, skinny people,
Alabamians, investment advisors, republicans, democrats and one of my
brothers-in-law. (I've had five, so you guys try to figure out which
My columns on the business aspects of college athletics
have generated the most letters, many in passionate
Not any longer. If you want mail, write a newspaper
column about the automobile industry.
Many of the comments and questions regarding last week's
column were repetitive, so I'll address them here, rather than respond
To those who agreed with my support of economic
Darwinism as it relates to the U.S. auto industry, thank you and
congratulations. Obviously you are well-informed, soundly grounded and extremely
intelligent. You are drawn to great writing and recognize an author with
Now onto the fun stuff.
The point of last week's column was that a federal
government bailout of the U.S. auto industry makes much
political, not economic sense.
Most of the letters of criticism I received actually
helped make the point. They disagreed with my conclusion by making
political arguments, not economic ones.
One writer told me that the Detroit automakers made
contributions to aid victims of the 9/11 attacks, unlike the foreign automakers.
As a result, GM, Chrysler and Ford deserve our help.
That is a political argument, not an economic
Another writer provided a list of general economic woes
that have plagued the U.S. since the start of the Bush
presidency. Additions to the national debt. Lost jobs. A decline in the
stock market. And besides, a $15 billion auto bailout is equivalent to only six
weeks worth of spending in Iraq.
This is not an economic cost/benefit analysis of why a
$15 billion infusion into the auto industry makes sense. It is an argument
of why it makes political sense.
Many writers questioned the labor costs referenced in
the column. Here are a few comments, along with my sources.
I must not have been clear, because several readers
mistakenly believed that I wrote that the average wage of a UAW worker is $73 an
hour. Not true. That is the average labor cost. In the next paragraph I
noted that the $73 figure includes insurance, retiree benefits and the jobs bank
The average GM cash wage of $37 an hour in 2006 is
incorrect. The General Motors Media handbook (available on the GM website)
reports the average cash compensation for hourly employees in 2006 as $39.68 per
I stand corrected.
As a couple of letter-writers pointed out, the most
recent UAW contract calls for certain new hires to make $14 an hour. The auto
makers, however, aren't hiring new workers, so that is almost irrelevant.
I wrote that the average wage in the U.S. is
$28 an hour. That statistic is based on September data from the U.S. Department
Finally, in a short email, one writer simply called me
stupid. His email had a grammatical error in every
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).