Let GM and the other failed auto giants go under

[+Green Blog]

Photo credit: davetrainer

Trevor Reichman over at TreeHugger asks why GM and the other corporate giants in the auto industry seeks $50 billion in public funding, while no one mentions help for public transportation.

Reichman points out that the demand for fuel in USA is decreasing and that an increase in travellers on public transportation shows that “Americans are willing to drive less”. So why should the US government even think that a “wasteful and economicly demanding invention from last century” is needed when there are other and better alternatives available.

“Instead of handing over 50 billion dollars to an industry that cannot be sustained at its peak level, public funds can be better used to fund rails, buses, and bicycle pedestrian projects that have already been engineered, already been proven, and are just waiting for funding. While GM and friends seek roughly $165 per American, there is no clear or specific plan for how that money will be used to benefit the public or save jobs.”

Reichman says that the “automobile giants have successfully lobbied to derail mass transit infrastructure around the world for many decades”, and that “now is not the time to further subsidize them.”

“Commuters have spoken, through actions, that the use of public money is better spent on public services than on private industries. Shifting jobs from the automotive sector to the public transit sector may hurt the elite few who sit at the top of a decades long monopoly over transit infrastructure, but the millions it would almost immediately benefit is something to consider before a decision is made.”

I completely agree with Reichman.

GM and the other auto giants that now face a financial crisis and their own impending death have themselves to blame. These auto companies have resisted and done everything in their powers to stop stronger compulsory MPG and CO2 emission standards, denied climate change and their promises that they could cut their greenhouse gases voluntarily have all failed. As a result the average car sold in USA today is less efficient than the Model T Ford from 1908.

In Sweden the auto giant Volvo is also facing a financial crisis and many people are loosing their jobs. The Swedish Government foolishly tries to help by pouring tax-money into these doomed companies. They all ignore the fact that these companies are failing today because they have for year’s resisted sane technological change.

The best thing for everyone is to let these “foot-dragging, planet-eating spongers” to go under.

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[Bobby]

The only problem here is what happens to all the people who would lose their jobs?? It's all great saying save the planet and let the big manufacturers go under, but realistically that would leave thousands of people destitute. I'm sure a strategy which involves financial aid in return for better manufacturing processes would be more beneficial in the long run...

[mountainhiker]

The only problem here is what happens to all the people who would lose their jobs?? It's all great saying save the planet and let the big manufacturers go under, but realistically that would leave thousands of people destitute. I'm sure a strategy which involves financial aid in return for better manufacturing processes would be more beneficial in the long run...

better manufacturing processes are not the answer, different processes are the answer producing a far different car than they produce today. Cars that are far more energy efficient, think what the effect would be if all cars got 50 mpg, instantly the oil requirement would be 1/5 of what is today. and on top of that we had electric cars that got the effect of 400 mpg. That is where they have to go and sadly they will only go if they are forced to by the governments. Ie, a bail out, is bad for business but good for the majority of the people in the long run. GM, has to unload the union contracts or they will NEVER be able to compete so a bail out without that is a never ending black hole.

[Simon]

You both bring up very valid points. But would we really hesitate to let these ignorant car companies die if we wouldn't all be in this global financial crisis?

Yes it's always sad when people loose their jobs. But, things change, and mostly to the better. Other companies will replace these “big three”.

In Sweden thousands of people have lost their former jobs in the car industry. Lars Ohly, party leader for the Left Party, says the car factories should be transformed to making wind power stations instead. That is something companies and governments around the world should really consider. The green sector will create millions of new jobs.

And mountainhiker is correct. These billions that the car companies will get will not make them build greener cars. It will just keep a dead company alive a bit longer.

[Simon]

Ford's solution to it's crisis:

“Ford Reintroduces Model T Line That Made It Great”, which has the following great figure:

[Simon]

"Until they show us the plan, we cannot show them the money," Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.

Oh yeah! Now, how likely is it that these failed auto companies will come up with any plan assuring the money would make them economically viable?

[brettbh]

Yes it's always sad when people loose their jobs. But, things change, and mostly to the better.

Indeed. Gloom mongers always predict that change will have a lasting and damaging effect, but it never does. The Luddites resisted the mechanization of the wool industry in order to save their jobs, but their jobs were nonetheless lost. The loss didn't result in lasting unemployment; people simply transitioned to other occuptions. And do you remember when computerization was claimed to be the harbinger of mass and permanent job losses? That hasn't happened either. Yup, computers led to some job losses, but it created just as many.

That said, I do wonder what the effects of bankruptcy would be. Bobby said that it, "would leave thousands of people destitute." That's somewhat of an understatement. Those companies directly employ 240,000 people and indirectly support more than 4.5 million other workers. Were they to go bust, there would be a substantial loss of tax revenue, a substantial increase on the welfare bill and a substantial shift in consumer spending.

GM and the other auto giants that now face a financial crisis and their own impending death have themselves to blame. These auto companies have resisted and done everything in their powers to stop stronger compulsory MPG and CO2 emission standards, denied climate change and their promises that they could cut their greenhouse gases voluntarily have all failed. As a result the average car sold in USA today is less efficient than the Model T Ford from 1908.

The best thing for everyone is to let these “foot-dragging, planet-eating spongers†to go under.

Whether or not these companies deserve to be saved is not the issue; the issue is whether they need to be saved in order to avoid the economic consequences of bankruptcy. And I somehow doubt that the millions who would lose their jobs and the millions of small investors who would lose a chunk of their savings would agree that it's in everybody's best interests to allow them to go under.

[mountainhiker]

"Until they show us the plan, we cannot show them the money," Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.

Oh yeah! Now, how likely is it that these failed auto companies will come up with any plan assuring the money would make them economically viable?

How likely, pretty much close to ZERO. Just how dumb are these people, show up and pretty much say that they have no clue as to how they will spend the money. Yeah, really want to trust this bunch of dim bulbs. :info:

Sadly, the only way they can turn it around is shed the union contracts. The average worker make twice what the workers at other car makers. Oh, the top 20 managers (added together) at Toyota don't make what the CEO of GM makes, hard to compete when your base overhead per car is $2,000 more than your competition. :mad:

[Simon]

How likely, pretty much close to ZERO. Just how dumb are these people, show up and pretty much say that they have no clue as to how they will spend the money. Yeah, really want to trust this bunch of dim bulbs. :info:

Sadly, the only way they can turn it around is shed the union contracts. The average worker make twice what the workers at other car makers. Oh, the top 20 managers (added together) at Toyota don't make what the CEO of GM makes, hard to compete when your base overhead per car is $2,000 more than your competition. :mad:

No no no. It's not the workers or the unions fault. The problem is that these company leaders are too dumb and too expensive for their company. These auto companies are not failing because the others have a cheaper workforce. They are failing because they make stupid gas-guzzling cars that no one wants to buy.

[mountainhiker]

No no no. It's not the workers or the unions fault. The problem is that these company leaders are too dumb and too expensive for their company. These auto companies are not failing because the others have a cheaper workforce. They are failing because they make stupid gas-guzzling cars that no one wants to buy.

You are trying to make it too simple. YES,

these company leaders are too dumb and too expensive for their company

, but, also the unions have inflated the cost of the workers to the point that they are too expensive for the company also. The bottom line is that both sides have to give here. Replace the management with people that are willing to change the corporate model, develop a plan to reduce the over production of cars, develop a plan to REALLY produce cars that people want to buy and rewrite the union contracts. No company can compete in the market place when your base cost is far greater than the competition.

[Simon]

You are trying to make it too simple. YES,

, but, also the unions have inflated the cost of the workers to the point that they are too expensive for the company also. The bottom line is that both sides have to give here. Replace the management with people that are willing to change the corporate model, develop a plan to reduce the over production of cars, develop a plan to REALLY produce cars that people want to buy and rewrite the union contracts. No company can compete in the market place when your base cost is far greater than the competition.

No, you still dont get it. The problem is not that GM and the other failed auto companies pay their employees reasonable salaries. It's because they make gas-guzzling cars that no one wants to buy. You can't make any money if you can't sell the things you make.

If there is anyone in GM and the other auto companies that should get their salaries cut, based on their work and results, it's the people who run them.

[mountainhiker]

No, you still dont get it. The problem is not that GM and the other failed auto companies pay their employees reasonable salaries. It's because they make gas-guzzling cars that no one wants to buy. You can't make any money if you can't sell the things you make.

If there is anyone in GM and the other auto companies that should get their salaries cut, based on their work and results, it's the people who run them.

And the part that you are missing is that the unions have forced them to "pay their employees UN-reasonable salaries"

which added to the fact they are producing cars that people do not wish to buy for several reasons including "gas-guzzling" and some truly butt ugly cars has put them in a position where they cannot be viable in the long term. They have to drop kick the current management of GM out the door, lower wages to the market norm, design and build cars more fuel economical than the competition AND build cars that you would want to be seen driving... :info:

[brettbh]

And the part that you are missing is that the unions have forced them to "pay their employees UN-reasonable salaries" which added to the fact they are producing cars that people do not wish to buy for several reasons including "gas-guzzling" and some truly butt ugly cars has put them in a position where they cannot be viable in the long term. They have to drop kick the current management of GM out the door, lower wages to the market norm, design and build cars more fuel economical than the competition AND build cars that you would want to be seen driving...

Yup, that sums things up reasonably well. To compete, these companies have to start producing vehicles that people will want to buy. That means producing greener vehicles; but it also means producing vehicles that are aesthetically pleasing and which match the reliability of the competition - and dropping the product lines which do not meet those criteria. They also need to substantially cut their operating costs by reducing salaries and eliminating extraneous dealership franchises.

Simply pumping $25 billion into these companies is not the answer as it would provide only a temporary solution to their problems. They need to completely restructure. But it's not going to be easy for them to do that. The unions would be extremely unlikely to agree to substantial salary cuts and various state laws prevent them from dropping fanchises.

To my mind, the only way forward is for these companies to file for Chapter 11 as this would enable them to carry out the necessary restructuring. Any subsequent injenction of public funds should be made subject to some strict conditions in order to ensure that the companies start to head in a more viable direction. There is, however, a big risk involved with this - namely that their sales would plummit (I mean, would you buy a vehicle from a company that had filed for Chapter 11?).

On a separate note, I found it rather amusing that the company bigwigs flew into Washington on their corporate jets to beg for the $25 billion. That's probably not the best way to gain public sympathy!

[mountainhiker]

Yup, that sums things up reasonably well. To compete, these companies have to start producing vehicles that people will want to buy. That means producing greener vehicles; but it also means producing vehicles that are aesthetically pleasing and which match the reliability of the competition - and dropping the product lines which do not meet those criteria. They also need to substantially cut their operating costs by reducing salaries and eliminating extraneous dealership franchises.

Simply pumping $25 billion into these companies is not the answer as it would provide only a temporary solution to their problems. They need to completely restructure. But it's not going to be easy for them to do that. The unions would be extremely unlikely to agree to substantial salary cuts and various state laws prevent them from dropping fanchises.

To my mind, the only way forward is for these companies to file for Chapter 11 as this would enable them to carry out the necessary restructuring. Any subsequent injenction of public funds should be made subject to some strict conditions in order to ensure that the companies start to head in a more viable direction. There is, however, a big risk involved with this - namely that their sales would plummit (I mean, would you buy a vehicle from a company that had filed for Chapter 11?).

On a separate note, I found it rather amusing that the company bigwigs flew into Washington on their corporate jets to beg for the $25 billion. That's probably not the best way to gain public sympathy!

Yep, the fact that they have several models that have sold less than 2,000 cars this year has highlighted their problem of being out of step, and on TV last night it was pointed out that they have groups of people that are being paid "not to work", union contract. So public sympathy has gone down hill in a big way for the management and the union as well.

As it turns out, the warranties will be honored during a bankruptcy reorganization, companies are not that dumb!

Scary thing is that they do not have a plan to produce lines of cars that will meet any sort of green standards, Ford may be close but GM is way out in left field. Possible that Ford will produce a plan but that will really sink GM if they are not able to match it. Cannot keep a company afloat that refuses to produce cars that people want to buy...

[brettbh]

Yep, the fact that they have several models that have sold less than 2,000 cars this year has highlighted their problem of being out of step, and on TV last night it was pointed out that they have groups of people that are being paid "not to work", union contract. So public sympathy has gone down hill in a big way for the management and the union as well.

As it turns out, the warranties will be honored during a bankruptcy reorganization, companies are not that dumb!

Scary thing is that they do not have a plan to produce lines of cars that will meet any sort of green standards, Ford may be close but GM is way out in left field. Possible that Ford will produce a plan but that will really sink GM if they are not able to match it. Cannot keep a company afloat that refuses to produce cars that people want to buy...

Gotta say, the situation really makes you wonder about the merits of capitalism. I mean, here we are with a collection of under-performing CEOs of under-performing companies riding into town on their multi-million corporate jets to beg for $25 billion of taxpayer's money. There's something wrong with that. Were these stoogies to be the CEOs of smaller companies, they'd be laughed outta town and their companies would cease to be. Yet, because the demise of these corporate monsters would have such a profound economic impact, they'll almost certainly end up being bailed out and the under-performing CEOs will keep their fat salaries and corporate jets ... all thanks to $25 billion of Joe Public's money. Hmmm ....

[mountainhiker]

[

Gotta say, the situation really makes you wonder about the merits of capitalism.

Has nothing to do with capitalism! What it has to do with is greed and corruption which you find under all forms of government. And keep in mind the greed was just as bad in the unions as it was in the management of GM. A key failure here was the lack of oversight of the board as well. "Never underestimate the power of stupid people in large groups to do really stupid things". <_<

[Simon]

First of all, it's not the workers fault that GM and the other failed auto companies are in this mess. So why should they have to lower their salaries, when their FAILED bosses makes $8000 every hour and can keep all their 8 personal company jets? Don't blame this mess on the unions or the workers. Instead blame should be directed at the rich ("capitalistic pigs") bullys that think they can get away with all of this without even making a single personal sacrifice.

And to answer Mountainhiker. Of course this is capitalism's fault!

Capitalism cannot exist without constantly expanding the scale of production and income. And any interruption in this process will take the form of an economic crisis. So capitalism is greed. And greed is capitalism.

Henry Ford II once explained why the US automakers prefer to make gas-guzzling cars, he simply stated that "minicars make miniprofits".

And John Z. DeLorean, former GM executive, have said that: "When we should have beeen planning switches to smaller, more fuel-efficient, lighter cars in the late 1960s in response to a growing demand in the marketplace, GM management refused because 'we make more money on big cars' ".

Now back then people already knew how stupid and inneficient private motorism was. But they all ignored it because otherwise their profits wouldn't be so high.

Bradford Snell once stated in a famous report to a US Senate committe that: "motor vehicle travel is possibly the most inefficient method of transportation devised by modern man."

But nevertheless the central US national transportation policy during most of the twentieth century has been a corporate strategy geared towards the high profits that comes with private motorism. Wasteful federal fundings for highways has been added with declining government subsidies for public transportation.

And its not just the US government that should be blamed here. GM and the other major auto companies in USA deliberately dismantled US earlier mass transportation system. GM and the others (also with the help from Standard Oil and Firestone Tire) systematically bought up many of US electric streetcar lines and converting them to busses. As a result the number of streetcar lines dropped from 40000 in 1936 to 5000 in 1955. At the same time GM used it monopolistic control over bus production and the production of locomotives to ensure the growing displacement of bus and rail traffic by private motorism. They essentially undercut themselves in intercity mass transit in order to make higher profits off increased private motorism.

And so USA today have to rely more than any other country in the world on private motorism and trucks for the ground transport of people and goods (with disastrous consequenses for the environment). Private motorism today in US account for the insanse 90% of all travels.

[brettbh]

Has nothing to do with capitalism!

Sorry, but this has everything to do with capitalism! Were our society not to be motivated by profit, do you really think that government would be handing over $25 billion of the public's money to the jet-set CEOs of private corporations to enable them to keep on making products that cause serious harm to our environment?

In Canada, the government is considering permitting coal to be mined in the Flathead River Valley, a pristine ecosystem to the north of Glacier National Park which has been described as "Canada's Serengeti." Meanwhile, south of the border, Glacier and other national parks are at risk from new rules which, according to the Washington Post, "Would make it easier to build coal-fired power plants, oil refineries and other major polluters near national parks and wilderness areas, even though half of the EPA's 10 regional administrators formally dissented from the decision and four others criticized the move in writing." Were it not for the fact that our society is motivated by bucks, neither of these things would be being considered. I mean, who would stand to benefit from a region such as Flathead, which supports the largest inland poplation of grizzlies in North America, being turned into a bloody big coal mine? The mining company and it's investors, that's who!

Government is controlled by big business: it's controlled by the companies that make millions in political donations, which employ countless lobbyists and which, like GM et al, have become so essential to our for-profit economies that they can wield enormous influence over government. In a capitalist society, government's primary remit is to enable people to make a buck. Other matters, such as the environment, come in second. And not a particularly close second at that!

When commenting on greening IT operations, Jon Koomey recently said, "We think of the problem of reducing electricity used by information technology equipment as a technical problem, but it's as much a problem of people and institutions as it is of technology. To attack this problem at its root we need to modify institutional structures and individual incentives so that the most environmentally sound methods are also the most profitable ones." And he's absolutely right. That's the way of capitalism. But it's not the right way. The most environmentally sound method should be the method that we use - whether or not it is also the most profitable.

If we are to protect our planet effectively, we need to find an alternative to the current form of capitalism. We need to find a model that will encourage people (and companies) to do what's right, not what's most profitable. We need to find a way to ensure that everybody has an equal voice when it comes to matters that affect us all - for example, you and I should have as much say over the EPA plans mentioned above as George Bush and his oil baron cronies. We need to find a way to ensure that economic decisions are reached democratically and equitably and are in the interests of the majority, not by competition between groups which are pitted against one another for profit and survival. We need to find a way to ensure that our economies reward people fairly for their contribution to society, and do not simply give big bucks to under-performing CEOs of an under-performing companies. We need to find a way to ensure that products are manufactured in the cleanest way, and not in the dirtiest way because that happens to be the cheapest and will enable the competition to be undercut.

People think that they live in democracies, and they do - but only to a point. Americans get to select their President by choosing between a couple of big business-backed candidates, but that's about as much say as they get in decision making processes. Joe Public certainly does not exert as much influence over government policy as the CEOs of GM, ExxonMobil and other major corporations which spend millions on political contributions and lobbyists.

In short, we need to find a way that to ensure that wealth and power are distributed evenly (and globally) among the majority and not, as it is at present, held by the minority. Globally, 50% of the wealth is possessed by 2% of the population - and the poorest 50% of the population possess only 1% of the wealth. In the US, 5% of the population possess about 50% of the wealth while 12.6% (37 million) are below the official poverty line. Yup, actors, sports stars and the CEOs of companies such as GM and Ford have more money than can ever spend while a twice as many people are struggling to put food on the table. The rich are getting richer, the poor are getting poorer and if you're unfortunate enough to be born poor, you'll almost certainly stay poor (50% of kids born into poor families in the US end up poor as adults - and only 5% of kids born into families in the bottom income quintile make it into the top quintile as adutls). In short, 5% of the population have more money than they can possibly spend while 12% are poverty stricken. Sorry, but our current form of capitalism simply is not working: it's bad for the majority of people and it's bad for the environment. The poor are not riding to prosperity on the coat-tails of the rich; they're simply getting poorer and staying poor. So much for the American Dream! And, all the while, we're stripping away our natural resources and damaging the planet. Companies have no real incentive to be green. Why? Because it's not the cheapest option and would result in more expensive products - products which they would not be able to sell because the competition have not gone green. Governments are unwilling to force the issue because it would make it difficult for domestic companies to compete overseas: in other words, it wouldn't be good for the capitalist economy.

So, what am I suggesting? A switch from capitalism to communism? Nope, not at all. Simply that we need to ask what we really want from our economies and whether our current capitalist economies are really delivering those things. If they're not, we need to ask how can we make them deliver and how can we make them deliver in a way that's more alturistic and will benefit the entire population.

[mountainhiker]

So capitalism is greed. And greed is capitalism

Give me a break, that does not qualify for intelligent thought, just shallow minded liberalism.... You are better than that! <_<

[Simon]

So, what am I suggesting? A switch from capitalism to communism? Nope, not at all. Simply that we need to ask what we really want from our economies and whether our current capitalist economies are really delivering those things. If they're not, we need to ask how can we make them deliver and how can we make them deliver in a way that's more alturistic and will benefit the entire population.

It's also worth noting that during the Soviet Union era they passed some of the most advanced environmental protection laws in the whole world. And ecologically the Soviet Union pioneered in various forms of environmental reforms and policies. Unfortunately when Stalin and his Stalinist bureaucracy came in power in the 30's these laws and policies were in practice disregarded and unenforced because the capitalistic goal of expending production.

Instead of communistic capitalism we need to transform our societies into eco-socialistic civilizations with a fair and even global developement.

Give me a break, that does not qualify for intelligent thought, just shallow minded liberalism.... You are better than that!

Capitalism turns humans from free subjects into objects defined by their capacity to work and consume. Capitalism is all about the generating more money above anything else. I don't know about you, but that is greed for me. And these failed auto companies is a perfect example of greed.

They got this coming. They deserve it. Let's not ease their pain or try to prolong their impending death. We got better things to do.

[brettbh]

Instead of communistic capitalism we need to transform our societies into eco-socialistic civilizations with a fair and even global developement.

For some reason, society seems to have accepted that capitalism is the only viable economic model and that anything else represents a dangerous and evil form of communism. Governments have elected to heed the advice of financial experts pulled from the ranks of companies such as Lehman Brothers, Merrill Lynch and Bear Stearns who say that capitalism is good and that less regulation and free-play market is what's needed. And where's that got us? Where we are today, that's where! Millions of people are now facing the possibility of unemployment and millions have seen the value of their small investment portfolios drop like a brick. And now the so-called experts from the financial institutions which so badly botched the economy are saying that capitalism is still good but that more regualtion is what's now needed in order to stabilize the econonmy and to separate the operations of investment banks from high street banks so that they cannot play high stakes games with our money - games which, when they worked, made enormous profits for the investment banks (and, of course, enormous bonuses for the wankers bankers) but which returned only modest gains to the people with whose money they were gambing.

Capitalism in its current form is not working. The American Dream is dead. The poor are not riding to riches on the coat-tails of the wealthy; they are simply getting poorer and remaining poor. Economic divides are increasing. The environment is being torn apart for bucks.

Like medieval map makers, we think that beyond the boundaries of our known capitalistic world lies only monsters and dragons (and reds and commies!). That's not the case and the sooner we realise it, the sooner we may begin to enjoy a better, more equitable and cleaner world.

How the Rich Are Destroying the Earth

[Simon]

For some reason, society seems to have accepted that capitalism is the only viable economic model and that anything else represents a dangerous and evil form of communism. Governments have elected to heed the advice of financial experts pulled from the ranks of companies such as Lehman Brothers, Merrill Lynch and Bear Stearns who say that capitalism is good and that less regulation and and a free-play market is what's needed. And where's that got us? Where we are today, that's where! Millions of people are now facing the possibility of unemployment and millions have seen the value of their small investment portfolios drop like a brick. And now the so-called experts from the financial institutions which so badly botched the economy are saying that capitalism is still good but that more regualtion is what's now needed in order to stabilize the econonmy and to separate the operations of investment banks from high street banks so that they cannot play high stakes games with our money - games which, when they worked, made enormous profits for the investment banks (and, of course, enormous bonuses for the wankers bankers) but which returned only modest gains to the people with whose money they were gambing.

Capitalism in its current form is not working. The American Dream is dead. The poor are not riding to riches on the coat-tails of the wealthy; they are simply getting poorer and remaining poor. Economic divides are increasing. The environment is being torn apart for bucks.

Like medieval map makers, we think that beyond the boundaries of our known capitalistic world lies only monsters and dragons (and reds and commies!). That's not the case and the sooner we realise it, the sooner we may begin to enjoy a better, more equitable and cleaner world.

How the Rich Are Destroying the Earth

Immanuel Wallerstein has said that we are in an age of transtion, from capitalism to something else. It might be worse, but maybe better!

Here in Sweden the right-wing government has today announced that they will give the auto-industry in Sweden 28 Billion Swedish Kronor - only 3 billion of those is meant to go directly to greener cars and science. They say this will help the auto industry and their subcontractors. But experts say it will just prolong their death and say these failed auto companies might either way go under by spring next year.

Its all wasted money that could have been invested into something much better! :mad:

[brettbh]

Immanuel Wallerstein has said that we are in an age of transtion, from capitalism to something else. It might be worse, but maybe better!

I do not think that we are yet transitioning to a non-capitalist model, but I do think that we are approaching a point where major economic changes shall become unavoidable. Copied from Wikipedia:

Giuseppe Carone and Declan Costello of the International Monetary Fund projected in September 2006 that the ratio of retirees to workers in Europe will double to 0.54 by 2050 from four workers to two workers for every retiree. William H. Frey, an analyst for the Brookings Institution think tank, predicts the median age in Europe will increase from 37.7 years old in 2003 to 52.3 years old by 2050 while the median age of Americans will rise to only 35.4 years old. The Organisation for Economic Co-operation and Development estimates only 39% of Europeans between the ages of 55 to 65 work. If Frey's prediction for Europe's rising median age is correct, productivity in Europe will radically decrease over the next four decades. Austria's Social Affairs Minister painted a bleaker picture in 2006, saying the 55 to 64 year old age bracket in the European Union will be larger than the 15 to 24 year old bracket by 2010. The Economic Policy Committee and the European Commission issued a report in 2006 estimating the working age population in the EU will decrease by 48 million, 16%, between 2010 and 2050, while the elderly population will increase by 58 million, 77%. By 2050 the ratio of Europe's working age to senior age population will decrease by 50%, two workers instead of four for every retiree. The U.S. Census Bureau estimates the European Union will experience a 14% decrease in its workforce and a 7% decrease in its consumer populations by 2030.

http://en.wikipedia.org/wiki/Aging_of_Europe#United_Kingdom

State welfare schemes were introduced at a time when people started work at young age and the average age expectancy was only a little over 60. Accordingly, people paid into those schemes for the majority of their lives, but took out only a relatively small amount. That's now been turned completely on its head. People are remaining in education longer and retiring earlier. Life expectancies continue to increase and so people are paid retirement benefits for a greater number of years and need health care for a greater number of years (in Switzerland, the number of people aged more than 100 has doubled every year since 1950). Furthermore, there are now a sizeable number of people who either never contribute to the welfare schemes or who contribute minimally - the long term unemployed and non-working single parents, for example. The welfare systems are also being constantly extended to pay more people more money in more circumstances. Whereas once people were paid benefits only when they were sick or had retired, they are now paid those benefits for maternity, paternity, strike absences and ill health caused by narcotic addictions (why the heck don't we pay for compulsory rehab rather than paying sickness benefits because they are too "ill" to work?).

This trend is completely unsustainable. Look at government projections for the next 20 to 30 years and you'll see a closing gap between revenue and spending. A shrinking number of workers simply cannot pay for an expanding number of non-workers. The balance sheet will eventually stop balancing.

We need to radically change our socio-economic models. We need to face the harsh fact that there are too many non-contributors in our society - non-working single parents who spend 20+ years on welfare, habitual criminals who are constantly in the court system, etc., etc. - and that we cannot afford to continue to support such people. These people are what society had made them and what society enables them to be - but now society need to find a way to remodel them into contributors and ensure that subsequent generations also become contributors. We need people to start working for the common benefit rather than working for the benefit of the 2% of people who control 50% of the wealth. We need to find ways to distribute wealth more equally. We need to find ways to ensure that we can properly care for the members of society which need care.

We see schools close because of a lack of money. We see hospitals unable to offer proper care because of a lack of money. We see people forced into selling their homes because it's the only way that they can pay for their medical care. Even in supposedly advanced countries (such as the US), we see people people who cannot afford basic necessities such as food and health care. Why? There's certainly no shortage of money in the US - the richest 400 people alone are worth more than $1 trillion - so why are some people unable to afford to heat their homes or buy food?

People created money, but are now going hungry because of that creation. Money has become king, but it can be dethroned.

[mountainhiker]

We need to find ways to distribute wealth

There is, it is called work. The non contributors need to grasp the concept!!!! <_<

[brettbh]

There is, it is called work. The non contributors need to grasp the concept!!!!

Yup, we do indeed need to reduce unemployment, but that alone is not the solution. There are millions of working people who are extremely poor. Do you know where the majority of your tax bucks go? Education? Health care? Nope, the biggest slice goes on military spending. And who benefits most from that military spending? The soldiers? Nope, it’s the CEOs and executives of the companies which manufacture weapons. Is the CEO of the chain which owns your local grocery store deserving of a half a million dollar salary? Do talented actresses such as Angelina Jolie deserve the enormous sums that they make? Did Dick Fuld, Chairman and CEO of Lehman Brothers and one of the "Ten Most Wanted: Culprits of the Collapse" deserve the $45 million he made in 2007? Is the CEO of GM deserving of his enormous salary – a salary that will soon be paid by your tax bucks? And what about sports stars and their multi-million buck contracts?

Ultimately, it’s your money that pays these people. It's the money that your activities help create. It’s the money you pay in taxes, the money you spend to see a movie, the money you spend at the grocery store and the money you spend when buying a car. Do you really think they are worth it?

The problem is that our economy is like a crooked pyramid scheme in which the people at the bottom make little while the people at the top make enormous sums.

For years, it has been claimed that these super rich people are extremely important. That they are what drives the economy. That we dare not tax them too much or they may decide to take their talents overseas. That the poor will ride to riches on their coat-tails. What absolute BS!

Some food for thought. In the US, 5% of the people possess more of the wealth than the remaining 95%. 10% of the people possess 85% of the stocks and securities and 90% of the business assets. The wealth of the top 5% is increasing at a much faster rate than the wealth of the rest of the population. Divide out the wealth of the richest 400 people among the rest of the population and each man, woman and child in the US would get about $3000. Divide out the wealth of the top 5% (about 15 million people) and each man, woman and child would get ... well, would you like to take a guess? Hint: it's probably more than you think. In fact, it’s probably way, way, WAY more than you’d think!

But while the richest are getting richer at a faster rate, everybody else is getting poorer. The real value of the minimum wage has decreased. Somebody earning the minimum wage today has less buying power than somebody earning the minimum wage in the 1960s. And the real value of the average wage has steadily decreased too. Do you see a trend here? Wealth is being channelled from the bottom of the pyramid to the top.

Do you really think that this is a sound economic model? Do you really think that it’s in the best interests of the majority of the population?