Saturday, February 21, 2009

Simple Bailout Math

GM and Chrysler are back looking for 9 billion and change.

Now, the CAW website says 'over 250,00 members'. Wikipedia says 265,00, but that includes industries like health care, which for some reason are represented by the CAW. Can you see where I'm going with this?

9 billion / 250,000 = $36,000. (If there's some change left over, give it to Ford, they seem to have a better idea of what's going on.)

Note that this lower bound is way south of the infimum, since it assumes that without the bailout everyone currently employed and represented by the CAW will be laid off, while the bailout will maintain current levels of employment at GM/Chrysler, neither of which are realistic scenarios, e.g. Chrysler has already committed to laying off 13,000, reducing it's Canadian workforce to 7,000. It wants 2.7 billion.

2.7 billion / 7000 = $385,714.29.

These jobs are getting pretty expensive. I remember back when I took cost-benefit analysis, when payments to labour input went in the cost column. The times change. And no, there are no valid arguments along the lines of 'but if the automakers go, so does x,y,z', because the government could spend the money somewhere else and presumably realize the same multiplier effects in the opposite direction.

If this goes through, we should lobby for a bailout of econobloggers.

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