They Flew in Private Jets! Egad!

Following the appearance of the Big Three CEOs on Capital Hill this week, one of the big headlines was not about the bailout or the state of the fledgling automakers, but on the mode of transport those corporate heads used to arrive in Washington: private jets. 

The Washington Post poked fun at the CEOs with this headline: Auto Execs Fly Corporate Jets to DC, Tin Cup in Hand.  CNN reports Big Three auto CEOs flew private jets to ask for taxpayer money.  You get the idea.  The press is telling us that we should be outraged that these guys flew in their company's airplanes to travel to a meeting.

I'm not outraged.

Call me insensitive, but when we're talking about a $25 billion bailout package for an industry that had $437 billion in sales revenue in 2007 ($178 billion by GM; $154 billion by Ford; $105 billion by Chrysler), I am not very concerned with three $20,000 roundtrip flights on corporate jets, a figure that comes out to about .00024% of the bailout package, or about .000013% of their 2007 sales revenue.  C'mon.  Give me a break.

[When you consider the cost of airline tickets - particularly first class tickets @ approx. $1400 each - for the CEOs and their entorauges, a $20K roundtrip flight on a private jet is not terribly extravagent, actually.]

Am I supposed to demand of the Big Three CEOs a symbol, or would I rather have real action on their part?  Should I demand that they fly coach next time, perhaps on SouthWest airlines?  I don't give a crud about how they fly to Washington, or how much their suits cost, or any other trivial detail . . . but I do care about what they're doing (or not doing) to make their companies relevant and profitable corporations that employ millions of Americans.  And forgive me for saying this, but having executives fly coach will not turn the Big Three around.  We need more than grandstanding politicians or silly symbols of faux middle-american simplicity to turn our country around . . .

I have no clue how to get our country out of this financial crisis.  But I know that blaming Wall Street is too easy.  And so is picking on the Big Three CEO's for flying in private jets.  What I'm more concerned about, frankly, is how we're going to get out of this mess.  Innovative responses to the financial crisis, not grand brouhahas over petty issues, is what we need at this time.

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This private jet issue is also like the great drama that John McCain made about cutting earmarks from federal spending.  Earmarks make for great headlines, but eliminating all the earmarks from the federal budget - besides cutting some valuable progams - would eliminate only about 1% of the federal budget.  Sadly, making mountains out of molehills has become a speciality in our 24-hour news cycle.

Comments

[LutheranChik]

I wrote about these guys on my blog. As a Michiganian it pains me to say this, but...the Big Three need to crash and burn. We need to post a DNR order on this patient's bed.

[David]

I disagree with the crash and burn. There are too many industries in Michigan that depend on the Big 3 for their livelihood. Blue collar workers in tool and die shops, metal fabrication shops, machine maintenance mechanics for a few are just the tip of the iceberg. As a Michigander in exile, I have deep roots in the Detroit area and many family members in this boat. Yeah, the Big 3 need to rethink their business model, but crash and burn only opens the door to further decline for U.S. goods in the market place.

As far as getting out of our economic mess, we need to start by looking in the mirror. For far too long Americans have lived way beyond our means, buying on credit instead of the money we earn each week. It will be a long process, and I doubt the mindset will ever change really. But it needs to.

[PS]

I disagree with you. I think that they symbol of them flying from the same place, or close to the same place, in their own private jets shows that they don't get the disconnect between what the big wigs do and say and what the little guys do. Not that many years ago, the CEOs earned 50x what the workers at many companies earned. Now day, supposedly they earn 250x what the workers earn. And CEOs, in general, get their golden parachutes even when things go bad. It is bad economics and bad symbolic messages. I was listening to somebody on the radio telling about the time her dad came home and told the wife that he was cutting his salary by 50% so that some of his employees wouldn't lose jobs. I'm assuming he wasn't earning any 250% either.

Salaries need to reflect the value of the workers. The men and women who actually make the cars are worth a lot. And if these companies go bankrupt, then they don't have to pay health care and pensions.

[Koelpien]

There certainly is a level of arrogance that goes beyond the private jets. Our local congressman, Steve Kagen, notes that Cerberus Capital Management, which owns Chrysler, also owns several paper mills that they recently closed down in his (and mine) district. Everybody wanted them to SELL the mills (to keep them in operation) if they didn't want to RUN the mills, but Cerberus didn't want to CREATE competition, so they simply locked the doors on some perfectly good paper mills. If Cerberus (Chrysler) needs money, they certainly have assets to sell before they should run to congress with their hands out (distracting us while their other hand is reaching into my back pocket).

Here's part of a story from the Green Bay Press-Gazette, November 19:

WASHINGTON — U.S. Rep Steve Kagen doesn't want Congress to provide $25 billion lifeline to U.S. automakers.

Kagen opposes providing money to Chrysler, which is owned by Cerberus Capital Management LP. Cerberus, a large U.S. private equity firm, also owns NewPage Corp., which recently closed paper mills in Niagara and Kimberly.

Community leaders want NewPage to sell the mills to another paper manufacturer, but that appears unlikely.

"If Cerberus needs to raise cash to bail out Chrysler, then they should sell our idle paper mills in Kimberly and Niagara," said Kagen, D-Appleton. "Cerberus already has millions of dollars of assets in these mills which they can sell tomorrow, putting my friends and neighbors back to work, and generating the capital necessary to keep Chrysler afloat."