I'll Give You 50 GMs for 1 Toyota

A market cap is what the market believes a publicly held company is worth at a particular time. You calculate it by multiplying the total number of shares of the company by the amount that shares are being sold for. As of today, November 12, 2008, GM's market cap is hovering around $2 Billion. Toyota, meanwhile, is right around $100 Billion. Yep, that's right, Toyota is worth 50 GMs to investors. While Chrysler and Ford are in a similar pickle, I will only focus on GM today.

According to Yahoo Finance Toyota employs about 325,000 people and has gross sales of around $260 billion. GM has 266,000 employees and sales of about $166 billion. So, while Toyota is definitely larger, it's not even twice the size, let alone 50 times the size. Why, then, is Toyota more valuable to investors?

The answer is that Toyota actually has a viable business plan. They build reliable cars and have dedicated employees. They do this by paying them with competitive salaries, 401(k) plans and healthcare benefits, not promises that they will pay for healthcare and pensions for the rest of their lives.

When GM was running the automobile world, it promised its employees pensions and retirement healthcare benefits. While that was great at the time with no need to pay into 401(k) plans, when hundreds of thousands of employees started retiring, the costs started adding up. Sure, GM had a pension plan whereby they invested money that could then be paid back to its employees, but the problem was that they weren't planning on all their workers living into their 80s. If you only put enough money into a pension plan to cover retirement benefits for 15 years post-retirement, you are going to be woefully surprised when you have to pay those same benefits for 30 or more years. One writer estimates that GM pays $78.21 an hour per employee to cover the salary of the worker (currently $26.65 for a new worker) and all the benefits they owe their current and retired employees. In contrast, Toyota only pays $48 for comparable benefits. That means that Toyota spends $1000 less for every car they make (and these are production costs, not sales costs). And you wonder why foreign cars, including those made in the United States, seem like a better deal - it's because you're getting $1000 more car for the exact same price.

Who do we have to thank for this mess? Culprit number one would be the executives running the company for the past 60 years. Sure, it was nice to save a little at the time, but you can't promise an inexact amount of benefits for a finite amount of service. If all GM employees died the year after retirement the company would be fine, but you can't base a company's future on that supposition.

The second culprit, and in my eyes the larger culprit, is the United Auto Workers. The UAW is an organized union that "represents" the autoworkers to management. I'm sure that most people are familiar with unions and the good they have done. Unfortunately, they have turned into a nearly insurmountable strain on our domestic manufacturing.

In our modern age people are able to relatively easily move to find new jobs (you're not stuck in the town where you're born) and are able to learn skills that make them desirable as an employee to an employer. A hundred years ago this wasn't always the case and unions put some parity in the bargaining process. Now, though, companies want reliable, low-maintenance employees who do their job and earn their pay. The cost of training a new employee is such that it makes more sense to keep an employee than to hire a new person. A hundred years ago, you could learn a factory position in a day - no need to understand anything more complex than a wrench. It is in a company's best interest to keep their employees since replacing them is an added expense both in time to find a qualified employee and in the cost of training the new employee. Unions don't help that process. Instead, they now simply fight to get more and more for the workers, eventually to the point of killing the company.

While I might think that the job I do is worth $50 an hour, if any high-school drop-out can do the same thing, $12 an hour might be too much. I, though, have the option of learning new skills and becoming indispensable to my employer. I have the right to leave at any time and my employer has the right to remove me at any time. If I'm doing my job, my employer has no reason to release me and instead has a great interest in keeping me. If, on the other hand, I have learned a skill that is worth more to someone else, I should have the right to go and work for someone else. Foreign company's understand this. No foreign auto-plant in the United States has yet to unionize since their employees understand this, too. If a Toyota plant someday unionizes, I hope Toyota closes down the factory and goes back to making their cars in Japan.

Sure, the threat of a strike is pretty tough on a business that is trying to make a profit. The answer, though, is that if all your workers really aren't worth more than they already make, it's time to let them all go. See what happened when when the flight controllers went on strike. Employees can go find another job anywhere in the world and companies have the right to bring in new employees. The unions, though, found that the auto companies weren't willing to let a temporary decrease in productivity stop them from making a new deal with the unions. The company executives weren't preparing for a future when there was more competition from abroad and the unions were sucking them for all their worth. Between these two groups (short-term thinking executives and blood-thirsty unions) we have an ineffective mess in Detroit. That's why Toyota is worth 50 General Motors.

Congress wants to bailout the American auto industry. Unfortunately, they don't need a bailout, they need an overhaul. Giving them money will keep them afloat for now, but it won't help their long-term prospectuses since the benefits they promised are sticking around for decades to come. We can protect American auto making only by blocking or heavily taxing all foreign manufacturers (an already-tried isolationist mentality) or by removing the unions and treating the manufacturing positions just like every other job in America. McDonald's, Best Buy and Dell have all done pretty well without Boss Tweed-type national unions. Maybe it's time for Detroit to try the same thing.

What's a Civil Right? What's Equality?

Proposition 8 in California recently passed which changed the state constitution to deny homosexuals the right to marry. Many hail the result and others condemn it as a step back in the civil rights efforts. The problem, though, with claiming that blocking the ability to marry whomever you choose is a violation of your civil right begs the question. By claiming that something violates your civil rights you are first claiming that something is indeed included in your civil rights. That, though, makes absolutely no sense.

Civil rights in America is a trite concept that has little bearing on actuality and instead is a focus on an innate desire people have to get their own way. The problem that many people on both sides of the political spectrum make is that they assume "civil rights" is a defined set of protected attributes that any person is allowed. They believe that the civil rights movement is simply a method whereby those rights that have always existed are not blocked by any other power.


The problem with this idea is that no inherent definition of civil rights exists in terms of societal recognition of any norm. Civil rights don't somehow validate a human's ability to choose, they simply imply societal recognition of the validity of a choice.

The civil rights movement of the 1960s didn't clarify an existing definition of civil rights that always existed, it rewrote what was included in the definition. When Rosa Parks refused to give up her seat, she didn't claim an inherent right that had always been hers, she simply set in motion a government recognition of her ability to sit where she chose. Rosa always had the ability to sit down as she saw fit, but after the civil rights movement, the government changed its stance on taking action against her for sitting while a white person stood. Her inherent ability to sit didn't change, only the government’s approval of what she did.

In California, no inherent ability was removed when Proposition 8 was passed, only the government recognition of something people already did. Homosexuals are not being blocked from living together, all that they lose is societal recognition of "marriage". Marriage, though, is a purely societal creation. While marriage in the religious sense could be argued to be more than a simple definition, in the legal sense it is only a legal recognition - the same as the recognition of the president, a voter and a felon. All of these definitions are societal norms applied as they so desire. Nobody has a fundamental, inherent civil right to have their vote counted on anything (for example, I can't go to Japan and vote on the next prime minister - there's simply no inherent part of being me that allows for that), nor do people have a fundamental right to be awarded the title of president. Additionally, nobody has a fundamental right to be considered a "felon" simply because they wake up one morning and decide they want the government to recognize them as such.

A legal definition certainly carries important weight and affects how a person lives their life. Once Barack Obama takes the oath of president, he effectively will be treated different by society because of that title (or legal definition) that he holds. To become president, though, he had to follow the seemingly arbitrary procedures setup and adhered to in our country - primaries, campaigning, electoral college, etc. He couldn't just decide that he wanted to be president and he wanted just the popular vote to decide that - Al Gore wanted that to happen, but look at where that left him. In that same vein, if you want to have the legal definition of "felon", you have to go and break a law and be prosecuted and be found guilty of a felony. It's not something you can do in a day and it’s not all in your control, either. If the prosecutor decides that all she wants to prosecute you for is a misdemeanor, your dream of becoming a felon will have to wait for another day.

Where does this leave gay marriage? The answer is that it leaves it exactly where it was before - a legal definition that can be either adopted or rejected by the voters. Are there benefits/detriments bestowed upon people because of the legal title they hold? Of, course. Presidents get to live in the white house and felons get to live in prison. Married people also can get certain tax breaks, more easily adopt children, leave inheritances and share insurance. These are definitely benefits. Do self-described homosexuals have a right to these things? Of course they do - as long as they follow the process that is in place to get them - namely by marrying a person of the opposite sex. Do all people have some inherent right to like who they want? Yes! That is part of being human. Do all people have some inherent right to be given any legal title simply because they want it? Of course not. Hillary Clinton probably wanted to be president more than any person who has ever lived, but simply wanting something wasn't enough. Legal recognition comes after you play the game, and she lost. So did the No to Prop 8 people in California. Societal recognition comes from society and if society votes against you, there's no recourse but to forget society (lots of people claim to be married even though the state doesn't recognize them as such) or else find a different society - Massachusetts is open for business.

The reason that many in California claim that gay marriage is different is because it is a question of equality and the state has already created a societal norm that all people will be treated equally. While defining equality is a dangerous proposition, I will attempt to briefly do just that.

America was founded under the proposition that all men were created equal. That's fine, as long as we understand that our founding fathers didn't mean that everybody had some innate right to be exactly the same at birth but instead recognize that people are all born with the same ability to make choices and suffer the consequences of those choice, whether they be good or bad. People, on top of having different situations where they are born, have different paths they can take based on the choices they make and based on what falls in their path. Lou Gehrig was blessed with a great physical ability to play baseball and he received recognition for that. He also was given a disease that destroyed his physical prowess. Obviously many people would have loved to have his physical prowess while most would want to avoid the disease that killed him. The important thing about Lou, though, was that nobody forced him to become a great baseball player any more than anybody forced him to not become a milk man. What he did with his life, including how to treat his disease, were up to him.

Equality, then, is that each person has the ability to choose for themselves based on the situation they are born into. I'll never have the physical prowess of LeBron James, but I can still decide to do with my life what I want to, just as he can. Nobody says he had to play basketball. Nobody said I had to graduate from college. We both did, though, because we were able to choose what we wanted to do with our lives - we were equal.

The true Civil Rights movement focused on people who were not given choices because of how they were born. If you were born black, you could not do certain things, no matter how hard you tried. Originally the idea was that black people were inferior to whites and were unable to do certain things (just as I'm unable to play in the NBA). Our societal mindset, though, was changed when we saw that race is not indicative of ability. Being black doesn't mean you are unable to succeed in a PhD program. Being autistic, though, might mean that you can’t - you can still try, but you probably will fail. Equality means you don't presume that because of a certain condition people can't even try. Nobody told me I couldn't try to be the best basketball player in the world, but I realized that for myself and made my decisions accordingly. Equality means that everybody can make choices for themselves and achieve whatever they want - whether that is to become the president of the United States or to become a convicted felon. Either way, you still have to follow the same rules.

Homosexuals claim that they are not being treated equally since the legal definition of marriage makes it so that they can't be legally married to the person they want to simply because of how they are made. That, though, simply isn't true. They can't be legally married to someone of the same gender because they live in a society that decided that legal "marriage" was between a man and a woman. Al Gore couldn't be president because he lived in a society that decided that the president was chosen by the Electoral College. If you don't like the rules, change them. That is exactly what Proposition 8 did. Inequality is saying that because you are female you can never become a felon. Inequality is saying that because you were born on a farm in Iowa you can never go to college. Inequality is saying that because you are an orthodox Jew you can't run for president. It is not inequality to say that because the person you want to marry is of the same gender as you that you can't be married. It is not inequality to say that because you voted for a Serbian national for president your vote won't count. It is not inequality to say that because you have had your driver's license revoked you can't get a job as a delivery man.

Remember, the government doesn't tell anyone who they have to like since that is a fundamental aspect of being human. On the other hand, society has its right to not recognize anyone's choice as to who they want to marry. It's not a fundamental right of a 5-year-old to marry the 6-year-old he really wants to. It's not a fundamental right of a group of six people to mutually marry each other, even if they all six claim to be in love. You can choose whomever you want to marry, you just can't always choose whether or not that fulfills the rules of marriage. Wanting your choice to become reality doesn't necessarily make it so. That’s why Hillary isn’t our president today.

Election Day 2008: The Least Important Election in History

Election Day 2008 will be remembered as the climax of one of the most elaborate, expensive and visible presidential elections in the history of the United States. Too bad that it will go down as possibly the least important election in the history of our country.

Not to sound too cynical, but what are the major differences between the candidates? Sure, you might actually believe that both are truly different and would approach things in a fundamentally different way, but that's really not the case. What this election boils down to is semantics. Let me explain.

At this point in our country's progression it should be apparent to all outside observers that what makes us tick is money. $$$. The Great American Dollar. As much as people chide one another over civil rights, foreign policy and morality, what people actually care about is how much money they can blow this Christmas on plasmas and PlayStations. The end result of this election is that the candidate who wins will spend more than this country has, which will just hurt the voter's bottom line in the long run.

Some people actually believe that the issues are what is driving our country. That's not really the case. Whether or not abortion is legal or not isn't going to change whether or not I go to school tomorrow, or, for that matter, whether a 17-year old is going to get pregnant from her 18-year old boyfriend. Whether or not public graduate schools accept under-qualified minorities to fulfill racial quotas didn't affect my decision to apply to and attend grad school. Whether or not the US ever invades another sovereign nation won't change whether or not TNT over-hypes the NBA's Eastern Conference for the 10th straight year. Sure, all of these issues might rile someone up, but they don't affect how we actually live our day to day lives. Whether or not we can afford to buy groceries, on the other hand, does.

Money means autonomy in America. Despite the "big brother" fear that McCain has instilled in his followers, the simple truth is that Americans want to be able to make their own decisions. The second a candidate says that the government will tell you what you can buy with your money is the last day he will be a viable candidate. We need to feel that sense of control - whether or not our money is devalued, whether we have enough money for non-essential purchases and whether or not we can even afford what we see for sale - as long as we know that we can do whatever we want to with the money in our pocket, we are able to confront another day.

Don't get me wrong about the issues - they are very important and affect many, many people, but that is on a micro scale. Some people will decide to enter the military based on who is the commander in chief and some people might use birth control if abortion clinics are closed down. Some people might even decide to start a business based solely on whether or not they would be required to pay health insurance for their employees. Then again, some people live their lives according to their daily horoscopes.

Americans tend to do what they want to with little regard to what anyone other than close friends think. Legalizing gay marriage won't make more people comfortable with homosexuality and increasing payroll taxes won't mean the end of small businesses in America. People adapt and move on, often indifferent to the policies and affairs of Washington. Until Congress actually passes a law that, in effect, eliminates a choice (such as, for example, charging a 50% tax on all small business) of a lifestyle, people will just get up and move on. Sure, some will blame Congress if their business fails after a tax hike, but the truth is that any increases in tax, unless drastic, are only a drop in the bucket of the daily dealings of any business. For every "blame" put on the government, there are countless other factors that are glossed over. As long as the government exists, though, it will always be a great whipping boy.

So, then, why doesn't this election matter? Because both candidates will have the same bottom line on the majority of American's pocket books. Both candidates want to spend, spend, spend. Both Obama's and McCain's health plans will cost over a trillion dollars over 10 years. McCain might spend more time in Iraq, but Obama will pour more money than the military uses into social welfare and affirmative action. Obama will raise payroll taxes and McCain will defecit spend. McCain's policies will benefit a few and hurt a few. Obama's policies will benefit a few and hurt a few. The vast majority, though, will keep doing what they are doing. Some will live and die in poverty. Some will live and die in riches. Some will work their way up and others will work their way down. Neither president will change what drives a man to greatness or despair.

Obama is a limousine liberal fighting for the ill-defined little man (who apparently comprises 95% of Americans). McCain is a Washington insider who knows how to work the system (in both the pejorative and positive sense). Obama's "change" is nothing more than lip service and a catchy press campaign. McCain's "experience" is nothing more than a devotion to an oversized federal government. Both misrepresent their own policies as well as their opponents. Both believe that the only way to "change" America is to start from the top. Both believe that they will lead the country to a new level of greatness, without realizing that they are both simply stepping in their forebearers footsteps. Whoever wins, the country gets the same.

Someday a candidate will run with a platform that actually espouses a plan that will change the way our government works from the inside out. McCain and Obama both simply promise to dress the outside in blue or red. Inside, we're still going to be the same where it counts.