No major airlines have been allowed to fail since PanAm and TWA curled up and died.
So, I suppose that the boards and CEOs of the most quintessential of American industries feels it is their birthright to receive a bailout.
And apparently, prominent economists such as Jeffery Sachs, are on board with that plan. It is a national industry, they say, with world-wide implications if it is allowed to collapse.
What they fail to mention is that not all of those world-wide implications are bad. If the American auto industry can't get its act together, and, pardon my saying so, can't remove its head from its ass, then why should we the taxpayer take on the role of proctologist?
If the American auto industry receives the cold shoulder from the bailout angels, and it cannot raise capital from bond issues, then perhaps it should hold out its hand to the Saudis who were instrumental in "fueling" the assembly lines of SUVs and pick-up trucks.
As Tom Friedman so nicely says, giving Detroit a loan/bailout/handout/ in order for them to retool their lines for the new demands of the American consumer is ludicrous. Ludicrous because while Europeans were embracing the Smart Car, Americans were drooling over the Hummer H3.
In order to be a viable player worldwide, the American auto industry realized long ago that smaller, more fuel efficient vehicles are the ones that sell abroad. I suspect that the only Europeans who own pick-up trucks are the ones in the construction or agriculture industries, and that Africans feel that SUVs are very useful in places where the roads are little more than dirt tracks with large potholes.
So, yes, part of the fault of the lackadaisical attitude of Detroit carmakers toward more efficient vehicles lies with the American consumer. But the car manufacturers are by no means stupid. They have figured out how to bring down the cost of production and increase the efficiency of their assembly lines for the vehicles they do make. Foreign car makers lead our market in smaller and more fuel efficient vehicles. But American manufacturers have stubbornly hung on to the bigger is better theory of innovation.
Lack of foresight goes beyond the blueprint table, however, to unsustainable pension and health coverage schemes. As their workforce continues to retire, huge sums of money will be spent on giving them 75-100% of their salary and health benefits. If the auto makers aren't making as much money, have to re-vamp their factory lines and supply chains for smaller and greener vehicles, and have to pay retired workers, then what is to assure us, the procotologists, that the bailout money will be used for something nationally productive, and not simply to ensure retirement lifestyles in Michigan?
2 comments:
Let's just look at one part of your argument. Europeans like small cars because they have high gas prices and small streets and parking spots. Americans like big cars because we have cheap gas, wide open spaces, and a love of big powerful toys. Ford and GM build award-winning and popular small cars for Europe and the rest of the world.
No argument from me that the auto companies and the unions have been short-sighted, but Congress and virtually everyone in government with a stake in energy and transportation policy deserve blame too. We have no national energy plan. We should raise the gas tax to keep prices at $4+. Use the revenue to help out poor folks who need to drive long distances, build up mass transit, and develop new technologies for hybrids/fuel cells, etc.
Letting the auto companies die makes about as much sense at letting Lehman Bros die. It feels good for a while, but the results are probably worse than a structured bailout.
you better hope the unions don't get wind of your blog...
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