>Like many Americans, I have mixed feelings about a government bailout for the domestic auto industry and more specifically, General Motors (GM). At first I was for saving G.M. and while I still would vote that way, I have some reservations.
First, the fairness argument doesn’t wash. The logic is if we bail out the financial industry, we should rescue car makers, too. But we are propping the financial industry for one reason and that is to save an ailing financial system, the foundation of a functioning economy. Treasury secretary Hank Paulson’s work isn’t out of the goodness of anyone’s heart. Rather, we all have an interest in a functioning financial apparatus. Short of that, get a gun and a case of soup.
Strike two is the arrogance of General Motors over the years. While Toyota and Honda inspired loyalty through smartly-designed, practical and reliable vehicles, GM often made junk by comparison. UAW head Ron Gettelfinger said this morning on the radio Detroit now makes cars “second to none,” but it takes decades to beat the bad rap. A commentator in that same radio report remarked how a premature “huge auto repair bill” can sour a car buyer forever (the odometer on my 1999 E320 turned 200,000 on the way to work this morning, a first for me).
And GM’s over reliance on gas guzzling SUVs and pickups exhibited a stunning lack of foresight not to mention a Neanderthal attitude toward the environment. Did GM make the SUV market? Or did consumers really want them? It doesn’t matter.
Now, we’re being bombarded with the scare statistics if Detroit shuts down: 3 million jobs and $156.7 of income would be lost in the first year; auto production worldwide would by harmed by bankrupted suppliers and governments would be swamped with unemployment and healthcare claims. In short, the argument to let GM slip it so it would get out from under its onerous labor agreements would be a debacle piled on the disaster we are already living through.
But many if not most products invented here and once made in the U.S. have migrated overseas: TVs, computers and all manner of electronics, household goods, clothes, shoes and textiles. The domestic automotive industry that once ruled the world has been ebbing away for 40 years. Wouldn’t a bailout simply forestall the inevitable?
Maybe, but shutting down the auto industry risks too big a shock for an economy that is already reeling. The loss of innovation and engineering jobs would be staggering given the myriad technologies in today’s vehicles and more importantly, the opportunity to rewrite the book on fundamental propulsion systems. With all the choices, who would you buy from - a car company in Chapter 11 which might be unable to honor the warranty or a solvent auto maker? The answer is obvious.
The soft economy is hurting all the car companies, but less the ones that have the right mix of products. That dealer lots are full of unsold large pickups even with the reprieve of gas prices should surprise no one, especially the management at GM. But just think how far GM has come with the Chevy Volt. A few months ago, it de-emphasized pickups and trumpeted the Volt, which seems to have put it on the right track.
It is not in the nationalist interest to cede cutting edge development of potentially lucrative intellectual property and the jobs that go with it. There’s only so much technology in a pair of shoes. A car is a rich complex of transferable technologies.
Yes, the bailout should go through with an emphasis on sustained viability and return for the taxpayer’s investment. I would have no problem if the funds called for an executive overhaul. My colleague Charlie Cooper at news.com jumped on board NY Times scribe Tom Friedman’s suggestion that Apple phenom Steve Jobs take over helm at GM. It’s not as crazy as it sounds. Nothing is right now.
Consider, too, that we have colossally short memories. In 1994, Jack Smith, a diminutive and impatient bean counter staved off bankruptcy at GM. His helper and heir apparent? GM’s current CEO and Chairman, Rick Wagoner who has admitted his biggest errors were killing the EV1 and not faster pursuing hybrids sooner.