There is a big debate raging in the US and Canada about what ever we’re going to do with the Big Three car makers. They’re such rascals! And since there’s nothing that I like more than a debate (except, perhaps, 80s parties), I figured I’d weigh in here. In particular, Blake Hounshell’s sorry attempt at contrarianism at the Foreign Policy blog deserves a stern rebuking. It’s titled Why the Auto Industry’s Plight is Your Fault (don’t worry, it’s not). Here is his argument:
- The industry was in trouble before, but it’s the drying up of consumer demand due to the financial crisis that is threatening to destroy it at present. Even the innovative Toyota is feeling the pain right now.
- Who bought all those “gas-guzzling S.U.V.s and trucks” Friedman is ranting about? Martians?
- I must have missed the groundswell of grassroots activism in favor of the higher taxes that would have put a floor under the price of gasoline and made for a stable environment that could make technologies like plug-in hybrids viable even when market prices for crude oil collapse.
This is stupid on a number of levels. It isn’t the public’s responsibility to ensure sound management of corporations. In a capitalist society, individuals are responsible only for their consumption, and our cumulative demand encourages the appropriate allocation of resources by companies who aren’t utterly inept. Whether or not individuals want to buy an SUV is completely, 100% unrelated to extreme negligence or incompetence in managing a corporation. Hell, if you wanted to blame individuals for the downfall of the Big Three, it would make more sense to blame them for not purchasing more SUVs now, not for purchasing them 5 years ago.
The most ridiculous argument posited above is about the “groundswell of grassroots activism” that Hounshell “must have missed”. On what planet is it the job of citizens to protest poor financial management in the private sector? Oh, did you hear about those bungling baffoons over at our local grocery store? They put the bananas in the deli section! Honey, grab the picket signs, we better put a stop to this!
Now that I have that off my chest, I will come to a concensus on the issue of a massive Big Three bailout. In the red (communist) corner, we have Jeff Sachs, Dan Gross, and David Lazarus. In the blue corner, we have David Yermack, David Brooks, The Economist and Richard Posner (who, incidentally, looks like a turtle). One newspaper, two humans and one turtle against three humans gives the anti-bailout forces a TKO in the fifth round. It’s simple math, people.
Fortunately, if the industry does fail, I can just blame the unions, which always makes me happy inside.
YIKESDATE: Via John, we have news that a full scale collapse of just GM may cost the US government upwards of $200 billion dollars. Good thing they’ve been saving for a rainy day. They have been saving for a rainy day right? Right? Hello? What’s that? THEY DID WHAT?
Nothing is going to get better as long as they stay in business making cars no one wants, or being so set in their ways they they can’t change on a dime.
Let them fail. Someone else will come along and take up the slack…
Seriously, all the global warming folks are saying how we need to shift to green industries and more efficient vehicles, well, this is a pretty ideal and effective kick in the pants.
I think I’m with Mike on this one. It’s going to hurt to have so many people unemployed, but they were not in a sustainable business because it was run very poorly and with waste and built-in obsolescence in the design of nearly all parts.
The big ones should fail, and the slack will be picked up by entrepreneurs with better cars that get better mileage.
Otherwise the government should nationalize the automobile industries that go under, and use this as an opportunity to standardize the auto-car so that parts are interchangeable on nearly all vehicles, automation of highways and streets gets closer to reality, and a new fleet of three-times more efficient cars can be pushed out to give jobs to those otherwise unemployed in the auto industry. We built a fleet of vehicles that didn’t even exist the decade previous, and they won a war in the early 1940s. And those vehicles had to fly and withstand bullet damage. There’s nothing to stop us from fixing our fleet now, except failed automakers and timid governments.
Saskboy,
Otherwise the government should nationalize the automobile industries that go under, and use this as an opportunity to standardize the auto-car so that parts are interchangeable on nearly all vehicles, automation of highways and streets gets closer to reality, and a new fleet of three-times more efficient cars can be pushed out to give jobs to those otherwise unemployed in the auto industry.
COMMUNIST!!! GET ‘EM!!!
Seriously though, talk about a major, MAJOR project. Not necessarily a bad idea in theory, but I don’t trust the government to get my mail to me on time let alone pull something like this off.
Hey, it worked before in WWII, and won the war. If the government launches a “war on waste” or “war on climate change”, they can spend trillions on it, with the support of even most of redneck America (the parts that will support anything if it’s a patriotic war on ____).
Al Gore’s 10 year plan to green America could be at hand if we have tens of millions of unemployed Americans and Canadians for the government to reassign to the task at hand of rebuilding an efficient economy and way of living. It has significant risks such as avoiding eugenics, and being “communist”, but Americans are swallowing the latter for their stock market, so it’s not a stretch to say that it wouldn’t work. We just need to make sure they don’t swallow the former too.
Saskboy,
It’s definitely ambitious, I’ll give you that. It’s also never ever ever going to happen, I’ll give you that too. But a gold star for your optimism.
Also, one last point: If the government launches a “war on waste” or “war on climate change”, they can spend trillions on it
The problem is, the government doesn’t have trillions. It has minus trillions. Have you ever tried buying a coffee with minus money? The lady at the counter named Suzie gets some angry. She also doesn’t care that you’re just joking, and wants you to leave immediately or she’s gonna call her manager. Jerk.
All the proud Lada and Yugo owners aside…I think nationalization of the auto sector didn’t work so well…
Meanwhile the war on drugs and crime in the good old US of A was a hit. No?
Picking the worst attributes of divergent systems of governance is an exceptional talent.
Nice.
Syncro
All the proud Lada and Yugo owners aside…I think nationalization of the auto sector didn’t work so well…
Meanwhile the war on drugs and crime in the good old US of A was a hit. No?
Picking the worst attributes of divergent systems of governance is an exceptional talent.
Nice.
Syncro
OOpps!
Syncro
A big bail out wont save those jobs, at best we can just delay the inevitable (which is a drastic reduction in the domestic auto sector).
Why not pump that money into something that will actually create new jobs (and hopefully some cool green tech as well), instead of pumping money into a doomed industry.
It kind of reminds me of the money that was pumped into the eastern cod fishery… and we all know how that turned out.
Syncro, perhaps I was being satirical? Yet governments of the last 8 years, in the States especially have excelled at doing the most satirical thing. We’ll know in less than a year the course things will take with the auto industry. I almost don’t want to be able to say, “I told you so”. In some ways I do, because anything the Russians can do badly, the Americans should be able to do at twice the cost in their imaginary dollars.
And speaking of minus dollars, that’s what a bail out is Olaf. It’s paying for a debt by creating another debt. It’s a wealth transfer from the innocent tax payer (and the naughty ones too), to the naughty failures of capitalism so in theory average Joe/Jane doesn’t lose his/her job.
I fear that our intrepid government will simply follow what the Americans do in the bail out option. This pretty much summed up your article for me:
“Whether or not individuals want to buy an SUV is completely, 100% unrelated to extreme negligence or incompetence in managing a corporation.”
[...] this dream tonight on CNN. It’s as if he was reading my brain. Maybe he was reading my blog (or Olaf’s). Or maybe he came to the only conclusion that a sensible person could come to if they thought [...]
Guyz, I want advise to look a very good movie – Zeitgeist: Addendum. In a film the most important thing is told about technologies of the future, and, the government position on this question is condemned.