Bailout Watch 58: Warren Brown: Detroit Makes Things
Students of this series will know that justification for the proposed $25b in low-interest federal loans for Detroit automakers is a moving target. First, legislatively, it was all about retooling old mid-western factories to build fuel-efficient cars (i.e. energy independence via United Auto Workers jobs). The media immediately saw the loans for what they are: bailout bucks. And while Detroit hewed to the “retooling for our future” meme, their politicians (savvy bastards that they are) chanted “jobs, jobs, jobs.” On Fox news yesterday, reporter Jeff Flock unveiled the latest party line: “Hey, if Wall Street’s money men are getting all this money, why not help the people who actually build stuff?” (Fair and balance that.) The Washington Post‘s nominal car critic is down with that. “At least with the car companies, we have the promise of something tangible — more fuel-efficient, environmentally friendly vehicles such as the plug-in electric Chevrolet Volt car that GM displayed last week at its 100th corporate birthday celebration… That’s worth $25 billion, I think. It’s a better risk than betting that the investors and speculators who got us into our current financial trouble by buying and selling poorly vetted loans have our best economic interests at heart.” Moral relativism sucks. [thanks to inept123 for the link]
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The proposed $25 billion "bail-out" should be seen as the thin edge of the wedge. Realistically, is the government prepared to fund 8x or 9x times that much? If the focus is on the Big 3, can the domestic OEM suppliers be far behind? If the qualification is moving towards re-tooling to build more fuel-efficient vehicles, isn't that really what's already one of the core strategies of all the domestic manufacturers anyway? How long have we been talking about concepts such as Lean Production, and Flexible Manufacturing? These are not new ideas. Adapting them to the new focus on fuel efficient vehicles is nothing more than juxtaposing sensible manufacturing strategies onto a new, more environmentally and fiscally relevant, product lines. I happen to think that given the subsidization we've heard about in Japan over the last few decades, it's long overdue for government to lend some sort of competitive advantage to the Big 3 (even if it is just access to cheaper capital). Are there really any suits out there who haven't been "scared straight" by now, and don't appreciate the potential for collapse of the companies that employ them? Done right, this could be a great shot in the arm, and bring about a significant benefit to the manufacturing base, with the proverbial collateral impact for numerous related jobs throughout the country.
There's a guy at work that likes to joke "I made some bad investments on horse races, I wonder if I can apply to the government and get one of those bailouts..." It's funny how 'the free market' is supposed to take care of everything, how businesses are supposed to succeed or fail on their merits, but we have to condemn our children, and their children and their children to a life of economic slavery to pay for these douchebags' mistakes.
Time to put some restrictions on the enormous salary some of these executives are drawing -- if they are going to be in he public purse-strings.