I've always thought of myself as a big government liberal, consistent Democratic voter, and, this cycle, a huge Obama supporter. Not for the first time, however, I've felt the pull of conservatism while listening to Obama and other Democrats speak. The latest episode came while reading about Rahm Emanuel suggesting that an Obama administration would push financial aid to auto makers in Detroit.
What gives?
Car companies in Detroit, once a point of pride for the American people and economy, are currently a black stain on the country. For the previous decade, foreign companies have been producing more efficient cars while American companies built bigger and less fuel-efficient cars in order to prop themselves up in the face of competition. This impossibly foolish and shortsighted business strategy is showing itself to be just that now, with fuel prices increasing and a desire for fuel-efficiency skyrocketing. The policies of the 90's and the early part of this decade were always completely untenable, but nobody in Detroit cared to pay attention.
The lack of innovation in Detroit should lead most observers to worry about the future of our auto industry. While other industries (technology and Apple is the one that sticks out to me--and Tom Friedman) have continued to develop innovative approaches and products, auto manufacturers continue to fail miserably, despite repeated benefits thrown their way by the government.
And now, the auto industry is clamoring for a bailout from the government. This is understandable given the windfalls handed out to financial and insurance companies thus far, and they behaved similarly incompetently. The stark difference between the financial bailout and the proposed auto bailout is cause and effect.
The current economic problems are largely caused by the mortgage and credit crises of recent months. Therefore intervening in Fannie Mae & Freddie Mac or other lending institutions is logical and necessary. I have no qualms about the bailout of most corporations included in the $700 billion package, because the economy literally depends on these giants for economic stability and reliability.
GM, Ford, and Chrysler are only relevant to the economy in that they are large corporations with many employees. The type of work done in Detroit by these corporations is in no way related to the financial problems except for their size. In addition, the companies in question have been miserable failures in recent history. They in no way deserve financial assistance. It's a mistake to propose intervention in the auto industry--it would boil down to a reward for shoddy business practices and a lack of foresight.
Also, a year ago the Treasury made $25 million available in low-interest loans to the automakers so they could "retool for innovation," but apparently that wasn't enough. If the big 3 cant get their acts together without government help, perhaps they deserve to fail. Let's look at it like this:
Tennessee Rep. James Cooper, a fiscally conservative Democrat, said Congress must take a "tough love" approach and criticized "management and boards of companies that have shown arrogance since the 1950s that they never needed to change in a fundamental way."
Full article
Detroit's big 3 automakers are obviously important parts of the national economy, but they're not too big to fail. They have dug themselves into this whole, which is in nature separate from the recession we seem to be headed into. I don't want my tax dollars headed to reward corporations for shoddy planning and terrible strategy. GM, Ford, & Chrysler dug this hole for themselves, and they can figure out how to get out without more government assistance.