Too Big to Fail
While we’re genuinely sympathetic to the enormous hardship that accompanies the loss of a job, the spectacle of Detroit automakers pleading for alms from us, the citizenry, from whom they have earned unfathomable wealth over the decades, is one of those macabre spectacles that normally appear in only the most imaginative science fiction. Our compassion for the suffering of working folks notwithstanding, it’s time to allow the lumbering manufacturing giants to go the way of the Edsel and Pinto.
The “too big to fail” argument wrongly supposes that there is some long-term national benefit to keeping millions employed at horribly mismanaged companies that, analyzed soberly, do more harm to our country than good. Unlike the two mortgage Freddies, whose reckless stupidity is partly responsible for the worldwide credit imbroglio, the Big Three automakers are not essential mechanisms for guaranteeing global liquidity and the free flow of money. They are for-profit enterprises who have amassed incalculable billions of dollars in real estate, hard assets, and cash. They have enriched tens of thousands of executives and shareholders. They have, in the blithe spirit of Industrial Capitalism, exploited labor and markets, all the while aiding and abetting the ruination of our planet.
General Motors, Ford, and Chrysler (which previously got a nifty handout in the Iacocca days) have had the technology and know-how to make reliable fuel-efficient vehicles that could compete with their Japanese counterparts and keep the American automotive industry a solvent concern with global relevance. Instead, they spent their money on lobbying Congress to be allowed to continue making extravagantly wasteful cars that fewer and fewer people want. GM was the main culprit in killing off the advent of electric cars, and they, along with their Detroit brethren, chose to spend hundreds of millions of dollars on marketing SUVs to size-obsessed Americans and on getting legislative waivers to allow those calamitous trucks to bypass stringent performance standards. They gamed the system. Now that the country club memberships and the Grosse Pointe mansions are under threat, they want the system to allow them a free pass.
Throughout the election season, a lot of not very bright Americans professed to be concerned about President-elect Obama’s policies inching us toward “socialism.” Apparently the concept is less frightening when applied to corporate charity than equitable tax rates.
American automakers deserve to fail. Indeed, the greatest tribute advocates of “free markets” could pay to their divine philosophy would be to let the marketplace punish the Big Three for delivering substandard products at an inflated price. The tens-of-thousands, or hundreds-of-thousands, who will be affected directly and indirectly by the American automotive industry’s failure will make for a skilled and highly motivated workforce in the next wave of manufacturing, whether it’s solar panels, wind farms, or bicycles. The billions that we don’t give to Detroit can be applied toward low-interest, government-backed loans for new companies that actually make something worthwhile for our nation.
Let the Barons of Detroit do what average Americans must: sell off their treasure at fire sale prices, or face foreclosure. Carmakers aren’t too big to fail. They’re too antiquated to survive.