There appears to be general agreement across the political spectrum that the Big Three automakers are going bankrupt because their CEOs have made many really, really bad choices over the years. Joseph Romm has an article at Salon about this. Here is just a bit:
When I was at the Department of Energy in the 1990s, we partnered with G.M., Ford and Chrysler to speed the technological development of hybrid gasoline-electric cars, given that increased fuel efficiency and advanced hybrids vehicles were (and remain) clearly the best hope for cutting vehicle greenhouse gas emissions and ending our oil addiction. This partnership was an informal deal between the Clinton administration and the car companies. We did not pursue fuel economy standards and the car companies promised to develop a triple-efficiency car (80 miles per gallon) by 2004.
In one of the major blunders in automotive history, G.M. and Ford and Chyrsler walked away from hybrids as soon as they could when the Bush administration came in — and after taxpayers had spent over $1 billion on the program. Ironically, the main result of our government-industry partnership (which had excluded foreign automakers) was to motivate the Japanese car companies to develop and introduce their own hybrids.
Detroit also spent millions of dollars lobbying against increased fuel economy standards — “suicidally lobbying against its own inescapable future,” as Romm puts it. Of course, the Big Three were encouraged to fight fuel economy standards by the Right, which for years has crusaded against CAFE standards as an example of socialism
What I want to know is, if the Free Market is so all-fired miraculous, how did such a pack of meatheads rise to the top of the auto industry?
(Actually, I know the answer to that, and I think anyone who has ever spent much time in big corporations does, also. Most corporations don’t reward competence as much as they reward aggression. Every corporate big shot I have ever met has been an alpha-on-steroids type who cannot live with himself unless he’s led three frontal assaults, so to speak, before breakfast. Those of us who don’t have testosterone running out of our ears don’t have a chance to climb very high on the corporate ladder, no matter how good and how smart we are.
I figure this phenomenon is some vestigial social behavior left over from our early cave dwelling ancestors. We’re wired to defer to the big guy who presents himself as the biggest badass in the tribe. See also Matt Yglesias, “Confidence Men.”)
Where was I? Oh, yes … a lot of right-wingers now are blaming unions for the auto industry’s problems. If those greedy workers didn’t insist on being paid a living wage and decent health benefits, the saying goes, everything would be hunky dory. I don’t think unions are above criticism, but frankly, without them we’d have a sickly and underpaid workforce. And if paychecks are so squeezed no one has disposable income, who’s going to buy stuff?
The damnfool CEOs can’t add two and two together to make four half the time. They are idiot savants, of a sort. They know how to game the system for their own benefit, but the world outside of their narrow self-interests is a blur to them. They can’t see past the next quarterly earnings reports.
If the CEOs weren’t such meatheads, for the past twenty years they would have been at the forefront of getting national health care, to get health insurance costs off their backs. Why haven’t they done that? Because they are meatheads.
That said — I understand that allowing the Big Three automakers to fail would set off a chain reaction of job losses that could lead to as many as three million people losing their jobs.
So what are we going to do?
Josh Marshall argues that letting the auto industry fail is nuts. See also Fester, Publius, and even a couple of guys at Bloomberg. For a lot of reasons explained in the articles linked, if the big automakers went bankrupt they probably could not just reorganize and come back, leaner and meaner. And the loss of the auto industry would have a catastrophic ripple effect on our already wounded economy.
On the other side of the fence are conservatives and “free market” economists who would rather let the Big Three go under than allow any government interference with the Free Market. These are the same people who for years have fought CAFE standards and national health care. In other words, they helped create the problem. Enough said.
There are lots of opinions out there about what should be done. I personally would insist that anyone who has served on the boards of directors or as a CEO for more than a year should be told to go away. No golden parachutes, no bonuses. They can keep the stuff they’ve got, which I’m sure is plenty to tide them over. If they think they have more to offer the auto industry they can damn well get in line and apply for whatever’s available. At the very least, they should have no authority whatsoever on how the money the government gives them is used.
Will workers have to take pay cuts and lose benefits? I keep hearing that it must be so. I’d like to see some provision made for pensions and health insurance, at least. Maybe this is where we start building a real national health care policy.
The auto makers must be forced to face reality and prepare to be competitive in the post-internal combustion engine world. Grants, loans, whatever, lots of strings, performance benchmarks, no excuses.