85 Comments

1. David Thomson:

“Our big auto companies were run by the biggest collection of troglodytes this side of the Sudan.”

They were also pressured by the UAW to provide their blue collar workers with benefits that were overly generous. Japan has also paid a huge price for allowing its government to interfere with the free market. If the current American auto companies go bankrupt—it may not really be a big deal! Another company merely takes over and begins running these legacy firms at a profit. And that company could very well be located in the United States. Try imagining that you have a couple of spoiled teenagers. When do finally tell them they have made their bed and must now sleep in it?

Nov 10, 2008 - 5:49 pm 2. David Thomson:

“Our big auto companies were run by the biggest collection of troglodytes this side of the Sudan.”

They were also pressured by the UAW to provide their blue collar workers with benefits that were overly generous. Japan has also paid a huge price for allowing its government to interfere with the free market. If the current American auto companies go bankrupt—it may not really be a big deal! Another company merely takes over and begins running these legacy firms at a profit. And that company could very well be located in the United States. Try imagining that you have a couple of spoiled teenagers. When do finally tell them they have made their bed and must now sleep in it?

Nov 10, 2008 - 5:49 pm 3. John Moore:

Err… if they go under, it doesn’t mean they disappear. It does mean that a lot of their ridiculous burdens (such as labor contracts) vanish.

There is a huge amount of infrastructure, industrial ecology (subcontractors, etc) and knowledge there. That has value and would not go unused. Someone would buy it up and get back to building and selling things.

As for foreign companies being smarter… just go ask Toyota. Their sales fell as dramatically as US car makers – because they also built large vehicles (I have a nice Toyota Sequoia SUV).

Although it is fun to pound on Detroit executives, and in the past they made some really lame vehicles, they’ve gotten better. Just like Toyota, they have been responding to consumer demand.

Don’t bail them out (my Ford stock can go under).

Unfortunately, an Obama administration beholden to labor wlil almost certainly bail out these dinosaurs.

Nov 10, 2008 - 5:53 pm 4. John Moore:

BTW, forgot to mention. Current auto workers average over $150,000 in total annual compensation!

Nov 10, 2008 - 5:53 pm 5. Barry Dauphin:

If the Big 3 go belly up, it will be very painful for a few million workers. The companies the Big 3 compete against do get government subsidies. Honda and Toyota don’t have the labor costs of the Big 3. If the government gives money, it needs to come with strings concerning Big Labor. Will Reid and Pelosi be architects of such a thing? The question answers itself. One of the to be written stories is the union pension set up. The Big 3 don’t manage the pensions. Instead they turned over billions to Labor to manage the funds. What is going to happen to that money? Will the government have to come to the rescue over that too one day? It seem ripe for massive corruption. Of course, Labor has always been so squeaky clean . That is a story to watch over the next many years.

Nov 10, 2008 - 5:55 pm 6. I Callahan:

Roger,

I think you give far too much blame to the management of the big three. The UAW has to take some blame as well.

I was born and raised in the Detroit area, and unless you’ve experienced it, you’ve no idea what kind of stranglehold unionism has on this area. Just talking of “Union busting” gets you thrown out of your own uncle’s house.

Here is my opinion – the big three want Uncle Sam to take over health care so they won’t have to pay for it. The bailout money will be used to tie them over until that happens. Then they’ll have more clout over the UAW, without appearing like they do.

It’s a win-win for the UAW and the big three if this happens, even if it’s a loss for the car buyer. Whether this happens, however, remains to be seen.

TV (Harry)

Nov 10, 2008 - 5:55 pm 7. jane m:

Apart from the lack of technological advances in American vehicle fuel efficiencies, the auto industry has a huge problem to solve called the UAW. There is really no long term solution to this problem as long as our auto industry cannot be competitive due to the demands that labor has been allowed to force on them. Our American manufacturers cannot compete with foreign manufacturers and still pay very high wages and huge retirement benefits to the American workers.

The failure of GM, alone (I’m hearing) would be a loss of 3.5 million jobs when suppliers and dealers jobs are factored in. I don’t see how we can let that happen.

Nov 10, 2008 - 5:56 pm 8. Bryan Lovely:

So why can’t the Big 3 go sequentially bankrupt and reorganize for better competitiveness, like the airlines have done over the past fifteen years? Why does everyone seem to think that “bankrupt” means “gone”?

Oh, and the UAW had nothing to do with the Big 3 making lots of poorly-designed cars. The few times I’ve had to rent a car in the last decade, I’ve done everything possible to avoid an American car, especially a Ford.

Nov 10, 2008 - 6:22 pm 9. jake:

“Current auto workers average over $150,000 in total annual compensation.”

Do you have a source for that figure?

Nov 10, 2008 - 6:57 pm 10. ahem:

Let ‘em go bankrupt.

Nov 10, 2008 - 6:57 pm 11. Webutante:

I just want enough bailout to insure my new little Ford Escape can get parts and service until I run it into the ground or 250,000 miles in the future whichever comes first.

Nov 10, 2008 - 7:51 pm 12. jedrury:

The immediate issue is whether Paulson should agree to fund part of the money from TARP.
He should not; kick the can down the road, let Obama be the one who makes the decision and catches the heat.
One of the major problems with W. is his magnanimity and this is one more time for the Dems to sodomize him, his party, his policies.
What has Michigan ever done for McCain or Bush or the GOP; its gifts are Carol Levin, John Conyers, John
Dingell, David Bonier, all UAW supporters.
But this is the time for grand gestures; Obama and the president at the White House.
More Bushisms and he being the noble guy. The nation is 2 months from the Inauguration.
Wait and let the matter slide and have the Messiah decide.
Seeing the heads of the Big 3 (Mulally, Wagonner and Nardelli) grinning for the cameras disgusts; like seeing a bordello of whores enticing the Johns.

Nov 10, 2008 - 7:59 pm 13. MisterH:

One could cite the numerous mistakes the U.S. auto industry has made over the last 30 years- not least of which is an insistence on trying to support a product line that is far too broad to be viable. But I’d rather look at the bigger picture anyway. Roger, You wrote that if the gov’t does not bail out the automakers then our industrial base goes further into the toilet. So I’ll do the “devil’s advocate” gambit:

Maybe our old industrial base is destined to go into the toilet anyway. Well, not actually go into the toilet, but go away to some distant, less modern land. Don’t economies go through various stages of evolution? Wasn’t half the U.S. workforce employed in agricultural just 100 years ago? Now we feed ourselves and a good chunk of the globe by an industry that employs less than 3M workers, and I’m glad I’m not one of them. Is it not likely that working in a factory assembly line – at least in modern economies- is something societies would like to move away from? We did it in agriculture, so why not washing machines and cars? (oops, no one’s been making household appliances in this country since the late 1980’s yet somehow people previously engaged in that found other employment) I know politicians regularly deliver diatribes about the demise of post WW2 rust-belt factory jobs; at least ones from Michigan and Ohio. Unless our government enters a full-on industrial subsidy and protection program like some other, less economically free countries, our manufacturing base will naturally move away from employing masses of workers to build large consumer products out of steel. Besides, none of these politicians have any dreams about getting a cool factory assembly line job for themselves or an immediate family member and unless I miss my guess Roger neither do you.

Nov 10, 2008 - 9:18 pm 14. Anita Hope:

Labor is the base of the problem, if they want to keep working and there is no question they want too and need too, then their union had better rethink
their position. UAW has been a strong arm in controling Management and has been the driving force for over 40 years plus, # 6 is right. In reality, they
more than likely have enough to bail out GM with all the years of their demands and settlements. If GM would retool and start turning out only hybrid
efficient cars with some style, we would more than likely buy American. They need to take a look at the Studebaker Cars of the 40’s that they forced out
of the industry and they were American made & designed with good milage even back then. The interior of the Cadillac & Olds stayed the same for over
15 years, need we wonder why we are in trouble. If we are going to bail with tax dollars, then the UAW must be made to re-negotiate their demands first, however, we must keep the workers in their jobs or we will all be placing this nation in a much bigger pit than we will be able to dig ourselves out of ….

Nov 10, 2008 - 10:07 pm 15. John Moore:

Jake,

Coyote Blog has that data here. He has links to sources.

John

Nov 10, 2008 - 10:10 pm 16. jake:

Thanks.

Nov 10, 2008 - 10:39 pm 17. David Franklin:

Before commenting on the advisability of the bail-out of the U.S. auto industry by public financing of low interest loans or some other financial instruments, I would like to address one comment that Mr. Simon has made on more than one occasion. The meme is this – that a hero of the new economy like Steve Jobs could, and maybe even should, be put in charge of G.M. and show up all those yokels and troglodytes of the smokestack-struin flyover country by transforming it into a successful operation, much like so many other Silicon Valley firms. This is nonsense. I know that it is easy to engage in hyperbole, even schadenfreude, when confronted with the impending disaster of a major sector of the American economy, but this idea does not stand up to scrutiny.

First of all, the task of designing, building and marketing a brand new car platform (a flexible design from which several vehicles will eventually be made) is many, perhaps very many, orders of magnitude more difficult and complicated than the process of designing and selling a phone or desktop computer. In fact, computers (many) and telecommunications devices are but two very small constituent parts of the design of a modern car. This is akin to saying that if a fellow has done a sterling job of designing, building and marketing a very attractive wrench, that he is highly likely to do a similar job for a jumbo jet or skyscraper. This does not even consider the further daunting differences lodged in highly intrusive government regulations, high legacy costs contracted to both current and previous generations, the necessity of doing most of the assembly and parts purchasing in the U.S. from U.S. suppliers (rather than outsourcing both of these to cheap Chinese sources), the terms of consumer involvement, and many more complications not encountered by the electronic appliance industry. Mr. Jobs has certainly never faced a task so vast and complicated, and, although he might well be very good at it, there certainly is no evidence that he would be. In fact, his record at recognizing a winner in the transportation industry is especially dismal. Remember “Ginger” (the Segway)?

Now, I would like to re-post my opinion about the bailout itself, something I originally put up at the forum of the Powerline blog, regarding an item which itself referred to commentary by William Katz at his Urgent Agenda site. Here it is.

There are many reasons for American auto companies’ recent woes; some of them can be attributed to their executive leadership, some to their workforce, some to our culture, and some to our federal and local governments.

I agree with Mr. Katz that, in the past, one could attribute an arrogant attitude to many in the industry’s leadership. Much of this was born of decades of immense success and may have, at one time, been justified, if not excused. However, since at least the 1970’s, our auto industry leaders have not done as good a job as they should have, and they may have been able to mount changes that could have averted their current dire straights, if they had had greater foresight and humility. That is their contribution to today’s realities.

Another, even more important factor is our culture and how that relates to the auto industry, its workforce and the American people in general.

Our culture developed, since the beginning of the twentieth century, based on certain assumptions about mobility, energy availability, command of power, a sense of national expansiveness, sympathy for “the little guy” or underdog, and a belief that literally anything was possible. For those of you with ordinary imagination, I expect that you can connect the dots as to how these concepts related to the development of our domestic car industry and what Americans demanded of their automobiles.

Looking over what seemed like a limitless horizon, and unencumbered by the privations visited upon countries like Japan and Germany in World War II, we demanded ever bigger, faster, and more opulent vehicles to take us all over our comparatively gigantic landscape, and we got them. No one wondered or cared about where we would get the fuel to power them, the roads and bridges to hold them, the steel to build them, the impact of their function on the environment, or even the workers to build them. The average person could not even imagine that, coming with the “age of Aquarius” we would have thrust upon us many limitations, some inevitable, some self-inflicted.

In the last 30 years at least, we have abdicated our responsibilities to provide plentiful, cheap, and relatively clean energy. We have it in the ground, in the air, under the sea, all around us, but we have hamstrung ourselves with mostly manufactured and false fears of Armageddon if we develop them into the means to live a fuller life. Fear of drilling for oil and gas, mining coal, and developing nuclear power have prevented us from doing the obvious. Pinning our hopes on the “kindness of strangers” (Saudi Arabia, the Emirates, Venezuela, Iran, Iraq, even Canada) and pie-in-the- sky projections of energy output from windmills, solar panels, and hydrogen is preposterous on its face and has always shown itself, under serious scrutiny, to be a frivolous diversion from reality, supported mostly by clueless environmentalists more concerned about anything other than people and corporate rent-seekers hoping to fatten their bottom lines at the expense of the well-being of their countrymen.

Without this continuing source of cheap energy that we have seemingly chosen not to exploit, the auto industry, among others, has been reduced to competing on the same terms as the industries of countries that have had to “make due” with much more limited resources for at least 30 years longer than we have had to. This is to their advantage, as, for example, the Japanese and Germans have been forced to develop their cars to fit on smaller streets, drive in a smaller country, and use much more expensive fuel since their inceptions. This contrast explains a lot about the attitudes in our auto industry; they have had a lot to “catch up” on.

Furthermore, the penchant in our country to always root for the “little guy” has been endlessly manipulated into a myriad of less than healthy outcomes. One of them has been the perceived public relations disaster that would await any corporation which did not accede to most of the demands of striking unions. They recognized a losing battle when they saw it, so they decided to pass along the costs of poor workmanship, excessive pay, bad work rules, plus overly generous medical, retirement and unemployment benefits to the buying public through higher prices. That worked until foreign makers, unencumbered by our sense of “fairness,” offered us their cheaper, more precisely assembled cars made by a more disciplined workforce.

Lastly, government, led by the opportunity to exploit the environmental and safety concerns of the American people and a never-ending quest to accumulate power and influence over every aspect of our lives and economy, have foisted upon the automakers (and, then, passed along to the buying public) huge additional costs through excessive regulation and taxation. I could expound on this nearly forever, but, needless to say, this has hobbled the industry, mostly to the advantage of foreign makers not under as much of the burden as their U.S. counterparts. And, this does not even approach the issues of the indirect subsidies of the foreign makers by government funding of health care and trade restrictions.

These are some of the reasons why the auto industry finds itself in its current dilemma, and why its future now hangs in the balance. Does the U.S. public owe the industry a bailout? I’d say yes, given that so many of the factors shaping their recent troubles have been either inevitable given our culture or literally caused by government itself.

The financial industry bailout goes to the friends, relatives and acquaintances of the national media, located in the same cities where they share their lattes every morning. This mostly explains the difference in the public perceptions of these recent proposals. I say give some back to the people at Duncan Donuts.

Nov 10, 2008 - 10:53 pm 18. Chaz:

Jake and John,

If one reads the Coyote Blog data carefully, one notices that the $70 to 75 per hour in “compensation” for UAW members is not in fact “compensation,” but “labor costs per hour worked.” In addition to current wages and benefits, it includes the total pension costs and health care costs for UAW retirees divided by the number of hours worked by still-employed UAW members. It is just a mechanism that the auto industry uses to allocate costs to their products and is far in excess of what an autoworker receives in wages and benefits.

Nov 11, 2008 - 12:05 am 19. Gary Rosen:

If someone had asked me to decide between a $700B financial bailout and a $25B auto bailout I’d have taken the auto bailout in a heartbeat. But now that we’ve already gone for the financial $$, I don’t want to “throw good money after bad”. I disagree strongly though with the MisterH’s implication that we can just blow off manufacturing. It’s not just an economic issue, it’s a national security issue.

Nov 11, 2008 - 12:46 am 20. David Thomson:

“I disagree strongly though with the MisterH’s implication that we can just blow off manufacturing.”

We are not blowing off manufacturing if we allow the free market to do its job and allow Ford and GM to go bankrupt. The exact opposite result will likely occur. As I said earlier, another company will buy out these two former giants. Also, we should never ignore the economic doctrine of moral hazard. God help us if the UAW does not pay a severe price for its greed. It will simply tell others that they too get can away with being foolish. A newly formed business entity will be able to justifiably ignore those past idiotic agreements.

We also do not manufacture less today than some forty years ago. The analogy with the farming industry is an accurate one. Our factories merely make more stuff employing far less people.

Nov 11, 2008 - 1:26 am 21. hermie:

Automobile manufacturing has to change, just like other industries which had to adapt or die. One of the problems with the big three, was that the management was just too comfortable with the status quo. That’s how they got beat by Toyota, Nissan and Honda.

They were also too accomodating to the unions when they should’ve been playing hardball. They gave idiotic concessions regarding pensions, insurance etc, which kicked the problem down the road and didn’t think about the future of the companies.

Yeah, the companies would have suffered with strikes, but they wouldn’t be on the verge of closing for good.

Union officials also should have considered the future, but instead only wanted to get their own bonuses and generous union pensions, and chose short-term thinking over long-term planning.

Nov 11, 2008 - 5:51 am 22. david foster:

Companies that are successful at one stage of a technology are rarely the ones that lead, or even survive, when new and disruptive technologies hit. The vacuum tube companies weren’t the leaders in solid-state electronics; IBM wasn’t the leader in personal computers or even minicomputers; the big integrated steel companies weren’t the leaders in electric steel “mini-mill” technologies. Why would we expect the Big 3 to lead in a transition to, say, electric vehicles?

What if there had been a huge government program to fund the deployment of a “national information infrastructure” instead of a market-based growth of the Internet? You can bet the government money would have gone to IBM, AT&T, and a collection of Beltway bandits, rather than to companies like PSI, UUNET, Netscape, Amazon, Ebay, etc. The results would have *at best* been something like an inferior version of France’s Videotex service, and more probably would have resulted in something that wasn’t usable at all.

Nov 11, 2008 - 5:54 am 23. lb_philly:

Someone in the punditosphere — possibly a blog, possibly the WSJ — pointed out that we’ve had a couple of major airlines go into bankruptcy and emerge intact.

Nov 11, 2008 - 6:31 am 24. RE:

The Democrats are not interested in health and welfare of the auto industry.

What they really want to save are the unions that played such a big role in bringing the US manufacturers down by rendering them uncompetitive.

Nov 11, 2008 - 6:32 am 25. Huan:

too big to fail = too big to succeed

let them fail

let others pick up the pieces as pieces and start new auto companies
hopefull with less union influence

Nov 11, 2008 - 6:50 am 26. Glenn:

Lots of good points in the comments. Fact is there’s a timing issue here, like a lot of other things the time for Detroit to act was the first time the oil supply was embargoed. That’s when the long war we are fighting with the Muslim world was rekindled. Even at that time an overwhelming majority of Americans didn’t want to face facts. The Detroit guys had every reason to ignore the Japanese competition because for years they had been told by “all” the experts that their position was impregnable. No one could take away their business because of the massive amounts of capital required. Like they almost always are the experts were wrong. And it may be too late to save the big three. But the bailout may be worth trying, what the hell, it’s only money.

Nov 11, 2008 - 7:06 am 27. davidingeorgia:

no.

Nov 11, 2008 - 7:08 am 28. S. Duane:

I’m a lifelong resident of Michigan and I have been witness to two decades of decline in the automotive industry here. I hate to see what’s happening to my state; I hate to see family and friends spread across the country because they had to follow job opportunities. That said, I don’t think it gets fixed by bailing out GM. A cash infusion at this point only forestalls the inevitable crash of a company burdened by decades of labor’s expectations and sense of entitlement. I view the coming collapse of the auto industry in Michigan the same way I view chemotherapy — you have to accept the pain as necessary to have any meaningful chance at recovery later.

Nov 11, 2008 - 7:13 am 29. srlucado:

Should we bail out big auto?

Nope.

Sooner or later, everyone who’s made a bad decision has to take his lumps. Automakers have spent decades making bad decisions, and they’re going to have to face it.

Yeah, it’s tough to think about all those high-paying jobs being lost. But if they’re not value-added activities, they need to end.

This “bailout” is really corporate welfare, in which the rest of us get to subsidize the wages of automakers because their own efforts can’t justify their pay. Terrible idea.

I live in a city that twenty years ago went through a local depression; energy, transportation, and defense jobs went away simultaneously. It was painful – extremely so – but not ruinous. The economy diversified, some of those cyclical jobs returned, and things are better now.

So it’s far better to pay the piper and get over it than to throw good money after bad trying to perpetuate an unsustainable economic model.

Scott

Nov 11, 2008 - 7:17 am 30. cfbleachers:

I guess my response is based first upon the answers to a couple of questions.

1. What are we “saving”?

2. What are we getting?

If we are saving an “industry”, that we deem vital to our future…we have a lot more important issues than how much money it will cost. How did we get tied to it so deeply with no exit strategy? If, however,…it simply is a place of inertia, where we got comfortable sticking unionized workers in “make work” jobs…it has operated as a private industry mirror of patronage governmental middle managers…then let’s dump it.

Look, I’m all for remaining a manufacturing force in the world. If we can figure out how to compete against countries that have a fraction of the labor cost, are not lawsuit happy and don’t have basically a “muscle” enforcement of patronage middle managers crushing invention and improvement, let’s by all means save it.

If, however, we are seeking to continue to provide our auto industry with stale ideas, union interference, substandard product and essentially what one would consider “good enough for government work” quality…only to be beaten repeatedly by superior competition, then my suggestion is that the problem that needs fixing isn’t going to be cured by throwing money at it.

Nov 11, 2008 - 7:23 am 31. Bob:

“Take the state’s nickel, take the state’s noose.”

The problem isn’t the bailout, it’s the fact that once they’ve given them the money, they’re going to want things in exchange. I saw one article where Pelosi stressed that she’d like to see them bring out more fuel efficient cars quicker if they get a bailout, and they’d need to preserve all their union contracts.

So even if wages overall are lower in the market, the UAW will protect the high wages through this bailout, and politicians, not the market, will dictate the model lineups. They might as well schedule the next bailout now, if that’s how their going to handle this one.

Nov 11, 2008 - 7:38 am 32. Keith:

Yeah, union wages are a problem. But not as big a problem as the cars they make. If the candidates that “Pajamas Media” supported in recent years hadn’t blocked the Cafe Standards, the Big 3 would be in MUCH better shape. Instead of a line of giant SUVs, we would instead have American car manufacturers with a more competitive product line. And a country less dependent on imported oil.

Nov 11, 2008 - 8:06 am 33. Jamie Irons:

It would be fascinating to see a survey of American consumers that explored the question of how many (if they given the cash to do so) would elect to buy an Big 3 car.

I sure as hell wouldn’t.

Jamie Irons

Nov 11, 2008 - 8:13 am 34. Roger L. Simon:

Just for the record, Keith, Pajamas Media, quotes or not, has not backed a single candidate. We have had writers who have backed many candidates. Personally, I have always supported the CAFE standards, though I suspect they were very late to the table. I agree with you that the cars that were made were, if anything, a greater problem than the UAW (of course thuggish and ultimately destructive). For many years, Detroit feared innovation. Now they are trying to play catch up (the Volt, etc.). The gentlemen who wrote above that automobiles are more complex than computers has a point, of course, but only part of one. Truly courageous leadership takes a company to the stars, figuratively and literally. Henry Ford, whatever his plus and minuses, quite clearly did not fear innovation. He just went for it.

Nov 11, 2008 - 8:15 am 35. Kevin:

Bill Gates is on the beach. He’s not Jobs, but he’s not an idiot either, which puts him ahead of GM management.

Nov 11, 2008 - 8:16 am 36. Kevin:

But the quick and dirty solution: have Obama announce that Chrysler will never receive another dime in federal help. Killing Chrysler immediately might be a cheaper way to subsidize Ford and GM.

Why Chrysler (besides the fact that they’re goners anyway?) GM and Ford are at least trying to produce hybrids and electrics. Chrysler isn’t, outside of press releases.

Nov 11, 2008 - 8:19 am 37. david foster:

I don’t think Steve Jobs has ever run a company with a strong union presence–not sure how well he would do at a GM or Ford.

He might do better at an automotive startup…and I suspect he might want to maintain tight control over the distribution (like Saturn attempted to) as opposed to the traditional auto-industry franchise model.

Nov 11, 2008 - 8:22 am 38. Jason O.:

Simon is so clever with his typical smartass comments about US automakers and their products. Ford Flex? A hit. Chevy Malibu? A hit. The Cadillac CTS-V lapped the Nurburgring in under 8 minutes, the first production sedan ever to record a sub 8 minute lap time, 13 seconds faster than the BMW M5.

Any mention of the fact that Toyota’s strategy was no different than Ford’s and GM’s? The Prius is a lower volume car that incurs a loss on every unit sold, but props up T’s average CAFE score so they can sell as many profitable gas guzzling full size Tundras and other large SUVs as possible. Has Simon noticed how many Tundra ads are still on TV, even now??

No one on this comment board has mentioned that GM (and F and C) has already dealt with the legacy cost competitiveness issue with the latest UAW contract that was inked in early 2008. The agreement shifts $51 billion in potential healthcare liability off GM’s balance sheet, puts new workers on a lower pay scale, freezes wages but guarantees bonuses, promises to keep investing in U.S. production and limits how long idled workers get nearly full pay in a so-called jobs bank.

Bottom line, this agreement puts the US auto industry on labor cost par with Japanese and German OEMs.

Kill the Buick brand? Buick is the best selling brand in China. North America is a mature market. China is a growing market with undeniably massive potential. Only a “troglodyte” would kill Buick.

Give GM and F low interest loans now, and their businesses will recover when the economy recovers.

Nov 11, 2008 - 8:25 am 39. David H Dennis:

I think Steve Jobs is happy with his present positions (note that they are multiple already!) and would not want to take the job of savior to the US auto industry.

The fixed costs associated with the US automakers cause product development to be massively underfunded and lead to inferior products compared to the competition. That’s the problem here, and although Steve could be very creative about it, I doubt that it’s solvable without abrogation of the labor agreements.

Frankly, I don’t think Steve Jobs has the patience to deal with union people and their agreements, which are the very antithesis of how Silicon Valley works. I wouldn’t myself, so I can certainly sympathise!

D

Nov 11, 2008 - 8:28 am 40. BarryD:

Steve Jobs relies on hype to bring products (some quite good) to market at highly-inflated prices for first adopters, then dropping the price to penetrate the mass market. His greatest attribute appears to be convincing a slice of the BoBo market that they’re some sort of hip counterculture rebels for buying electronic gadgets for high prices, then using the cash infusion to increase market share by lowering the price.

Steve Jobs is VERY good at this.

Is there room for this in the automobile market?

Surely the Prius commanded a premium price for a while, but we’re talking what, 10 or 20% tops?

It would be interesting to see Jobs telling American car buyers that they’re really cool hippies for getting their Chevy Ecogreenneatowagon for 50 grand, and their neighbors just aren’t with it (when they wait six months to buy one for 20).

It would also be amusing to see the shock on the first adopters’ faces when they find out they have to FedEx their car back to Chevy for a $2000 oil change. One would just have to hope that the cars could be refueled at a non-Chevy gas station. I’d want it in writing.

Seriously, as someone who once worked in MC briefly: beware of the Corporate Cargo Cult! Steve Jobs has been very successful in a very specialized niche. To imagine that the same magic formula could be applied to an utterly different industry and the money will fall from the sky is a good way to lose one’s shirt. Note that Steve Jobs’ other ventures, even in the computer industry, have not been successful.

Nov 11, 2008 - 8:36 am 41. Self-hating boomer:

You got the wrong computer guy. Put Jobs in charge, and all they’ll be able to compete with is BMW. Put Perot in charge. He knows exactly what’s wrong; he’s been pointing it out for decades.

Nov 11, 2008 - 8:39 am 42. srlucado:

Yeah, well, S-h b, the Democratic Party has been “pointing it out” for years, too, but I doubt that with them holding the reins things will get any better. Criticizing ain’t governing (or managing, or any other thing; “a legless man teaching dancing”, as someone said).

Besides, Perot’s inflexible discipline may make rational sense, but humans seldom act out of pure rationality, especially these days (see above reference to Democrats).

Scott

Nov 11, 2008 - 8:49 am 43. Fat Man:

Read Robert Farago’s Editorials at The Truth About Cars

Nov 11, 2008 - 9:02 am 44. Doc99:

The one argument to keep GM in business is the Chevy Volt. Otherwise, let ‘em fail. The UAW’s feasting on the Golden Egg-Laying Goose is at an end.

Nov 11, 2008 - 9:17 am 45. I Callahan:

All of this “let them fail” language may be correct, but it won’t happen. Those of you outside the rust belt have no idea of the stranglehold blue collar unionism has in this area.

Take the Detroit News and Free Press for example. This was a strike that lasted over a year and a half, complete with injuries and death threats. The newspapers goal was to keep the unions from getting double-digit raises, and they went completely ballistic over this. Their unions were MUCH smaller than the UAW.

In addition, Obama is NOT going to let the unions fail after they gave him their undying support. Michigan voted for Obama 55-41.

If the big three were allowed to fail, expect riots from unions all over the country. Expect truckers to come to the aid of their union brethren and go on strike themselves. We’ll look like France during a nationwide transit strike.

Some may wish the big three to fail, but it ain’t gonna happen.

TV (Harry)

Nov 11, 2008 - 9:24 am 46. Dr. Kenneth Noisewater:

What if there had been a huge government program to fund the deployment of a “national information infrastructure” instead of a market-based growth of the Internet? You can bet the government money would have gone to IBM, AT&T, and a collection of Beltway bandits, rather than to companies like PSI, UUNET, Netscape, Amazon, Ebay, etc. The results would have *at best* been something like an inferior version of France’s Videotex service, and more probably would have resulted in something that wasn’t usable at all.

And where in the holy name of Xenu is __MY__ fcuking dot.com bailout?! ISTR that after NASDAQ got a-slaughtered there wasn’t a whole lot of money forthcoming from the FedGov… I guess it’s who you send hookers to that counts..

Oh, and for you union folks, the reason the 1950s-60s were a golden age of American industry was because we had bombed the rest of the productive world back into the ice age. So shall we bomb the be-Cthulhu out of China, India, Brazil, etc as a means of reducing global competition for industrial goods?

Nov 11, 2008 - 9:43 am 47. Ron Sanders:

I agree with David Foster. I heard Jobs speak at an educational meeting in Austin last year. He said he didn’t think he could run a school district because he wouldn’t be allowed to fire non-productive people. He would have the same problem with the UAW.

Nov 11, 2008 - 9:45 am 48. hermie:

Bailing out the automakers would solve nothing except ensuring that the union bosses’ salaries and benefits are still paid.

The government would have the means to dictate what kinds of cars will be built, how they will be built (features, equipment, etc), how much they will sell for…all without addressing the fundemental problems within the industry. Consider how the government can’t run itself right, and you want them to run a car company? You’d have a bunch of government lawyers and bureaucrats flooding the offices, while all the experienced car builders, designers, etc would have to sit on their hands while the government people figure out how many pages of government jargon are needed to describe an odometer.

Nov 11, 2008 - 10:08 am 49. MikeD:

“too big to fail = too big to succeed”

You describing the automobile industry, Huan, or the Federal government?

Nov 11, 2008 - 10:42 am 50. CCN:

Regarding the comment that Jobs count not run a Big Auto company because he thought the Ginger (Segway) was a good idea. Every account I’ve read of Jobs involvement in the Segway said that he thought it was stupid.

Some choice quotes:

“Because I see a big problem here,” said Jobs. “I was thinking about it all night. I couldn’t sleep after Dean came over.” There were notes scribbled on the palm of his hand. He explained his experience with the iMac, how there were four models now but he had launched with just one color to give his designers, salespeople, and the public an absolute focus. He had waited seven months to introduce the other models.”

—

“What does everyone think about the design?” asked Doerr, switching subjects…

“I think it sucks!” said Jobs.

His vehemence made Tim pause. “Why?” he asked, a bit stiffly.

“It just does.”

“In what sense?” said Tim, getting his feet back under him. “Give me a clue.”

“Its shape is not innovative, it’s not elegant, it doesn’t feel anthropomorphic,” said Jobs, ticking off three of his design mantras.

“You have this incredibly innovative machine but it looks very traditional.” The last word delivered like a stab…”There are design firms out there that could come up with things we’ve never thought of,” Jobs continued, “things that would make you shit in your pants.”

—-

“Jobs said he lived seven minutes from a grocery and wasn’t sure he would use Ginger to get there. Bezos agreed.”

Nov 11, 2008 - 11:17 am 51. joe:

First realize this would not be a bailout of the GM or the big 3 but a bail out of the UAW. You cannot pay someone $60/hour to put on hubcaps. Like-minded unions have destroyed the airlines and the steel companies. Those industries had to resort to bankruptcy before they could become competitive. The only other group of people in the world that had the same benefits as the current UAW retirees were members of the Central Committee of the Soviet Union.

Realize Americans will still buy cars. So for each car GM does not sale then another carmaker will.

Nov 11, 2008 - 11:30 am 52. john lynch:

Heh. GM would stop making cars and start making movies.

Nov 11, 2008 - 12:58 pm 53. Wellspring:

Roger,

There is much truth in the comments here. The union contracts did strangle the automakers. However, that’s not the whole story.

American auto companies have archaic management systems, self-destructively adversarial relationships with their supplier networks, and a complete resistance to change and innovation. It’s tempting to place the blame on the UAW, because the UAW really does bear a lot of responsibility. This doesn’t make management exempt from blame.

The question isn’t whether or not to bail out the automakers. All our money will buy them is time before they go bankrupt. If it took fifty billion and then they’d be profitable and competitive again, I’d see the logic. But all this is is an infusion of cash to keep a dead patient on the respirator. The automakers have had thirty years and many generations of managers to re-invent themselves and reform. They haven’t, and there’s no evidence at this late date that they ever will.

So what exactly will our money buy us? We might as well put all those workers on unemployment and use the money to improve the business climate in Michigan to the point where new jobs will appear.

Finally, no offense, Roger, but hiring Steve Jobs to run GM makes about as much sense as hiring John Sculley to run Apple did. They’re two separate businesses with two separate sets of problems. GM (and Chrysler) need to reform their supply chains, especially with regard to improving vendor relationships and collaboration. They need to streamline their product management strategies. They need to relentlessly improve their operations management and processes, while shedding their adversarial, calcifying and destructive labor relations. They need to slim down and rationalize their distribution channels. Steve Jobs isn’t the man who can accomplish that — though he’s a great CEO, his strengths are elsewhere. In fact, the man who can save GM probably doesn’t exist at all.

Nov 11, 2008 - 1:22 pm 54. JMH:

Let them go under. Their assests need to be shaken loose from entrentched management and entrenched unions, both of whom have an entitlement mentality that prevents them from competing. All a bailout would do is steal money from productive Americans who are held accountable for their mistakes and give it to loudmouthed jerks who aren’t. Like CFBleachers said, the problems are deeper than anything a handout could solve, and if we prop them up now, we’re just throwing away money. It won’t “save” them – they’ll be shouldering their way back to the trough as soon as they’ve burned through the cash.

I Callahan is probably right that the current political climate prevents letting them go bankrupt. But that means we need to place our markers now, clearly, forcefully, and to stand by them.

Nov 11, 2008 - 1:26 pm 55. David Thomson:

“In fact, the man who can save GM probably doesn’t exist at all.”

That is correct. There is indeed no one likely to provide the leadership to save these auto dinosaurs. Such a brilliant individual probably never existed in human history. GM simply must go bankrupt so that newly formed company is relieved of the current union obligations. God help our economy if Obama “saves” them. It will push us into a serious recession. Bankruptcies serve a valid purpose. Government interference in this most necessary process only distorts the markets and makes matters worse.

Nov 11, 2008 - 1:45 pm 56. Huan:

@MikeD

it works for both
both the auto industry and government would benefit from being smaller, more nimble, more responsive.
but the two are not comparable. there is only one level of auto industry currently in the US, the big three. There are at least three level of government with different responsibility currently, national to defend the nation, local to provide services, and state for all the in-betweens.

Nov 11, 2008 - 2:46 pm 57. Tim H.:

It’s been said (mostly by management) that union health and welfare bennies add 2K to the price of every car and that this makes US cars uncompetitive. But people routinely pay 2K+ more for a Japanese or German car because they hate watching Regis on the dealer, waiting room, TV several times a year. Detroit can’t seem to figure out that WE F-ing hate and resent Mr. Goodwrench. Why would I care if the parts are “genuine” or not since the original parts failed before the new smell disappeared. It’s sad. I bought “American” for years and got screwed every time. Not by hi tech parts but by things that should have been perfected long ago- rotors,water pumps,alternators, heater cores etc. Sad really very sad.

Timmmmmmmmmmmmm

Nov 11, 2008 - 4:20 pm 58. BarryD:

Another thing…

Steve Jobs had to compete with Microsoft and slapdash PC clone makers for the Mac market, and a bunch of relative newcomers to the consumer market for other gadgets.

To make GM work, the new super CEO would have to compete with Toyota, Honda, BMW, Nissan et al. Sure, they’ve all made mistakes here and there, but it would be hard to suggest that Nissan and BMW haven’t done their design homework, nor that Toyota and Honda are slapdash car builders. And the auto interface has been standardized for close to a century.

I’m not saying Jobs isn’t good at what he does. I’m just saying that the problems of resurrecting the dying American auto companies are far more difficult and more expensive than what faced dying Apple 10 years ago.

And that doesn’t even begin to touch on the problems with Michigan, union power, corporate culture, etc., etc.

Nov 11, 2008 - 4:59 pm 59. Roger Godby:

Japan might subsidize its auto companies directly or indirectly now, but its national debt is, per capita, worse than America’s (but we’re working hard to be #1 on that). Mass immigration is out–yay!–but Japanese don’t reproduce–boo–yet live forever. At some point, Japan’s government too will have to make tough choices. My bet is the growing population of Japanese in their 70s+, who are largely in rural areas where votes are disproportionately powerful, will get what they want. Funds will shift from corporate welfare to social welfare. When will it happen? Not sure, but demographics here are ugly.

Italy and Germany have similar demographics, although much more immigration. However, their immigrants don’t seem to like work or even the host countries and populace.

Nov 11, 2008 - 7:19 pm 60. Joe:

Oh, yeah, put Steve Jobs in charge. It’ll be wonderful to see him fall flat on his face.

Seriously, Steve Jobs doesn’t operate plants — he subcontracts to people who own plants. Which means he can switch who assembles his laptops and iPods if somebody else offers him a better deal. GM, by law and by contract, can’t just put out auto assembly to bids. It’s stuck with the plants and the union and the resulting cost structure put in place forty years ago.

TimH — when you pay $2,000 more for a Japanese car over an American, you’re getting almost $4,000 worth of extra quality in materials and workmanship. Nobody will pay $30,000 for a U.S. car of exactly equal workmanship as a $28,000 Japanese car; they might pay $26,000 for an inferior car because they’re on a budget that can’t afford the extra $2,000.

Nov 11, 2008 - 7:27 pm 61. Barry Dauphin:

The Big 3 have been beneficiaries of government policy from Administrations of both parties and Labor has benefitted from policies of both parties. We don’t have a free market for autos nor do we have a truly socialized market. We have a highly regulated market in which the regulations help some people (e.g., Toyota benefits from not having Labor costs that the Big 3 have), but the Big 3 can and do receive various favors and direct and indirect money from government decisions. We are at a point that if we lean toward a freer market or lean toward more government intervention, there will be lots of pain. The pain will not simply occur to the GM execs or UAW members. It will ripple out.

Those with more socialistic tendencies seem not to recognize that tax payer bailouts affect the middle class in very aversive ways. Wealthy people can go on paying higher taxes and be OK, but they will create fewer jobs by design and spend money less often by their discretion (which also creates jobs). Middle class people really hurt with “only” 5% or 10% higher taxes, not to mention multiple taxation effects if the Feds raise taxes and the states raise taxes and local communities raise taxes. “Saving jobs” comes at a high cost to others and has a corrosive economic effect. There will be less innovation in the very areas the left desires. They might be all hot to trot for embryonic stem cell research and green technology, but there will be shrinking revenues for that. And Dems are focused on truly odious things like card check as a sop to unions.

The free marketeers seem to forget that we don’t have a free market, so that the pain of creative destruction is far greater and people who suffer often had little power to have done otherwise (in many respects even though they are still responsible for their personal spending habits). The ripple effects will not only affect the “stupid execs who make stupid decisions” or the “lazy, overpaid UAW member” but it will affect them too. Some act as if they can be unaffected observers simply watching the wretched suffer their just desserts. Nice job if you can get it, but it won’t be that way. There could be plenty of pain to go around.

We are going to learn the hard way that there aren’t any saviors. The ONE is all too mortal, and no Steve Jobs couldn’t save GM. But that is why Roger’s question is important, it doesn’t have an easy answer. But we continue to need sound public explanations for why the world is in this position. Bush’s communication difficulties crop up again. The ambiguity is playing into people’s superstitions and prejudices.

That is not a good thing. The kumbayah of Obama will only last a short while. Then tempers will become quite frayed, finger pointing could become rampant, etc. Our public intellectuals have to start acting like intellectuals; our politicians have to act like statesmen instead of party hacks; people will have to be civic minded; folks have to be honest with themselves. This is an incredibly tall order after an electoral process dripping with denial.

Nov 11, 2008 - 7:50 pm 62. bullmoosegal:

No! Yes, folks will be out of a job, and that’s terrible. Yes, foreign countries give their companies a leg up, and that’s unfair. Yes, the world is a difficult place for an honest company to make a buck. But that’s capitalism. It’s either stick with our system and make it more efficient and workable, or dump it for government-run and owned companies.

Nov 11, 2008 - 8:22 pm 63. Gary Rosen:

Barry, as usual you have one of the most thoughtful posts in the thread. If anything, though my earlier post made it seem otherwise, I lean more to the free market side of the question than the bailout side. I just wanted to bring out the fact that there is a national security component to having a healthy US auto industry. America’s military superiority is based in large part on our technological superiority. While we are entranced by all the new whizzy electronic/Internet technology (I work in Sili Valley myself) we cannot ignore our traditional industrial base. This does not in itself justify a bailout but it has to be factored into public policy somewhere.

Nov 11, 2008 - 9:31 pm 64. Mark D:

No more money for auto. “Bailout” is a misnomer – as if the auto companies will survive even with more money.

The first $250 Billion was not enough. Now they need another few hundred billion. Where does it end? I think if you gave them even $1 Trillion it will only delay their inevitable collapse.

Nov 11, 2008 - 10:02 pm 65. Barry Dauphin:

Gary, thanks for your kind words, though I wish I were closer to a good solution. Yes, it is a national security issue too. We have much cooperation between public and private in America, mostly beneficial and occasionally corrupt. Part of the reason I find it difficult is that I live in Michigan and work in Detroit. It isn’t just the direct effects but the indirect. The layoffs will lead to unemployment benefits and government programs of all sorts. Either more taxes, severe cuts in spending or big deficits (or all of the above). I’m very concerned that throwing money at the Big 3 is a bottomless pit. I could see them burn through it and ask for more. It will have to stop at some point. Perhaps that point is now.

But even if there is a bailout, there will be significant pain (that’s what the socialistic sympathizers don’t get). I am concerned about sharp cutbacks in Defense. During my worst moments, I picture President Obama having a quiet meeting with the president of Taiwan, telling him, “you’re on your own.” Russia being poised to become expansionist as America withdraws into symbolism and images on the foreign policy front.

Nov 11, 2008 - 10:20 pm 66. zefal:

This is just a bail out for people who are in a privileged position of being in a overpaid union job.

Nov 11, 2008 - 11:45 pm 67. Carl Pham:

Never, never, never interfere in a free market unless you have some unbelievably good reason, and probably not even then. It has never worked out well, not once, not in the history of the planet. That should tell you something.

Mercantilist or nationalistic fears of our “industrial infrastructure” going into the toilet are not reasonable. In the first place, it’s not like if GM goes belly up no Americans will be building cars any more, and as a nation we’ll turn stupid about it. Plenty of Americans are building plenty of cars in America — for Toyota. What you’re really talking about letting collapse is the top American management of the American car companies. I trust you don’t feel we’re going to forget how to do top management anytime soon? And that, furthermore, preserving the careers of some guys who have done badly at it is not a good way to encourage good management traditions anyway?

Secondly, the idea that car tech is a 21st century technology is laughable. It’s 20th century, pure and simple. Complaining about the fact that it’s drifting off to Korea, and probably soon enough China, is about as sensible as the complaints in the 80s that steelmaking was drifting off to Japan and South Korea (which it did, to no obvious ill effect).

America has super-high wages compared to the rest of the world because we work on the cutting edge, on the tech that is high profit margin, where you need serious brains to make any headway. Car-making doesn’t fit the bill any more, except maybe on the Tesla margins.

But so what? We should be celebrating and encouraging our real 21st century tech, which is biotech, healthcare, bioengineering, medical devices, nanotech, rational drug design, green chemistry, efficient chemical synthesis, with information tech hanging on. These are things at which we are the best in the world, and where the wages to be earned are great, because it’s highly skilled labor.

Michigan should be saying sayonara and good riddance to the auto tech business, let the low-wage Chinese built the smokey factories and compete on the lowest possible price for shaped steel. Meanwhile, get down to Ann Arbor and see how to turn some of those clever ideas about new drugs, new treatments, engineered organisms and so forth into bankable technology, the kind we can sell to the Indians and Chinese in exchange for the dollars they earn selling us cars.

Nov 12, 2008 - 1:57 am 68. nina:

The UAW does is only interested in keeping the money flow to the members so they can justify their being. They just spend millions electing democrats and is pay back time. Pelosi is interested in this deal so they can control the whole industry and produce more green cars. Read her press release yesterday where she talks about the auto industry developing better technology to build cleaner cars.
She is above her pay grade on this. The union thugs could care less about clean car tech and she doesn’t have the moral aptitude to control them.

Nov 12, 2008 - 4:59 am 69. Alan Kellogg:

Here you can read a story about a dead boy. His parents insist he’s alive because drugs keep his heart beating and a machine keeps moving air in and out of his lungs. Insist in denial of the fact the child’s brain is rotting. This remind you of an industry?

The American automobile industry isn’t moribund, it’s a source of infection. It’s low grade beef gone bad stored in freezers with non-functioning condensers. It’s time to go through the pockets for loose change. This is an ex-industry. I say we bury it, disinfect where it died, and see if those new mammals can evolve anything to take the reptiles’ place.

Nov 12, 2008 - 5:16 am 70. hermie:

Why would liberals like Pelosi insist that automakers be state-supported, when at the same time they are trying to ’save the planet’ by eliminating automobile usage amongst the masses?

Nov 12, 2008 - 6:20 am 71. Bob W.:

It is fun to watch the democrats twist in the wind a bit on this one; they have been critical for years of the auto industry and the fact that they haven’t made more economical, environmentally-friendly, fuel efficient cars, and now, when their failed business models have them circling the drain, here comes a helping hand!

I don’t think subsidizing the failure of Detroit autiomakers and their unions is a good, long term investment for the American people. Perhaps bankruptcy and restructuring would compel the automakers to develop a competitive business plan. Pass this bailout and you are ensured of only one thing: another bailout for the auto industry somewhere down the line.

I am also alarmed at the “mission creep” involved in the bailout; where will it end? My guess is that it ends when we run out of $700 billion, unless we pass another bailout bill!

What about the failing newspapers in this country, or the recording industry, are they going to get the helping hand to continue limping along with their failed business models?

And what about the Postal Service? It is poised to shed jobs and force buyouts as well, should the mailmen get bailed out, too?

I would argue that yes they should, and that it can be done rather innocuously, too. A bailout of U.S. Mail is certainly no worse than throwing a taxpayer funded liferaft to the big three in Detroit, right?

Nov 12, 2008 - 8:04 am 72. Mike G:

The flip side of the unions that no one talks about is the dealer networks. They have a huge amount of influence on GM and the other companies and it’s a very powerful force against any form of innovation in products, production, pricing, etc. Who do you think wanted Saturn killed and Oldsmobile kept alive?

I think catastrophic failure is necessary to find some way to break all these forces and allow small pieces of the car companies to find their way to success.

Nov 12, 2008 - 9:43 am 73. Salt Lick:

And where in the holy name of Xenu is __MY__ fcuking dot.com bailout?!

This is where I’m going, more and more. I’ve lost half my retirement assets in the last month, money I saved by living an extremely frugal life for 30 years, and now I have to look for a job as an “older worker” while the frigging grasshoppers around me eat what I’ve stored. I’m trying to stay rationale, but I’m just getting more and more pissed.

Nov 12, 2008 - 10:16 am 74. TM:

You might remember that NEXT had one of the most advanced manufacturing lines of it’s time (albeit brief). All JIT, more modern than Dell.

Can’t that much difference between a car and an ipod….

Nov 12, 2008 - 11:46 am 75. davidingeorgia:

after the No Bank or Paulson Friend Left Behind Program has worked so slendidly?

to reiterate…

no.

Nov 12, 2008 - 12:01 pm 76. Alan Kellogg:

I wonder, if the automobile industry worldwide was to lose all subsidies, how much more expensive would cars be? How would the drop in car ownership change the world?

Nov 12, 2008 - 1:22 pm 77. Wellspring:

To Dr. Kenneth Noisewater: Bailout for the rest of us.

Nov 12, 2008 - 3:27 pm 78. pete:

The reason the American car manufacturers are in this situation is quite simple: Car buyers have declined to support them, preferring to buy cars from other manufacturers instead. We’ve voted with our wallets.

Now House Majority Leader Pelosi wants to take our tax money to subsidize them to no lasting effect, and taxpayers won’t even get a crappy Cobalt or Vega for the yard.

Nov 12, 2008 - 4:15 pm 79. njcommuter:

>blockquote>But the quick and dirty solution: have Obama announce that Chrysler will never receive another dime in federal help. Killing Chrysler immediately might be a cheaper way to subsidize Ford and GM.

Why Chrysler (besides the fact that they’re goners anyway?) GM and Ford are at least trying to produce hybrids and electrics. Chrysler isn’t, outside of press releases.Actually, Chrysler spent a great deal of money co-developing the two-mode hybrid. Like GM, they have tried to bring it to market in the logical place: the vehicles that need it the most and that are most able to use it (since it is genuinely hard to scale it down in volume and weight).

If you love freedom, you should want to see GM go, since they are the ones planning to produce cars that can be shut down remotely by satellite (using OnStar). This is done in the name of giving police departments the authority to stop high-speed chases. Do you think it will stop there?

For many years, the US auto market was a near monopoly for the UAW. Between trying to cut costs and trying to respond to other government mandates, the Big Three outsourced a lot of their technology (and a lot of risk) and helped create the situation we’re in, but they did it in response to government action.

The best thing we can do is require that government aid be matched by ‘reorganization’ in bankruptcy court. Some of that aid might go to picking up ‘underfunded’ medical benefits for pensioners, with the proviso that people now employed contribute more towards those benefits, and accept a future cap based on ability to pay. And the unions should run the funds that will pay out for those benefits.

Now, will G.W.Bush buy into this and go public with it? No. Would the press pay attention if he did? Well, the Wall Street Journal would, and a few others. Would Congress even nibble at the idea? No. But it would be the right thing and the conservative thing to do.

Nov 12, 2008 - 6:21 pm 80. Tim H.:

In the last 30 years or so while American manufacturers cried about costs and poured money into lobbying to maintain the status quo the Japanese were busy pouring money into R&D and creating high priced, high quality, lux lines like Infinity, Lexus, and Accura. Their experience with their regular car lines told them that people would gladly pay more for quality. During this same period the American auto industry created Saturn. How sad is that? And yet foreigners still kill for spots in the American business schools that produced the thieves and idiots who last good ideas were Saturn and Mr. Goodwrench. Sad. Very sad.

Th

Nov 12, 2008 - 7:03 pm 81. Valjean:

Read my lips (with profound apologies to GHW Bush):

Let. Them. Die!

I, for one, am absolutely sick and tired of reading about Detroit and their insipid, protected, coddled, unionized and “too-big-to-fail” minions. I *know* this will be a major blow, but when will we clean out the rot? If we keep transfusing them with taxpayer loot, they’ll never learn.

Can’t risk it? If you told someone 30 years ago that TWA, PanAm, Eastern (Airlines), Data General, Warner Brothers, Texaco, ShellOil, or even AMC Motors (I could go on, of course) would be dead or acquired by the 21st century you’d have gotten blank stares. It’s the nature of the market. Subsidizing them puts politician’s and bureaucrat’s whims above the public’s (and their wallet’s) choosing. And as any good European will tell you, that’s a trough where the pigs are *never* satisfied.

Nov 12, 2008 - 10:05 pm 82. gm1000:

Let’em go bankrupt, t send the unions and whinging gov granholm into the fields to start growing corn for biofuel or build grid s for windfarms at minimum wage, get the Japanese in to show Detroit how to make cheap modern eco cars that ordinary people, rather than bloated union workers, can afford…..

Nov 13, 2008 - 5:11 am 83. Gippergal:

Steve Jobs any day, man! You raise an interesting point about whether the government should bail out the industry in order to try to stay competitive globally.

My concern there is that anything the government touches never seems to stay competitive globally – take, for example, education.

Additionally – having lived in Michigan – while I understand the devastation it would bring to lose the Detroit auto industry to that state, I also understand something else: this isn’t a bail out of the Big 3; it’s a bail out of the UAW. The unions have ruined the auto industry; my grandparents’ motto – auto factory workers – was always this: “don’t work too hard.”

For too long, Democrats have been in bed with mob-run labor unions. The idea of the liberal illuminati handing over taxpayer dollars to organized crime makes me ill. And make no bones about it: that is exactly what the labor unions are, and everyone in Detroit knows it. As for me? I don’t want my tax money to send Tony Soprano on vacation.

Nov 15, 2008 - 9:42 am 84. Reporters Notebook » Blog Archive » From Apple To Lemons:

[...] Should we bail out big auto? [...]

Jun 16, 2009 - 2:14 pm 85. Reporters Notebook » Blog Archive » From Apple To Lemons:

[...] Should we bail out big auto? [...]

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