I realize that I'm going to get a ton of grief for this from my friends and colleagues, and I really hate it when I find myself siding with the Republican Party on policy -- because they're just so predictably wrong on almost everything they utter these days -- but I think this auto industry bailout is a piss-poor idea and I find myself rooting for the GOP to kill it.
First, I totally get why we're headed in this direction and, having been raised in a union household (dad was a Teamster for 40 years), it really pains me to think about the millions of union households -- who have gotten the squeezed so hard over the past decade thanks to Republican policies -- that would be out-of-work if the car companies go under. I get that and I realize that not a small part of the current GOP opposition to the bailout is that they see a prime opportunity to drive another stake through the heart of labor in hopes of pleasing the big business pimps which they work for. It also sucks to watch our ever-shrinking manufacturing base shrivel even more. Awful.
But the truth is, the American auto industry has done an abysmal job for decades when it comes to building non-SUV vehicles that are both appealing to the eye and the wallet. In fact, outside of the SUV lines, I can't think of a single American car that would even make my Top 10 list right now. If I want style and performance, I'll take a Lexus or BMW or Acura any day. For durability and gas mileage, I'll take a Prius or Civic or Camry. For a solid car at a lower cost, some of the Hyundai models are finally appealing to me. Other than Jeep, I never find myself looking at American cars. Ever...and I am presently looking.
The car companies suffer from a chronic problem in leadership, a lack of vision, crappy management, and a refusal to adjust to the demands of the market. Now, with an economic crisis upon us coupled with a public that is gun shy about gas prices (you just know those $1.75 prices are only a short-term tease), they now come running, hat-in-hand, begging for bridge loans, as if this economic downturn was the only obstacle in front of them before reinventing themselves into profitable companies that build great products.
Whether or not we like it, whether we think it's a good thing or not, globalization is here to stay. Once that door opened, it will never close again. The days when the Big Three saw a domestic market share of 50 percent are long gone and, frankly, other countries simply do a much, much better job at building cars than we do. And except for products built by Apple, they also do a much better job at building pretty much any desirable consumer electronic (computers notwithstanding).
The truth is, until this moment of monetary groveling by the auto companies, they displayed no ability to turn a profit on any of its non-SUV product lines. Instead, they happily made a ton of money on each SUV sold, lost money on all their cars, and suffocated any attempt at innovation along the way. And the first moderately interesting product that Detroit has any shot of actually bringing to the market is the electric Chevy Volt. But, apparently, we have to wait a few more years and they're talking about some absurd $40,000 price point, to boot. Exactly why would we spend $10,000 more for an American green car than for the next-generation Toyota Prius which will offer solar roof panels to power things like air-conditioning and are expected to be plug-ins? It's not even close.
I also wasn't thrilled about the bailout of the investment banks, but I knew we needed to do it. We really were on the precipice of something catastrophic and hoping to prevent that calamity (and we're not out of the woods yet) was more pressing than debating the merits of whether those white collar gamblers deserved a rescue (they didn't). But despite the moronic and ever-changing efforts by Hank Paulson, the infusion of hundreds of billions of dollars of cash into the banking system has, so far, prevented a complete credit collapse and the ship is still sailing. Hopefully we'll avoid that other massive iceberg in front of us, which is a very possible implosion of the commercial real estate market.
Ultimately, the only compelling reason to try to save the auto companies is the fear of what a few million more unemployed American workers would do to an already fragile economy in recession. I don't underestimate that concern. But separate from the jobs issue, I'd rather save our domestic airlines than our car companies, if I had to choose. We already have better automobile options right now with foreign companies, but we really can't afford to lose our national air carriers. There aren't foreign options to pick-up their slack, nor do I think that relying on foreign air carriers to provide domestic service is particularly wise. But I digress.
I don't want to bailout the auto companies because they've more than proven that their product is not worth saving. I realize what is being discussed is a "bridge loan" and not anything like what we've done with our big banks. But I don't believe for a moment that the money will do anything but temporarily prolong a well-deserved death. It's not like they were on the cusp of a revival until the economy turned sour. The trendline has been going down and nothing I've seen shows any realistic hopes that a few billion dollars is going to do much for companies that burn through several billion a month as a matter of course.
Actually, the best argument might be that the money is needed to prevent the auto companies from going under right now because we may not be able to handle the shock to our economic system if they do, and that the $15 billion is mainly an effort to prolong their collapse until next fall when our economy might be on sufficient footing to better weather that storm. I might be willing to go along with that bad medicine. But the notion that we might actually be able to save these companies with a modest loan, even though they've been unable to save themselves for some time, even with massive concessions from the UAW, sounds like lunacy to me.
It kills me that our manufacturing base has been some decimated and that organized labor has taken such a hit over the past few decades. I hold out hope that President Obama will be able to spark a green revolution in the coming decade right here in the United States and that will prove to be American Manufacturing 2.0. It has real potential. But I think this bailout, bridge loan, whatever you call it, is bad business and I'm really hating the fact that I'm rooting for Republicans to kill it.
Hopefully, I'll never have this feeling again. Ever. It makes me feel dirty...
Mark Nickolas is the Managing Editor of Political Base.