Richard Spencer

April 08, 2009

As the Big Three bailouts go, I feel I?ve already said my piece (see here, here, and here); however, I?d like to make a few points regarding Tom?s most recent article. 

1) I find the depiction of Ford, GM, and Chrysler as populist organizations, beloved by normal Americans, inspiring upright living, and disparaged only by big city elites and the counter culture, to be way off the mark. Last December, these Washington big wigs, who, we?re told, turn up their nose at American industry, gave Chrysler and GM handouts in the tens of billions, overriding the objection of Congress. Even if bankruptcy is ultimately in the cards for the Big Three (I don?t think it is), it will be done under government supervision and under the best possible terms. I sure wish those elites in Washington hated me this much! Then I might be able to move out of Brooklyn!

And it?s not just left-wing status seekers and moral reprobates who drive imports and don’t much like Detroit. In a March 17 CBS poll, 76 percent of the public disapproved of giving the Big Three more financial assistance. Moreover, a Honda Accord retails for something like $20,000; no one wins any special points for choosing one over a Taurus. (And I imagine that there were quite a few Accords and Toyotas in the lot Tom mentioned in his anecdote.) I?m not an engineer or designer, so I won?t speculate on exactly what Detroit?s doing wrong; however, I?d stress that the last thing we need are American industries that operate like not-for-profit organizations, forever winning praise for their cars? ?reliability? (or, after full nationalization, their ?greenness?) and then explaining away yearly losses with gestures towards ?national interest.? A manufacturer should be profitable; otherwise, it needs to go. Simple as that.

3) Last week, for the first time, I felt sorry for Richard Wagoner when he was summarily ousted by a presidential committee consisting of Barack Obama, Tim Geithner, and Steven Rattner (a community organizer-cum-president, bureaucrat-cum-central banker, and ibanker-cum-?car czar,? all of whom know nothing about automotives). And even a liberal friend of mine told me she thought this was a dangerous step towards government control of the economy. But then what did everyone expect? You can?t have your socialism and eat it, too; you can?t expect the government to finance your company and then not dictate what you produce. The fact that Larry Summers is dreaming of compelling Chrysler to make a ?green? car and Geithner has announced his prerogative to fire bank presidents at will gives you an idea of what we have in store?industries as the playthings of politicians and bureaucrats. I?ve seen the future of American automobiles, and it?s called ?Ester, the Post-Feminist Organic Diversity Mobile.?

4) Some of the Southern states that host foreign manufacturers do seem a bit ?third-world? in parts (indeed, this is part of their charm!). But this has nothing to do with their ?bribing? foreign industrialists to set up shop in their territories. First off, tax breaks aren?t bribery. And, secondly, since no Big Three manufacturer is planning on building a new plant any time soon, I don?t know how one could object to, say, Louisianans or South Carolinians offering foreign entrepreneurs attractive business environments. A Honda or Toyota plant offers jobs that are almost as high paying as those at GM and Ford and, it would seem, promote equally the familial stability Tom writes about. So what?s the problem? Is it only wage earners in Ohio whom we should be concerned about? Southern workers be damned! 

5) I don?t follow Obama?s investment advice (or any other politician?s), nor would I purchase a car based on his urgings. The next logical step to what Tom desires is for Washington to require us to buy American cars (indeed, such a bizarre program now seems possible after all that?s happened over the past six months.) 

6) In the end, all of these points pale in comparison with one really big problem I have with the logic of the auto-bailout supporters: They argue that if the conditions were right, Americans would go on a new car-buying spree and save American industry. But Americans shouldn?t be buying any new cars for a long time.

At the moment there are some 250 million cars in running order in the United States?that comes out to more than one car for every person over the driving age of 16. Americans save nothing, and thus for domestic car buying to pick up, we?d have to take on a whole new load of debt. (In this line, it?s important to remember that when GM was profitable in the early 2000s, it was still losing money on every car it sold, making it up on financing in its GMAC division.) Anyway, for Americans to purchase lots more GMs, Fords, and Chryslers, we?d have to create a highly leveraged ticking time bomb of car loans, much like the subprime mortgage securitization process (or, for that matter, the debt bombs waiting to explode in the student loan and commercial mortgage markets.) This would be a disaster! 

Instead, we need to sell cars to the Chinese and Indians currently riding around on bikes, and begin digging ourselves out of our massive trade deficit. We need companies that operate like Tata Motors, not like General Motors.