“We Simply Cannot Ask The American Taxpayer To Subsidize Failure”

Study the words in the title, and take a think. Haven’t we already subsidized failure to the tune of hundred of billions in the last three months?

i speak with forked tongue

Before Mitch McConnell uttered the phrase above, he made sure to try to separate the bailout of the auto industry from the bailout of the financial industry. The financial bailout he said, was to shore up the entire economy. The auto bailout would support a single industry.

But McConnell’s cries of selectivism should fall on deaf ears. The US Auto Industry is no ordinary industry. It represents a big chunk of our albeit shrinking manufacturing output. It’s not as if the aluminum siding, or the garden furniture industries were looking for federal handouts. We’re talking about cars here. You can’t walk five yards in this country without seeing fifty. If the US car industry were to fail it would impact millions of Americans, would crush a thousand companies that rely on the Big Three, would severely impact the world auto industry, and would dig us deeper into recession.The truth is that sometimes principles have to suffer. But it’s not as if McConnell and his fellow Republicans can make any claim on ideological purity when it comes to subsidies.

Ford + GM Have Been Making Small Cars For Years. In Europe.

Recognize these?

The one on the left is a Ford Ka, the one on the right is GM Vauxhall Corsa.

Small, good-looking, low cost, not at all thirsty, and sold in Europe for years.

Ford and GM during their latest congressional grovel sessions, said they’d tool up to produce small cars in the US. Great idea, except they’ve been making small cars for decades. Good ones too.

Here’s the rest of the Ford Europe Range, and here’s the GM Europe Range (brand name Vauxhall). Take a look. Would they be able to take on Toyota and Honda in the US? Definitely.

They both have great well designed ranges that could be really competitive in the US, with low emissions, great gas mileage (almost as good as a hybrid for way less money) and far better European styling than we’re used to here in the US even from the Japanese.

So why weren’t they for sale here?

What’s Good for America is Good For GM

Is this the future of the Big Three?

David Brooks in today’s NYT suggests that bailing out the Big Three US car companies is a bad idea. While I have some doubts about his ideologically driven “creative destruction” thesis, the notion that some US Government Car Czar is going to be able to prevent these monoliths from going over the precipice is absurd. They are beyond recall in their current form. I come from the UK and back in the seventies we experimented with nationalizing the once glorious British car industry. British Leyland was the result and it was a national joke.

There are many well documented reasons that the Big Three can’t be saved; ranging from massive legacy costs, onerous union agreements, byzantine, slow moving management, being enslaved by short term stock prices, outmoded technology, and of course bad, boring cars. These companies as they are now are from another era. They are inherently dysfunctional, and need to go.