Worth rescuing? (AP Photo/Gene J. Puskar)
The fate of Detroit's Big Three
"Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler, and Ford," said David Brooks in The New York Times. The $50 billion bailout proposed for the big automakers—on top of an earlier $25 billion in loans—isn't like the Wall Street bailout, which was necessary to save the entire financial system. Somebody will always make cars in America—what we're talking about is rescuing the "politically powerful corporations" that are making them now.
"This isn't just about three large Michigan-based companies and the 240,000 people who work for them," said Ron Gettelfinger, president of the United Auto Workers, in The Washington Post. Detroit also provides jobs for millions of workers who work for car dealerships and thousands of other small- and medium-size businesses in towns across America. The domestic auto industry can't survive in today's unstable economy without government help, and "the costs of failure are unacceptable."
It's undeniable that the repercussions would be widespread and painful if the federal government let GM fail, said The Washington Post in an editorial. But if Congress and the president step in, they should insist on radical reform in return—including lower labor costs and elimination of duplicative dealerships. Otherwise, "Detroit will be back for more help before long."
Everybody knows the automakers have to cut salaries and hire better managers, said Daniel Gross in Newsweek online. But “if the Big Three can be saved, they can only be saved by government.” The American auto industry has already failed.
"The Big Three deserve some scorn" for clinging too long to their gas-guzzlers, said Jonathan Chait in The New Republic online. But there's something missing from the editorials demanding reform or saying we should let the free market devour Detroit's dinosaurs. The automakers' transformation is already well underway, so the question is whether we give them time to finish the job.
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Recent comments | 9 total
I have owned two GM cars in the course of my 65 years. Both were disasters. BOTH, one Honda Accord went 400,00 miles, another 275,00 miles with little problem. Now I have a Civic with 120,000 miles and it runs like a top. --Not only were the GM cars much worse-terrible, the worst part of owning them was trying to deal with GM for under warranty repairs. Totally not helpful. --Why not let Detroit just go under, re-organize, and perhaps with other companies help, start all over. I am afraid GM and perhaps Ford (and Chrysler is beyond hope) are just too entrenched in poor quality, poor design and poor customer relations. If you get what you pay for, why would oe want to pay for GM?
these auto companies got into this mess all by themselves, and they should have to extricate themselves from their mess all by themselves. let them go through the bankruptcy process, which is a very effective way to clean house, and deal with the unions, which they have to do. if the govt. bails them out, they will be forestalling the very steps that must be taken to fix their broken business. they have to take responsibility for the condition they got themselves into, face up to the unions and make themselves mean and lean, instead of fat, sloppy, and looking for a hand=out. a bail-out with taxpayer money is a bandaid and it will only delay the inevitible anyway.
The government should take a stake in the companies and break them apart into pieces. The predicament they're in is all due to lack of foresight on the part of their terrible management. These companies have been borderline bankrupt for decades now.
The government is the "bad guy" here. When the automobile companies started to make money, the government wanted to tax them. This left the US car companies making less money than they should, which left then with less money to improve their cars. Then, on top of that, the unions demanded "equal pay" and the car companies had to pay for that too. Pretty soon, the US car companies decided to take their business to China because it's affordable there. This leaves the foreign car companies able to make more profit, and therefore were able to improve their cars. The bad guy is the government, not the US car companies.
The Big Three definitely bear most of the blame for their current situation, and they should be required to bring themselves back from the brink. The companies in Detroit have not been improving the designs of their cars nearly as much as they should have been for at least the last 40 years, so the fact that their products are being outsold by superior ones is simply market forces at work. Experiences like Mr Friedman describes in his comment are the kind of experiences I have heard without exception all over this country and even in Australia where I lived for a year. American cars breaking down and Toyotas that last forever have been my experience, too. American companies can make the best cars in the world, but they don't. That can't possibly be because they just cannot figure out that they need to make dependable cars that are highly fuel efficient. Imagine if any of the Big Three made a car that lasted for 500,000 miles and got 70 mpg! Everybody would buy a car with that level of technology, not only in this country but around the world. It's easily within our current engineering capability. Why don't they do something like that?
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