Sunday, September 7, 2008

American Auto Makers Request Nationalization

Well, not really. They do want special financial treatment from the government. But they don't want any pesky obligations to their creditors.

Of course, this isn't the first time that large American employers have asked the government for welfare. The big airlines (most notoriously American and United) have gone crying to Uncle Sam for bailouts repeatedly over the last ten years; what always happens is they spend the last package and come back again for more, and somehow they manage this without our elected officials demanding some oversight into how they wasted our taxpayer dollars. If you really support a free market, then (like me) you're rightly horrified by what amounts to prodigal socialism. If you're going to have a national airline, then just have a national airline for crying out loud - they use taxpayer dollars but at least they're subject to oversight by the people writing the checks. The airlines have had it both ways for years, and now the auto makers want in on the action. Who can blame them?

Of course, the problem is that GM, Ford, and Chrysler going out of business would be a bad jolt to an already shaky economy, and in a state critical to John McCain's victory (the Big Three execs should have written the number of Michigan's electoral votes on their name badges). So the question is: would the jolt be bad enough to justify some good old New Deal-style intervention to keep them as going concerns at least for right now? Some cases (like the Bear-Sterns bailout and acquisition) would be opposed only by the most rabid market fundamentalist. But sorry Mr. Wilson, what is good for GM is not always good for the country. The problem is that any enterprise which needs welfare to continue functioning is likely to become black holes that keep needing it - as do United and American Airlines - and in some cases, they even expand, because there's no pressure to streamline. The intractable problem of China's economy is what to do with the State Owned Enterprises (SOEs) that Mao founded, many of them (interestingly) automakers. This isn't a problem that we need. With the SOEs, the State is guaranteed to continue pouring away money it doesn't have. Without them, China's economy would melt down, despite the growth it's seen in the big coastal cities. By the way, can you name a single Chinese automaker? No? Is it maybe because they can't compete internationally?

This isn't the first time the American Big Three automakers have complained to the US government or the American public about something that in a real capitalist economy would be considered nobody's fault but their own. Another favorite on their s***-list is what they consider the hoarding of hybrid parts by Japanese automakers. Translation: Japanese automakers were way ahead of Detroit on this curve and by the time the Big Three got off their asses, Toyota et al already had strong relationships with vendors, causing those vendors to de-prioritize their deliverables for their newer, smaller customers - the American automakers - thus damaging their competitiveness in the only sector of the auto market that's showing growth in an otherwise dismal year (and not the only example of an important American industry getting caught off-guard when it could, with more foresight, have been profiting from this economy). Not to put a fine point on it, but boo-hoo, Big Three - that's how international business works. I should also point out that there's a strong difference between government-industry partnerships, which have worked so well in Japan, and bailouts, which is what they're looking for now. But it doesn't stop the whining. Sorry, Big Three, and sorry airlines - the party is ending. It's either capitalism, or state-owned-enterprise. You have to pick one, and only one.

So the Big Three went to Minnesota, begging the GOP to completely compromise the principles of Ronald Reagan and Richard Nixon and give them billions in special deals. Then again, in today's religious-zealot-controlled GOP, you can't let your (supposed principles) get in the way, especially in an election year. State, market, and religion are usually not lined up behind the same objectives - especially not religion. The question is how much can you stomach your party lying to make it seem as if they are?

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