07 December 2008

Bailouts: Why The Auto Industry Is Different

Sure, I'm hesitant to bite the hand that feeds me . . . and feeds my kids . . . and also pays for my Dr. Pepper habit, occasional cigars and Internet access, but there are legitimate reasons why even a fiscal "keep the government out of our business" conservative like me supports the idea of a government loan to the auto industry.

I was against the banking bailout since it did little more than feed a habitual harlot and her corrupt congressional pimps. And I'm also against an open door bailout policy where billionaire panhandlers show up in Washington looking for a tax-burdening handouts.

But the auto industry is different.

First of all, we are talking about millions of jobs. The latest estimates are between 1 - 5 million could be lost, depending on what happens to automotive suppliers who depend on the Big 3 for their livelihood (including hundreds of small businesses). When both sides of the aisle are talking about stimulus packages in hopes to produce a million or so new jobs, it would be self-destructive luncacy to allow the failure of job sustaining machines that already exist.

Secondly, though the Big Three have made their share of mistakes, much of their failure was outside of their control . . . and most of the blame can be laid at our government's feet. For example, government imposed CAFE standards consistently mandate fuel standards without regard to current technologies, forcing the Big 3 to invest and retool when there is no money to do so. In addition, unfair trade practices allow import vehicles to saturate the American market without reciprocal open policies for shipping U.S. cars to their countries. And the icing: labor costs are much higher for the Big 3 than most of their competitors. It's tough to compete when your own side ties your feet together.

Third -- I'm on point three, right? OK, thirdly, the congress has refused to "drill, baby, drill" which has put the American auto industry in the hands of foreign oil producers and their distribution whims. Yes, we all agree that alternative fuel sources are needed, but we're not there yet and we won't be for a few years. Without a solid energy policy the American auto industry and its future (regardless of fuel source) is in the hands of foreign oil-producing governments, many of whom would love to see America in economic chaos.

Fourth . . .ly, the automotive industry has long been a cog in our national defense. In times of war the auto plants have shifted production to develop military transportation and technology as needed. Jeep and Hummer have had your back.

Five golden rings.

Finally (and number 6), if we are to find alternative fuels in the near future we will need the technologies of a strong automotive industry to do so. The auto industry is a launching pad for innovation and a proving ground for ideas.

I agree that any loan from the government needs to come with a plan from the manufacturers; a plan that proves the money will not just be a short-term bandage for a gaping wound. But in light of the importance of this industry to our country's future, a plan deserves support.


  1. RightMichigan.com said...

    And it'd be nice if any loan came with a plan from the GOVERNMENT too, on how THEY can reduce regulations and the costs of doing and staying in business!

    Sorry to hear about the tooth, by the way. Glad to have you back.


  2. Khaki Elephant said...

    Excellent point, Nick. I had a conversation with a liberal friend today who insisted that the "failure of the U.S. auto industry" is the "failure of capitalism." Though he couldn't explain how capitalism is supposed to function when government regulations intervene.

    It's good to be back. Thanks!