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A fitting fix for US automakers

Nov. 24, 2008

by Ivan Raconteur

The goals of the federal government seem to be to reward incompetence and discourage personal (and corporate) responsibility.

It has been wildly successful in achieving these goals.

Like the forty-niners and other get rich quick artists, many groups and institutions have joined this rush to insanity, and have come forward with hat in hand looking for handouts from taxpayers.

This is especially problematic when corporations and institutions grow so large that they enter a new dimension.

They tell us (and our elected officials) that we can’t afford to let them fail because it would be disastrous to the economy.

What they don’t seem to understand is that what we really can’t afford is to keep bailing out corporations.

The latest group to step up to the Congressional handout window is the “Big 3” automakers.

The feds approved $25 billion in loans for these birds in September, but now they are back saying that they need another $25 billion or they will run out of dough by the end of the year.

No one disputes the fact that the fate of these overstuffed behemoths affects the livelihood of thousands of Americans.

But this does not mean that it is the responsibility of the taxpayers to keep throwing billions of dollars at private businesses.

Perhaps we need a refresher course on the difference between public and private.

The public sector involves those things that governments can and should do for the benefit of all citizens. Things like building roads and schools, and maintaining law and order fall into this category.

Most things fall into the private sector, which is (or should be) financed by private entrepreneurs who reap the profits or suffer the losses from these enterprises.

What is perhaps the most irksome about the auto industry’s request for taxpayer support is that it still refuses to take responsibility for the situation it is in.

The auto executives who have been begging on Capitol Hill have the audacity to say that it is not their fault, it is due to the economic turndown and the credit crunch.

That, one might say, is a load of male bovine excrement.

These dinosaurs have been lumbering along, conducting business as usual for years, without adapting to the changing conditions around them.

They have been losing market share for decades, and they still don’t seem to understand why.

Their business plan has been to continue to try to sell the vehicles that they want to sell, while the competition has been increasing market share by providing the vehicles that consumers want, rather than the vehicles that the manufacturers want them to have.

One of the biggest issues is fuel economy.

The technology has been around for ages, and foreign car manufacturers have been constantly improving in this area, especially in countries where gas prices have long been higher than they have in the US.

And yet, US automakers have consistently chosen not to develop fuel efficient alternatives.

They didn’t learn any lessons from the fuel crisis of the 1970s, and they haven’t learned anything from the recent scare when gas topped $4 per gallon.

They are still trying to convince us that a vehicle that gets 24 mpg is fuel efficient, when it should be getting two or three times that.

The prospects for these dinosaurs seems bleak. Those at the top lack vision for the future, and they are carrying such heavy burdens from the past, it is unclear if they will ever be able to become viable again without going through bankruptcy.

In addition to management blunders, the industry is fraught with obscene union contracts that are completely out of synch with the rest of the job market. These labor costs serve as an anchor that is dragging the companies down and making it impossible for them to be competitive.

People whose wages are stagnant or have declined, and who are struggling to afford health care may find it tough to swallow when asked to subsidize companies whose workers earn inflated wages and receive rich benefit packages.

Still, as they say, the livelihood of many people is tied to the success or failure of these dim-witted giants, so one might concede that they should receive some help.

It shouldn’t come from the taxpayers, though.

For decades, the auto industry has been in bed with the oil industry. This unsavory alliance has cost consumers a fortune and has been a detriment to both the US economy and the environment.

Since the oil industry has been raking in record profits lately, let these companies use some of their ill-gotten gains to bail out their mistresses in the auto industry.

Big oil has profited from the auto industry’s refusal to develop fuel efficient vehicles, and no doubt the auto industry has profited from this tidy little arrangement as well.

It is time for those who are making the profits to fund the bailouts.

They made their unsavory bed, let them wallow in it. And please, leave the taxpayers out of it.