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Sun

07

Jun

2009

What Makes Sense for Health Care Makes Sense for Autos: Car Industry Needs Public Option Too
Sunday, 07 June 2009 19:20
by Dave Lindorff

Just imagine for a moment that you are a retired contractor, struggling to get by on your pathetically shriveled 401(k). when your ne-er-do-well child suddenly comes to you saying he’s got this idea to start buying derelict homes and rehabbing them for resale. He asks you to stake him with a $100,000 loan (about half of what you’ve got left in your retirement fund), promising to repay you when he sells his first couple of houses. You know the kid’s flat busted and has been laid off from his job as a dishwasher, so you want to help, but you’ve also seen his carpentry skills: The doghouse he build in high school fell apart on a windy day, and his own house has a leaking roof, needs repainting, and all the plumbing leaks. You’ve also seen his business skills: He plays the Lotto excessively, hasn’t saved a penny, and buys most of his supplies at the local 7-Eleven.

Would you front this kid half your money?

Well, if you really loved the kid, and if he was in danger of losing his house, you might want to help,. But the smart thing to do would be to offer to go in with him in the business, acting as the contractor, so that you could train him in the necessary business and contracting skills, and at the same time make sure the rehab jobs got done properly.

That might work out. Your son might never learn to be a master carpenter, but at least you’d have a good shot at getting your investment back.

What wouldn’t make sense would be to just hand over the $100,000, and say, “I’m going to stay out of your way son. Good luck, and remember to pay me back when you sell a few of those houses.”

Crazy, right? And yet that’s what the Obama administration’s auto industry “rescue” plan amounts to.

We Americans like to fancy ourselves the supreme rationalists, but when it comes to economic policy, we are as mired in superstition and religious dogma as any theocratic society in the world.

Our religion is “free-market economics,” which posits that an “invisible hand” of competition takes care of all problems, leads to the optimum outcome in terms of distribution of wealth and standard of living, and ensures maximum success in business.

Looking at the auto industry rescue program objectively, you have to ask why President Barack Obama would insist that the government, despite being the major owner of both Chrysler and General Motors, is refusing to demand a primary say, or really any say, in running those companies. I mean, if you are the major shareholder—and in this case “you” is not just the government, it is all of us, the taxpayers—you should be running the company. It is the government that should be naming all the members of the boards of directors of the two firms, and it is the government that should be deciding who will be the chief executives.

The government, on behalf of “We, the People” who elected our leaders, should also be making sure that these large, critically important firms, make decisions about vehicle design that further our national goals, such as reducing the demand for imported oil, and reducing the production of CO2 and other pollutants.

The high priests of America’s state religion—the leading economists on Wall Street, in the K Street lobbies, and at the various so-called think tanks that dot Washington, DC—all rant and sermonize that letting “government bureaucrats” run the auto companies would be a recipe for disaster, but this is absurd.

After all, did the vaunted managers that their free-market religion so venerates do such a great job of running these firms? Hell no! They ran them into the ground. Chrysler already had to be rescued by the government once, and never really recovered. GM has been a failing enterprise for decades, as its management shipped production and jobs overseas, while continuing to produce shoddy and oversized dinosaurs here at home, letting foreign companies like Toyota and Honda eat them for lunch.

Now that we are on track to invest over $100 billion in rescuing these companies, why would we taxpayers want to leave these same kinds of managers, with their MBA degrees from the B-School seminaries, in charge?

Seriously, how much worse of a job could the government do than what they’ve done?

The workers in Detroit know how to build cars, and what’s more, they know what they and their neighbors want to buy and to drive. They also want their companies to be around for a long time—not just for them, but for their kids and their grandkids. Meanwhile, the American public wants car companies that will be around for a long time, and they also want to reduce both dependence on foreign oil imports and production of dangerous greenhouse gases, which means they want companies that will produce cars that are stingy about gas mileage. So I say let the unions and the public run these companies.

It is only pseudo-religious free-market dogma that prevents us from making these companies truly public property.

To tell the truth, the same thing can be said about the banking sector. We’ve just had a frightening demonstration of what leaving such a critical industry in the hands of capitalist owners and managers can do.

Now that we’ve poured trillions of dollars into propping these zombie enterprises up, it’s time to take control of them too.

At a minimum, if it makes sense to have a so-called “public option” health insurance plan to keep the private insurance industry honest and to force it to treat insured customers well, it surely makes sense to have a government-run bank to keep the private banking industry honest.

Ditto with the car industry. We still have Ford, which is privately owned, and also the foreign makers. So why not have the public option in the auto industry, too?

One thing doesn’t make any sense: pouring hundreds of billions of dollars into an industry and then leaving it in the hands of the same kinds of managers who destroyed it in the first place.

That would be just like having our retired contractor write his wayward son a check for half his retirement assets and then go home to his TV to sit around and hope for the best.
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