Saving the Big Three

There is much debate going back and forth about whether the U.S. auto industry warrants a lifeline, much like the banking industry received.

This debate isn’t about American car quality vs. foreign automakers, as some have made it. Detroit has made tremendous strides in quality, so for lawmakers, talk show hosts (like Howie Carr and others), and pundits to trash the Big Three as putting out poor quality, is to show your ignorance. On a personal note, I drive a Ford, made in the U.S. My wife owns a Toyota. Both were purchased recently, and I think in many ways, the Ford is equal in quality to my wife’s Toyota, so quality isn’t the issue here.

Secondly, U.S. manufacturing, despite huge job losses, is still a viable aspect of our economy, and to think that dumping over two million jobs, in the midst of one of our worst quarters in recent memory is asinine. How are those kind of job losses going to be positive for our economy, moving forward?

Manufacturing is a wealth-generating sector (unlike the financial services sector, which just pushes money around by keystrokes), one that few politicians know firsthand. Because most of them have never made their living with their hands, and since they deplore the people that do, I think this has more to do with Washington’s reluctance to help U.S. automakers than any other smokescreen that they are currently putting forth on Capitol Hill. It’s particularly disappointing to see Mitt Romney say that these companies should be left to their own devices, given his own family history with the automobile. For Republicans, like Romney, however, the issue is about bringing organized labor to their knees, and not bailing out the big three is a way to do that. The Democrats don’t seem particularly willing to come to labor’s aid, even though the unions have given back with concessions.

What I’d like to see happen is Congress extend some bridge loans to get the automakers through this tough patch, while at the same time, convening talks about where they need to go with R & D, particularly as it relates to new technology.

My ideas about what's best for Detroit are best summed up by Richard Posner, in a recent blog post on the subject.

A worthwhile primer on the importance of manufacturing can be found here.