First, they
are so special that they do need to be bailed out. Why? Because it’s not just the blue-collar jobs they provide, though there are a lot of those. It’s not just the white-collar jobs they provide, and they provide plenty of those as well. But what about the literally
millions of jobs that are related to what GM, Ford, and Chrysler do?
The automotive companies are the leading buyers of IT equipment... GM having more work-stations than any company in the country. They purchase cutting-edge virtual reality displays, advanced electronics, and the latest simulation software. The auto companies push the development of all sort of new technologies from batteries to fuel cells to new polymers.
This purchasing, this innovation, is here in America. Toyota and Honda do the same thing... in Japan. If GM, Ford, or Chrysler are gone, Toyota will fill the void and sell their cars. Toyota will make a few models here, but the manufacturing and the innovation gap will not be filled. They will keep that innovation... and the high-tech jobs... and the money... over in Japan.
In addition, the cost to the government (i.e. all of us) would be far greater than the cost of a bail-out. The retirements of over 800,000 people would suddenly fall on the shoulders of the U.S. Government. Unemployment compensation would be out of control, instantly
tripling what it is right now. Not to mention all of the local governments that rely heavily on the taxes provided by auto industry plants and businesses.
Second, I am sick and tired of hearing how GM killed the electric vehicle, and how they don’t make cars people want to buy.
In 1990, GM started a long journey to make an all electric car. GM made 1,000 cars and was only able to lease around 800... at a
hugely subsidized price. They didn’t kill the electric vehicle, consumer’s lack of interest killed it.
Ford and GM do not make ugly, inefficient cars that few people want to buy. Their current problem is that they made exactly the cars people wanted to buy. They made SUVs with seating for nine, draped with leather, dripping with chrome, quadruple climate zones, and a TV screen for every passenger. They weigh in at 8,000 pounds and have to go 0-60 in under 10 seconds (to meet the expectations of the consumer)... and then are listed as “inefficient”. All things considered, these SUVs are pretty damned efficient.
It just so happened that four years into the five year development time that a car takes to be produced, the gas jumped unexpectedly and out of control. Suddenly the price to fuel the SUVs that the consumers
demanded was way more than filling up a Mini. Suddenly GM was no longer making the cars people want... even though a month ago GM couldn’t make the same SUVs fast enough.
GM, Ford, and Chrysler have been doing the same thing that every company in the world does. They make what people are buying, not something people might buy if all conditions fall a certain way. That’s not poor management, that’s business as usual.
Interestingly enough, none of the opponents to the auto industry bail-out have clearly expressed why AIG deserves it, but GM does not.
