“I don’t know that we’ve seen anything like this since the government told the automakers what kind of tanks to make during World War II,” he said. “And that was just for the duration of the war — this could be for much, much longer.” Full Story »
Posted by Kaizar Campwala
Sanger's lively writing brings to life the interplay between politics, economics, business management, trade policies, and international relations. His comparison provides beneficial context, relating today's dire times and proposed strings-attached rescue loan for auto manufacturers to Truman's seizure of steel mills for national interest.
The first $15 billion and the car czar who oversees it, however, are only the beginning. “After that, we’re in uncharted water,” said Malcolm S. Salter, a professor emeritus at Harvard Business School who has studied the auto industry for two decades and, until a few years ago, was an adviser to General Motors and Ford. “Think about this: Who in the federal government would have the tremendous insight needed to fix this industry?”
I counter that question with this one: How could anyone in the new federal government possibly do a worse job than the auto industry has already done to itself?
Depending on how the longer-term revamping of the industry proceeds, Washington could become a major shareholder in the Big Three, it could provide loans, or, in one course that Mr. Obama seemed to hint at on Sunday, it could organize what amounts to a “structured bankruptcy.” In that case, the government would convene the creditors, the unions, the shareholders and the company’s management, and apportion a share of the hit to each of them. If that “consensus building” sounds a lot like the role of the Japanese Ministry of International Trade and Industry in the 1970s and the 1980s, well, it is.
Well…it’s time to look at how effective the Japanese Ministry of Internationa Trade and Industry has been over the past 30 years. Given that I drive a well-maintained 8-year-old Honda Civic made in America (that gets 43mpg on the highway and 34 in the city), I’d say they were pretty successful.
I like this article--and hold a somewhat different point of view. I agree that there will be many howls of pain and outrage over "nationalization" of industries. These howls will come from the same folks who cheerfully coughed over $700 BILLION in taxpayer money to rescue Big Finance, under the sole discretion of Henry Paulson. With some $450 BILLION already disbursed--without any requirements, or any way to even find out where it went--the same people are quibbling over a LOAN to the auto industry. Yes, "government" may not have done a brilliant job managing tactical operations in the 1950s--but government agencies also did not rob the public blind for profit and fat executive salaries, perks, and golden parachutes, either. Over the past 30 years, those basic functions properly assigned to governments have been "privatized" to reduce the cost of government. But here's the reality of it: worker pay and benefits have plummeted, unions have been severely damaged, quality has dropped, service has worsened, and those lucky enough to have a job--ANY job with a "successful business" (read Wal-Mart and the like)--are most likely to be part time employees with low pay, no benefits, and no health care. So where did the government costs go? Not down, but up, along with the national debt. For all those services 'privatized,' we taxpayers now pay the government to be the middle-entity between the profiteering private companies and the poor suckers they serve. For a pertinent example, look no farther than the military operations in Iraq and Afghanistan. "We" wanted to reduce the overhead costs for the military, so we pared personnel to the bare minimum. Then we launched a disporportionate attack on the entire country of Afghanistan because the ruling Taliban (a former US puppet) refused to turn al Qaeda over to the US. Not content with one partially-justifiable military action, we gratuitously attacked Iran just because the President wanted to. With all military personnel and reserves in combat, for meager pay and vanishing benefits, we pay contractors to feed, house, clothe, entertain, and otherwise provide for military personnel. We also pay those same private contractors, aka mercenaries, to protect the State Department functions...at salaries that beggar military pay. And who does that? PRIVATE industry--through no-bid, cost-plus contracts, staggering incompetence, and probably-criminal profiteering. The net effect of the Reagan-Bush-Clinton-Bush economic revolution has been to suck all of the money out of the working middle class and transferred wealth upward, creating an unprecedented gap in pay between the executives and the workers. The trade and tax policies have legalized corporate highway robbery, spread privatization of national resources, and given tax incentives to take businesses and labor offshore. What if "the government" is a bit short of perfection on managing industries for a while? SOMEbody has to regulate rampant industry for the public good. The incoming government cannot do a worse job than the outgoing administration, corporate oligarchs and financiers have done over the past 30 years. Today's financial catastrophe is the direct result between private greed, complicit politicians, and and a total government failure to regulate commerce and taxation in a responsible way. Let's turn the Shock Doctrine to progressive advantage, ignore the shrieks of the negligent executives and politicians, and have a NEW "New Deal." How 'bout the GET REAL Deal???