01:26 pm
The Real Face of the Big Three Bailout
Over the past few weeks, the heads of the so-called “Big Three” American automakers have repeatedly gone to Congress to plead for a bailout. At first media coverage focused on the (legitimate) outrage over the CEOs using separate private jets to come to DC. Then, this week, we’ve had the circus of watching the same, now supposedly contrite, men arrive after driving 500 miles in hybrid cars. Throughout, we’ve had the skepticism (and posturing) of Members of Congress, who are holding the country’s largest remaining industry (which, by one account I’ve seen, is responsible for generating jobs for 1 out of every 10 Americans) to a much higher standard than they did the crooks, con-men, and charlatans on Wall Street.
I hold no brief for the Big Three. For decades now they’ve put short-term profits over long-term thinking. They’ve sacrificed American strategic interests (and their long-term prosperity) in order to sell big, ugly, gas-guzzling SUVs and trucks. They have decimated entire communities by outsourcing jobs either overseas or to other parts of the United States — mainly the South — where unions aren’t nearly as powerful. They’ve proven themselves incapable of streamlining, restructuring, or retooling in a way to make themselves more competitive. They have brought their problems on themselves, and on one level they deserve to die.
But this is crazy. We’ve just dumped at least $500 billion into a series of ratholes — AIG, Citi, Bear Stearns, etc. — that contribute no real value to the economy other than to move money around. But now, we are told, we should not spend significantly less to save hundreds of thousands of people from joblessness.
Does anyone seriously believe that the collapse of the auto industry won’t have a cascade effect? The first to go will be the auto parts infrastructure that feeds these behemoths. Then other businesses (large and small) no longer will have the customer base to sustain themselves. (Does anyone seriously think that, say, Wal-Mart will keep stores open if nobody is buying anything?) Finally, local and state governments will no longer have the tax base necessary to sustain a range of public services.
If there is an equation for a second Great Depression, it has to involve destroying the economy of an entire region in the name of teaching some fat cats a lesson.
As I’ve watched this spectacle, I’ve wondered why Congress isn’t asking the people most affected — the workers — to testify. This new ad by UAW isn’t a replacement, but it’s an important step toward moving beyond the CEOs to see the real face of the bailout:
I’m a Michigander by birth (though I was raised in Florida). When I was a kid, there were two iron laws in our family: go to church and buy American cars. To this day, when Molly and I return to visit family (she’s also from Michigan), the overwhelming majority of cars on the road are either American-built or American-owned. Michiganders — even those who don’t work (directly or indirectly) for the automakers — are fiercely loyal to and protective of what they recognize is the foundation of their economy.
We’re not merely talking about the death of an industry here. We’re talking about the end of a dream and a way of life. It is the autoworker, after all, that exemplified the potential of mid-20th Century America — a place where you could work a blue collar job, earn a nice middle-class living, and put your kids through college. It is the Midwest, after all, that was, until the 1970s, the economic engine that drove prosperity throughout the United States.
Abandoned Fisher Body Plant, Detroit
Much of that already is gone. Here’s what I wrote a few months ago while visiting Michigan:
When I was a kid, my dad was the editor of The Saginaw News. When we moved there (the summer of 1966), Saginaw was still a fairly prosperous city, with two major plants — Saginaw Steering Gear and Gray Iron Foundry (later Central Foundry) — providing a large number of people the chance to live a middle-class existence. It was a tradition that everybody worked in one or the other at some point. My brother spent several summers working at one, and my then-brother-in-law started on the line and eventually ended up as an executive after GM helped put him through college.
But the automakers weren’t the only source of prosperity: Wickes Lumber, a legacy of the years when Saginaw was one of the great lumber processing towns, remained a major employer, and several other large companies contributed as well. The downtown was in fairly good shape, with several large department stores, including Morley Brothers and Heavenrich’s, as well as the Saginaw Hotel and the newspaper, serving as anchors.
By the time we moved to Ann Arbor (August 1973), the rot already was evident There were multiple causes: the 1967 Detroit riots (and 1968 riots elsewhere) caused many whites in the city to flee to the surrounding township; the first mall (Fashion Square) opened outside the city, leading many businesses to move out of downtown and leading those that tried to stay to fail; Wickes consolidated its offices elsewhere; and, of course, the energy crisis, which, combined with competition from Japan, began the Big Three’s long, slow decline (Central Foundry relocated in 1977).
Today, downtown is almost completely empty, most industries are gone, and only the continued presence of Saginaw Steering Gear keeps the city going. That’s only one story. Despite its occasional exaggerations, Michael Moore’s Roger and Me is a fairly accurate picture of Flint’s decline. And there are far too many others.
To let the auto industry die would be to witness the epic failure of Saginaw — and all the other cities and towns that are only barely hanging on as it is. These workers (and the cities they live in) will face the economic equivalent of Katrina. If anyone thinks this month’s job loss figures are bad, just wait until the automakers go under.
There are plenty of ways to structure a bailout so as to ensure that it accomplishes not merely the existence of the Big Three, but their reinvention. These include mandates on changing leadership, a significant paring of lines and models, a cutback on gas-guzzlers, subsidization of alternative technologies, the retooling of plants for other projects (such as high-speed rail), and even some sort of leveraged support that would allow the companies to restructure without actually calling it bankruptcy.
So enough already. Congress needs to stop moaning about the people running these companies and start thinking about the hundreds of thousands who will suffer if we don’t do the right thing. Bush needs to do the right thing by signing whatever Congress puts in front of him. And President-elect Obama needs to speak out more forcefully in favor of a solution.
We can’t afford the consequences of inaction.
Photo: Derek Farr via Flickr, used under a CC 3.0 license
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