When I first heard that the “Big Three” automakers were teetering on the brink of bankruptcy, my reaction was good riddance. The automakers, in conjunction with the United Autoworkers Union (UAW), have blocked environmental legislation for decades because cheap oil spelled big profits with gas-guzzling SUVs. There’s something to be said for allowing market forces to weed out inefficient producers and reward the Asian car manufacturers who had the foresight to develop fuel-efficient fleets.
But after some reflection I realized that this was too simplistic. Part of the reason the Big Three are so close to insolvency is because of the credit crisis, which is no fault of theirs. Currently it is simply difficult to get car loans, and even Toyota and Honda are experiencing huge sales downturns. In addition, because the U.S. is the only major industrialized nation without universal healthcare, U.S. automakers are at a competitive disadvantage vis-a-vis their overseas rivals.
Bailing out Detroit might not be a great option, but it appears to be the lesser of bad options; letting the mainstay of U.S. manufacturing go down in the middle of a major recession would reverberate throughout the economy, and make things significantly worse. In comparison to the $700 billion so far pledged to bail out the financial sector, the $15-$34 billion that is being discussed for the Big Three is a relative pittance; there’s also a good chance that the government (aka we taxpayers) will eventually recoup the investment, which happened when Chrysler was bailed out years ago.
Enter the Senate Republicans.
At the weekend the GOP, in yet another show of class warfare and ideology trumping the public good, seemed intent on derailing any auto bailout because the UAW would not agree to immediate and major cuts in wages. That the GOP’s anti-union stance would blind them to the repercussions of letting this modest proposal fail shows all too well that when it comes to the middle class and blue collar workers, the Republicans could care less. Where is their outrage over the compensation of corporate CEOs and investment bankers who pull down more in a year than autoworkers make in a lifetime? Their companies have already received tens of billions of dollars, many times more than the Big Three are asking for.
I hold no love for GM, Ford, and Chrysler and I’ve never owned an American-made car, but I never imagined the day might come when these companies went out of business. There is still time for emergency measures, but the window of opportunity may be about to close for good.
Jason Scorse