Dissin’ Detroit and Its Consequences for Conservatism
Now that President Bush has decided to go over Congress’ head and provide General Motors and Chrysler bridge loans through March, I think now is the time to see how the GOP and conservatives in general handled the issue. This is only my view and it’s the view of a crank living in Minnesota. However, in the glorious age that we live in, with handy little computers connected to the internet, one crank can share his views with the whole world and that’s what I am about to do.
In my opinion, I think the GOP and conservatism in general failed the test. We were correct on the merits: private businesses should not run to the government for help and should succeed and fail on their own. However, we failed in really looking at the situation around us and seeing if this we could apply this principle at this time. I think we were intellectually lazy, not willing to get from behind our computers and see what was actually happening on the ground. In the end, this shows a problem with conservatism in America in general and has hurt the GOP’s chances to make a convincing case in the Midwest.
I’ve read enough from bloggers at how we should not support a declining industry. For example, this is what David Brooks (a columnist that I normally agree with) said about the bailout back in November:
This (the auto bailout) is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.
Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line. It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. A Detroit bailout would set a precedent for every single politically connected corporation in America. There already is a long line of lobbyists bidding for federal money. If Detroit gets money, then everyone would have a case. After all, are the employees of Circuit City or the newspaper industry inferior to the employees of Chrysler?
Brooks is thinking the danger here is that the government is going to try to save every failing company, thereby threatening capitalism itself. Give the money to these aging dinosaurs and they will just misspend it and make the same mistakes over and over.
But is that what’s going on here? Are liberals rushing in to end capitalism and create some new Peoples’ Republic?
No. Brooks and many others were looking at this from a philosophical standpoint and not a real time standpoint. They were talking about the vibrancy of the free market while at a time when the market is fragile and might not be able to mend so easily if one or more of the Big Three went down.
And that’s been the problem here. I think conservatives have been more concerned about the letter of the law than its spirit. They have held fast to a rule and not noticed if the times warranted such close adherence.
In normal times, I think it would make sense to ignore the pleas of Detroit. In many ways, they got themselves into this mess. However, these are not normal times. The housing cum financial crisis has made this economy fragile. While I don’t think we are rushing headlong into the Great Depression, Part II we are in a spot where doing the wrong thing could lead us down that road. Allowing the Big Three to fail would have created massive unemployment in states like Michigan, Ohio, Illinois, Indiana and Missouri. Those states would have to use already tapped resources to provide unemployment insurance. And it would have spread to suppliers as well. In some cases, that is already happening. A blogger at Autoblog sums up what is happening at a former workplace:
I’ve recently been in contact some former colleagues at TRW’s headquarters complex in Livonia, MI. Since the start of 2008 there have apparently been five rounds of layoffs at the technical center. In the most recent round in mid-November, one former co-worker with 32 years of experience as a skilled technician was laid off as were numerous other engineers and technicians many with 25-30 years or more of experience.
Much of my former department has been let go, as the work they were doing has been consolidated at another facility. The most recent publicly available information about TRW indicated that the company had over 66,000 employees worldwide with 4,000 in the Detroit area, including 1,200 at the Livonia technical center. It’s estimated that as many as one-third of the people in Livonia lost their jobs in the most recent round of layoffs. These are mostly college graduates with bachelors and masters degrees, and many of these same people are having a tough time finding jobs because every other company in the field is also letting people go.
These engineers are technicians are being fired because the vehicle programs they were involved in have been delayed or canceled outright. Lack of a paycheck means these people will be spending less money in the community in coming months, leading to cascading business failures and job losses. This is the real cost of the financial mess on Main St.
Any potential demise would also hurt suppliers, which would in turn, hurt the foreign automakers that have plants in the U.S. since they get their parts from the same suppliers.
If the government did nothing and the Big Three collapsed, would we enter a depression? I don’t know, I’m a pastor not an economist. But I do think that with the economy has fragile as it is and with rising unemployment, I wasn’t interested in testing out that hypothesis.
In the end, I think conservatives did not do anyone a favor for not even trying to provide a solution and as the old saying goes, ideas have consequences. Don’t be surprised if come 2010, the Democrats use this failure during the elections. The Dems and Unions will run commercials about how the GOP was willing to put this economy at risk and many people will remember. They will not care that these bloggers and politicians were sticking to principle, they will remember that the GOP tried to stick it to them.
The sad thing is that 30 years ago, it was the autoworkers that Ronald Reagan went after to win the Presidency. Back then, those autoworkers were dissatisfied with the Democratic Party and started voting for the Republicans. It was in Macomb County a suburban county of Detroit where the term “Reagan Democrats” was coined. Three decades later, the GOP has basically told these people to drop dead and forced back into the arms of the Democrats. It’s yet another sign of how tone deaf the GOP has become and so willing to write off total sectors of the American populace for a thin slice that they think will carry them to victory.
Maybe a “bailout” was a great idea, but the GOP wasn’t that interested in presenting anything new. Creative destruction, as they say. Never mind if this time the destruction was the Apocalypse.
Again, I am not an expert, but I am the son of two autoworkers and have seen the hard times in my home state. In the past, I would have said this was the result of the economy and Michigan hasn’t moved forward. And I still think that is true. The Big Three have been slow to change and again, if it were normal times, I would say they should go hang. But we live in risky times and the GOP failed to see that and was willing to gamble with the lives of tens of millions of people. I believe in the free market, but I wasn’t willing to let such a massive calamity happen that could bring down the rest of the economy. I’m a conservative, but I am also loyal to my parents.
I don’t know what the answer is for conservatives here. But before we start throwing out that “elitist” charge at liberals, we might want to check ourselves.
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7 Responses to “Dissin’ Detroit and Its Consequences for Conservatism”
I think what many in this debate may be missing, on both sides, is this:
Bureaucracy- Toyota has ten levels of management between shop floor and CEO. GM has forty-three levels.
Honesty-Unions gain strength with their constituents (the workers who belong to them) in direct proportion to how unethical or incompetent the management of the company is. The more unethical, dishonest, inefficient, and ineffective management is (as occurs when you have LOTS of managers in many layers without effective accountability or firm responsibilities), the more visceral and vicious your Union negotiation tends to be, and the less concern said unions will have about the overall health of the company *(and why not-the Board of Directors don't care, the President-levels don't care, why should the line workers? When you know for a fact your job's already on the block for outsourcing, “Get what you can while you can and stick it to the man” tends to be the result.)
Outsourcing: GM has outsourced enough of their subassembly and production overseas and offshore that the impression in the trenches (and on the shop floor) is that the company's going to leave anyday, anyway, regardless. This creates hard lines, as the workers simply presume the company's out to cheat and abandon them, and when those subassembly parts keep showing up defective, late, wrong, etc. it impacts the view of Quality on the line as well-again, if the Executives are compromising the product to gather fat golden parachutes, and reaping bonuses while the company's actual profitability tanks, why should the workers expect any different?
Bad quality leads to something else-customer dis-satisfaction. Customers flee, cutting more deeply into profit and sales. It is possible to show a quarterly “Up” every quarter, and lose money for the year, and that's exactly what the Big Three have been doing.
Engineering/intellectual Capital: GM Ford and Chrysler treat engineers differently than Toyota, Honda, and Subaru. The way that engineers are treated at the “big three” is atrocious-they're effectively living the Dilbert Cartoon in Real LIFE. This does not lead to good, innovative design. It leads instead to Engineers leaving the company for someone that will treat them with some dignity-like the Japanese companies, who value Engineering talent and try to nurture and reward it. This impacts everything from quality of the end product on up to the quality of initial design.
Finally-the expectation. If a CEO is recieving a thousand times the wages of a line worker, it should be (but is noT) expected that said CEO is doing a good job. This is clearly and blatantly NOT THE CASE with the Big Three (or, for that matter, Boeing). CEO pay is too high not because it's too high, but because the executives in question have not delivered that level of performance, and continue to not deliver it even under extreme stimulus conditions (like, say, the company being on the verge of bankruptcy and fading fast).
Notably, all of these problems are present somewhere else-Government itself. Oversize management sectors that are not accountable for their results, overpaid and overcompensated senior managers who don't perform, elected “board” officials who have little to no understanding of the entity they are supposed to be overseeing, a culture of neglect, carelessness and capriciousness that erodes the morale, competence, and willingness to address realities throughout the structure. The problems of Big business are the same problems Big Government currently has, only in microcosm, and without the ability to tax-at-will to stave off insolvency.
Unless you have not noticed, the Democrats have been in charge of Congress for the last two years. It is not the job of the minority party to put together complete policy proposals while the majority party seems unable to conduct hearings, make proposals, or face the citizens of the U.S. and explain what they are doing.
The Democratic Party has failed twice in the last few months. The Democartic leadership seems incapable of going to the media and explaining what its proposal is and what it hopes to accomplish.
There is no reason for theRepublicans to propose anything while the Democrats are being inept and incoherent. Poorly formed, ill concieved ideas should always be rejected even if there are no good alternatives.
Cannonshop, it sounds like you have some inside information on how the “Big Three” are run. Did you used to work for them, or maybe talked to some who did?
Cannonshop, my I use your comments in a post? You made some very good points.
The bailout is not a surprise. Don't forget that most objected to the financial bailout, but eventually it was done, anyway. (And, when it was done, the second bill put through Congress had enough “sweeteners” — oink, gurgle, oink, oink — in it to let us know the approximate price of the vote of someone in Congress, Democratic _or_ Republican.) Detroit has been a failure for ages, and deserved no bailout; but what is right or proper means next to nothing when it comes to politics and policy. Besides, there was legitimate concern that our economy would be made somewhat worse if Detroit were allowed to fail. Bush was surprisingly generous. (Obama can be more generous still, as we all expect him to be; his administration can redirect the remaining TARP funds to be used instead for all kinds of preferred vote-buying Democratic spending measures. It's not as if the TARP funds are being used well already, anyway.) Because the financial bailout happened, despite our objections, naturally a Detroit bailout was likely to happen eventually. It's no surprise it happened.
Now, the most interesting item to date isn't the way some here in Detroit and elsewhere say the bailout was proper, or that Detroit and the UAW have not done anything wrong (that's so sickening it cannot manage to draw laughter any more), but the continued idiocy of the UAW, but which is also already happening as some of us have suspected. UAW people, at least one supporter in Congress, and who knows, likely Detroit's management as well, plans to get a better deal out of the Obama administration next year. Will they make any kind of serious effort at all to do anything next year once they're given the money? Already we hear lunatic nonsense from governor Granholm, about this being only a “down payment” and vast sums being expected in order to finance (for Detroit alone) the magic new electric cars that will save Detroit and make it prosperous (while eliciting a warm glow from a grateful as well as gullible public, no doubt).
“Unfair and unenforceable.
Remember those two words before you count on the UAW accepting those ginormous concessions for auto workers in the Bush administration's rescue plan.
You'll be hearing them a lot and for good reason. …
The union will talk about making General Motors wages and work rules comparable to nonunion plants in the U.S. owned by foreign automakers.
But not by next year, not on the terms of their harshest critics, and not after already agreeing to a two-tier wage system in the last national contract.
That's part of what's already been branded unfair by UAW President Ron Gettelfinger.
And the unenforceable part?
That's the word U.S. Rep. Dale Kildee, D-Flint, kept using Friday to describe the worker give-backs in the Bush plan.
Unenforceable because the president won't be around when it's time to measure progress at turning around GM and Chrysler LLC next March.
Both the union and the congressman held their noses at the Bush plan Friday, and will bide their time during the last days of this administration.
Both are counting on President-elect Barack Obama to look for change …”
Gettelfinger's statement on the UAW's Web site said as much, acknowledging the necessity of the bridge loan from Bush while looking directly to inauguration day.
'We will work with the Obama administration and the new Congress to ensure that these unfair conditions are removed,' he promised.”
http://www.mlive.com/flintjournal/voices/index….
* * *
Now, one of a few things I was refraining from commenting on these past few days (like Bush's doing the bailout so as not to “dump a catastrophe in Obama's lap” — this, after Bush returned from Iraq) is this:
“If a CEO is recieving a thousand times the wages of a line worker”
The UAW is ridiculous, and needs pay cuts and work rule changes and other reforms (no more thirty-years-and-out nonsense; the pension plan that exists now should be terminated and given to the PBGC, etc., JOBS bank abolished immediately, and so on).
We know the UAW pay is excessive. How does Detroit executive pay (not to mention management layers, etc.) stack up against that of the executives in the “transplant” operations? If assembly worker parity or something close is sought, what about the same for executive pay?
Thirty years, indeed. Too bad Detroit didn't relocate to Los Angeles that long ago. Plenty of Baby Boomers, throughout the cohort (born 1946-1964), routinely disparage Detroit and prefer automobiles of East Asian and European make. This has been so for ages. Now please consider Gen Xers and other younger people, and how many of them in fact grew up with that mindset handed to them from the very first formative years by their parents, and then they grew up immersed in that modern and contemporary culture, where many, many people simply would never consider, nor be seen driving, “an American [Detroit] car.” This phenomon has lasted as long as a mortgage!
The following says it all. Will they try to Change [pun intended], or will they seek Change to the conditions and a better deal in other ways from Obama and the next Congress — will they take the low rather than the overdue road? It may be interesting, or disgustingly predictable.
“Can Detroit's auto giants do in three months what has stymied them for 30 years?”
http://www.chicagotribune.com/business/chi-sat-…
sure.