Opinion: Not much sympathy here for Detroit
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The results are in from our highly unscientific poll on whether the government should try to rescue the Big Three, and it looks like our readership is strongly in favor of free-market Darwinism. OK, it was a very small sample -- a little less than 320 votes were cast -- and our blog’s polls are so unscientific, some of my colleagues wish we’d refer to them by some other name. The most popular choices were ‘Do nothing’ (99 votes) and ‘Allow failing automakers to file for bankruptcy and reorganize, but cover the cost of honoring their warranties to reduce damage to the brands’ (90). That’s 189, or 60%, in favor of letting the chips fall where they may.
On the other side, voters were pretty equally split between lending money with conditions (41) and rescuing Detroit without conditions (40). Only 19 liked the idea of nationalizing Detroit’s retirement obligations. Collectively, these options drew 32% of the votes, with the remaining 8% falling into the ‘None of the above’ bin.
There were plenty of thoughtful comments from voters, which you can read here. I was especially struck by this one from Don Goodwin:
Detroit has made great strides in quality and technology in this century and has cut their labor cost by 50% in the new contract as well as shifting the responsibility of the retiree medical obligation to the union starting in 2010. Detroit is on the verge of developing a new generation of renewable energy vehicles that can help propel the U.S. into this new technology. Our transplant motor vehicle industry conducts all such research overseas. The argument is more than a question about how best to create a new Great Depression for this century. It is also about the future economic stability of our country.
This is precisely what Washington is struggling with today. The current contracts with the UAW make up for some of the excesses of past years, offloading a lot of cost onto the union itself. Will that be enough? Do we just need to buy Detroit some time until the credit crunch eases and demand for cars revives? It’s really hard to say. There are just too many variables. How long will the downturn will last? What will happen to gasoline prices over the next five years? Will climate-change regulations and ‘smart growth’ efforts push more people out of cars and into mass transit? I tend to think that market forces will do a better job shaping the domestic auto industry than government officials could. And I’m especially troubled by the idea of a ‘car czar’ ruling on automakers’ restructuring plans. Do you really want someone in the government deciding how many brands GM should have, or how much of Ford’s R&D budget should be devoted to battery technology? But as reader Goodwin put it, there’s a lot at stake here.
AP Photo/David Zalubowski