To many, it seems downright un-patriotic not to support our domestic auto industry, while at the same time championing foreign automakers setting up manufacturing facilities in the U.S. For a political party that more often than not has wrapped itself in the flag over social and economic issues in the last few decades, these recent developments have a surprising twist to them.
One of the leading GOP opponents of the bailout is Senator Richard Shelby of Alabama. He has been quoted repeatedly about not wanting to award the "mismanagement" of Detroit's automakers. But let's take a look at who's building in his home state in the heart of Dixie. None other than Hyundai, Mercedes-Benz, Honda, and Toyota. Hmm...could those fancy steak dinners paid for by foreign automaker lobbyists have something to do with his vociferous opposition the the domestics' bailout?
There's no question that decades of capitulation to the United Auto Workers' often ridiculous demands have crippled the domestics' competitive edge on many levels. But with the implementation of the union-managed VEBA due to go into effect in 2010, it would truly be a shame for the Detroit Three not to be able to see the realization of the hard-fought savings and efficiencies they hoped to achieve through the historic agreement.
I will readily admit that over the years, the domestics have made numerous strategic blunders, and for a long time, simply produced sub-par products. But the Detroit of today is a far cry from Detroit of decades past. Arguably one of the biggest obstacles the domestic automakers have to overcome is consumer perception, with many still droning on about nightmarish experiences they had with domestic cars more than 15 years ago.
And of course the unanticipated factor of the U.S. and World economy essentially falling off a cliff in the last two quarters of 2008 certainly didn't help matters. Frozen credit is also crippling auto sales. Until things improve on those two fronts, it's probably going to be dark days for all automakers well into 2009.
So, at the end of the day, is a government bailout for the automakers "corporate welfare?" In a sense, yes. Did they dig their own hole in many ways? Yes. Should we just sit back and watch them fail and be dismantled? As much of an advocate of free markets and the capitalist system as I usually am, this one time, I have to part with my free-market Kool-Aid drinking friends on the right and say no. Give them the money. With conditions, of course, and as much as he's fought it, if it means Wagoner or Nardelli or even Mulally have to go, so be it. When was the last time you've seen an ex-CEO standing in an employment office line? These guys will find work elsewhere, or simply retire to their golf-course adjacent Florida condo.
We need to preserve what precious little is left of the American industrial sector to at least begin to attempt to tip the trade balance back in our favor.