The Economic Nationalist

America’s material wealth consists not of the things we finance, communicate, administer and trade. It consists, largely, of the things we manufacture, grow, mine and build. The Economic Nationalist thus wonders how it comes to pass that the United States can spare $ 2000 billion to bail out Wall Street, which makes nothing, but, seemingly, not $ 50 billion to bail out Detroit.

Mitt Romney answers,

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course—the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

[…]

It is not wrong to ask for government help, … [b]ut don’t ask Washington to give shareholders and bondholders a free pass—they bet on management and they lost.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.

Though Mr. Romney betrays here a certain deafness to the sensibilities of the auto workers whose wages constitute the “excess labor … costs” Mr. Romney wants “to shed,” he is nonetheless a serious, thoughtful man who, besides being a top Republican, is also one of America’s foremost experts on corporate restructuring. Too, he is the son of a Detroit automotive CEO. The man knows whereof he writes. You and I—along with the United Auto Workers—would be foolish not to consider Mr. Romney’s advice carefully.

The Economic Nationalist however inclines in the matter toward the contrary view of Tom Piatak. To follow the link now and read Mr. Piatak’s entire, vigorous article is strongly recommended to all readers, but for readers still reading this sentence because they have not yet decided to follow the link, here is how Mr. Piatak’s article starts:

Back in the 1950s, when Americans knew from recent experience just how important it was to have a dominant manufacturing sector, Ike’s Defense Secretary, “Engine Charlie” Wilson, formerly of General Motors, famously declared, “What’s good for America is good for General Motors, and what’s good for General Motors is good for America.” Charlie Wilson, whose former company had turned out the TBM Avengers that helped put the Imperial Japanese Navy on the bottom of the Pacific, while his competitor Henry Ford’s plants were busy turning out the B-24 Liberators that helped destroy the industry of the Third Reich, spoke the truth, even though his sentiments were ridiculed by the effete intellectuals of his day.

There is a big difference between a single, mismanaged auto manufacturer’s troubles, on the one hand, and the simultaneous troubles of the entire U.S. auto industry on the other.

Some Congressmen would have us believe that each and every U.S. auto manufacturer had been simultaneously mismanaged. Maybe it is so, but it does not seem likely, does it? The Congressmen in question ought rather to consider whether each and every U.S. auto manufacturer had not been simultaneously misgoverned—by the United States government.

Seaching for the source of the problem, maybe some Congressmen ought to look in the mirror.

If, in our hubris, we imagine that we can somehow spare $ 2000 billion for the fast-talking suits on Wall Street, then we ought to be able to come up with $ 50 billion for Detroit’s men of steel. As Mr. Piatak reminds us, Detroit was there for us when we needed it. Now Detroit needs our help.

HJH

This entry was posted on Thursday, November 20th, 2008 at 8:59 pm and is filed under The Panic of 2008, Labor, Trade. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.