The burning issue of the day in financial circles is: Should the taxpayer subsidize Detroit’s “big three” automakers by giving them tens of billions of dollars to help them avoid bankruptcy? Put me down in the “no” column. The arguments just don’t hold water. President-elect Obama says yes, because the automobile industry “is the backbone of manufacturing.” Nonsense. It might have been that 50 years ago, but in the information age one can make a more powerful argument on behalf of the computer and semiconductor industries. Is a healthy automobile industry an essential component of our defense capability? Ask General Petraeus whether he needs Humvees more than he needs battlefield computers and communications.
My children, their spouses, my wife and I drive a total of eight automobiles. Seven of the eight were made by Japanese manufacturers. So Detroit’s share of this micro-market is 12.5 percent. It is not that we have an affinity for Japan or that we wanted to buy the cheapest cars. We thought the Japanese cars were just better than the U.S. alternatives. After driving them hundreds of thousands of miles, we still think so.
I don’t know anything about automobile manufacturing, but I do know something about the electronics industry. Today, most of our telephones, computer motherboards, television sets, DVD players, and radios are made in other countries. Does anybody care about that? Maybe they should, but globalization is a fact of life. Most of the best electronics engineers happen to be Asian. It wasn’t so 40 years ago, but it is true today. The same can be said of automotive engineers. Meanwhile, our educational machinery keeps turning out more sociologists and journalists and public-affairs specialists. And lawyers, lots of lawyers.
The clamor to bail out Detroit is wholly political. It has nothing to do with merit. It has everything to do with jobs and unions and their political allies. The worst part is that the bailout won’t work. “We just need a loan to get us through this valley” is how one industry advocate put it. But it is not a valley, but an abyss, not a loan but a political payoff. It won’t make me trade in my Accord for a Chevrolet. It will just postpone the inevitable demise of companies gone bad – and add to our staggering national debt.
