Your Wounds Are Self-Inflicted, He Said, Firing Another Shot

By November 19, 2008Economy, Labor Unions

BusinessWeek’s summary of a theme in yesterday’s Senate Banking Committee:

But it was clear from the statements and questions posed by Senators to Wagoner, Mulally, and Nardelli that many think Detroit’s problems are self-inflicted, and that the companies lack the innovation to climb out of their hole.

The criticisms come both from liberals who believe everyone should drive a little green car and the conservatives who blame executive arrogance and unions for the Big 3’s problems.

You can argue the points, but to maintain any sort of fairness or honesty in policymaking you should also acknowledge that Congress bears responsibility for Detroit’s problems as well. In their zeal to to replace the marketplace in determining what vehicles the manufacturers should produce — 35 miles per gallon?  No, 38! — elected officials* have added thousands of dollars in costs and inefficiences to each vehicle while unleashing a fleet of unintended consequences. You know, consequences like forcing Detroit to produce cars people don’t want to buy.

The Wall Street Journal makes this case in a provocative editorial today, taking on the left-leaning critics, “The Environmental Motor Company — Making Detroit a subsidiary of the Sierra Club.”

When is $25 billion in taxpayer cash insufficient to bail out Detroit’s auto makers? Answer: When the money is a tool of Congressional industrial policy to turn GM, Ford and Chrysler into agents of the Sierra Club and other green lobbies.

That’s the little-understood subplot of the Washington melodrama over a taxpayer rescue for Detroit. In their public statements, proponents describe the bailout as an attempt to save jobs, American manufacturing and the middle-class way of life. But look closely and you can see that what’s really going on is an attempt to use taxpayer money to remake Detroit in the image of the modern environmental movement. Given a choice between greens and blue-collar workers, Congress puts the greens first.

Perhaps Congress should consider lifting some of the mandates it has imposed on the industry, things like CAFE standards, or the various strings attached to the $25 billion authorized in 2005 for “retooling.” No? Well, can we at least have an open discussion of these issues after committee members finish lambasting the auto executives?

* We shouldn’t limit the criticism to Congress. Many governors and attorneys general also claim to be more knowledgeable than the marketplace. From Legal Newsline, “Automakers must cut emissions in return for federal money, AGs say“:

WASHINGTON (Legal Newsline) – Seven state attorneys general have written to federal lawmakers, urging them to require financially troubled automobile makers to produce more fuel-efficient cars if those companies receive federal help.

The attorneys general say any relief package crafted by Congress must include measures that will cut greenhouse gas emissions. Legislators met this week to consider help for the automobile industry.

“If the domestic auto manufacturers are to survive, they must change their ways” Vermont Attorney General William Sorrell said. “Making them produce cleaner, more fuel-efficient cars is key to their future success and should be part of any financial package.”

California’s Jerry Brown, Connecticut’s Richard Blumenthal, Maryland’s Doug Gansler, Massachusetts’ Martha Coakley, Oregon’s Hardy Myers and Rhode Island’s Patrick Lynch joined in the letter.

Two thoughts: It might be an interesting exercise to compare the average level of economic growth and employment in these seven states versus the rest of the country.

And…But what do the local assessors and clerks of court think? Surely, they’re smarter than the automakers — or attorneys general.

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