Detroit, live or die

Considering that my father is a Chevrolet dealer, I ought to have an informed opinion on whether the government should authorize another massive loan to the Detroit "Big 3." But to be honest, I don't know enough about the industry or economics or precisely how perilous a situation we are in to say yea to bailout or nay.

I do have a small window into the retail side of the car business. We're hearing a lot about the effect a failure of GM or Ford or Chrysler would have on the manufacturing sector, and consequently on large sections of the country, particularly the midwest. Don't forget that post-manufacture, there's a huge workforce employed to deliver, sell, service and finance cars, all connected with the auto corporations. These people are also potentially impacted.

I don't know whether this is a good argument for loaning massive amounts of money to corporations which may ultimately founder (Chrysler might, GM and Ford make good cars now) and have a history of making bad decisions (bad quality for years, design didn't keep up, resistance to improving gas mileage, stubborn refusal to get serious about post-fossil fuel future). We seem to be having a very big accountability problem with bailout packages so far. Would bankruptcy and re-organizing be a better solution?

Josh Marshall of TPM addresses this from a different angle and kicks those in the butt who say unequivocally, let them die:

Quite a few readers are of the opinion either that the Big Three are ground central for global warming and/or they've spent thirty years making cars that can't compete with Japan, etc., so just let them fail. It's over. They've had their chance. It's done.

I have to tell you this just strikes me as nuts -- and beyond being nuts represents a great failure of imagination.

The auto industry -- directly and indirectly -- employs a ton of people. Even in ordinary times having that all gone down the tubes would mean a massive shock to the economy. If we can avoid having that happen now, why would we possibly let them happen in the face of what already promises to be a massive recession?

Second, on the question of the environment. There is no question that the internal combustion engine is at the heart of the climate crisis. But getting rid of Detroit won't get rid of cars. More to the point of creativity -- one of the things about crisis is that it opens opportunities would never exist in normal times. People have been looking for ways to get Detroit to get serious about developing cleaner, more fuel efficient cars for years. At this point, we're beyond that. We need to get serious about cars that don't use gas at all. If the whole domestic auto industry is all but asking to be taken into federal receivership, that tells me that the people running the federal government now have quite a lot of leverage.

I don't pretend to know the mechanics or precise solutions. But these are times that call for boldness -- and more than just boldness, which gets said a lot -- but creativity to rises [sic] to the challenge of the moment. [emphasis added]