Technology with attitude

Michael Moore Discusses the Automaker Bailout

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Last night, Michael Moore was on Larry King discussing the crisis facing American automakers. I thought it would be interesting to see what the man behind Roger & Me had to say about an industry that’s far worse off now than it was when the film was made 20 years ago.

Moore: I’m of mixed mind about this bailout, Larry, because I don’t think these companies, with these management people, should be given a dime, because that’s just going to be money going up in smoke or off to other countries.

GM is currently building a $300 million factory in Russia right now to build SUVs, right outside of St. Petersburg. That’s where your money’s going to go, no matter what they say.

King: Why (do you have) mixed feelings?

Moore: Well, because we can’t let all these people lose their jobs because of the bad decisions, the stupid decisions made by the management of these auto companies. I think what has to happen here is that Congress needs to pass some legislation, and our president-elect needs to do what Roosevelt did.

When Roosevelt came in and when World War II faced the country, Roosevelt said to General Motors and Ford, you’re not going to build cars anymore. You’re going to build airplanes and tanks and guns and the things that we need for this war because we have a national crisis. General Motors had to do what Roosevelt told them they had to do.

King: What do you want them to do now?

Moore: President-Elect Obama has to say to them, yes, we’re going to use this money to save these jobs, but we’re not going to build these gas-guzzling, unsafe vehicles any longer.

The fallacy in Moore’s argument is that those gas-guzzling vehicles (SUVs and large trucks) have been the only thing propping up the U.S. automakers. Until gas hit $4.00 this summer, American’s loved their gas guzzlers and GM and Ford were the companies meeting the market’s demand.

The problem is, the gas-guzzlers were the only market in which these companies were turning a solid profit. If buyers really have soured on these low-gas-mileage vehicles, a restructured GM would, through natural forces, turn to more fuel-efficient vehicles. What makes Moore think federal government mandates and industrial control could ever make GM more competitive than GM could make itself after a restructuring?

What Moore is suggesting is a step away from nationalization of industry. What’s really amazing is that he’s advocating that the government should do exactly what he says caused GM to fail in the first place. Read this quote from the interview:

Well, what really went wrong is that General Motors has had this philosophy from the beginning that what’s good for General Motors is good for the country. So, their attitude was we’ll build it and you buy it. We’ll tell you what to buy. You just buy it.

But I guess it’s different if the U.S. government is telling people what’s good for them.

Fortunately, Moore’s brave new world is an unlikely scenario. But his thoughts illustrate what I think is happening in American political thought: despite wide differences on remedies, both the left and the right are coming to a general consensus that an unconditional loan is a bad idea. The question now is: does the government mandate how GM (and possibly Ford and Chrysler) change OR do we let the companies go through the more dynamic restructuring possible in bankruptcy?