Wednesday, November 12, 2008

November 12, 2008--What's Good for General Motors . . .

GM CEO “Engine” Charlie Wilson once famously said, “What’s good for General Motors is good for the United States.”

At the time it was considered a symptom of corporate arrogance and American chauvinism. A version of it today, “What’s necessary for GM is necessary for the United States,” is about to become public policy. There seems to be no doubt that taxpayers will be anteing up at least $25 billion to bail out GM and the other two major US automakers because unless we do at least three million jobs will be lost and we may plunge quickly from a recession into a depression.

So I guess I’m in favor of this. If both George Bush and Barack Obama agree that we have to do something like this, other than the few remaining free-market fanatics who believe that the Invisible Hand of capitalism will guide us to economic health, who can disagree?

But I would attach many strings to the deal.

It’s clear to most that the former Big Three, out of ignorance, greed, and mismanagement for decades missed numerous opportunities to build the kinds of cars that Americans and others worldwide wanted. The Toyotas and Hondas figured out that a large segment of the market wanted smaller, lighter, better-built, fuel-efficient cars long before the current series of crises set in. And so over time Toyota came to displace GM as the world’s largest auto manufacturer.

The strings I would attach to any bailout would require Ford, Chrysler, and GM to finally build the kinds of cars people want and which will help wean us off our addiction to fossil fuels. The money we hand over should be contingent on their developing a business model to move rapidly in this direction. If they don’t, then let them go under and we’ll figure out how to deal with the economic fallout.

The technology to do this is already available. All they need to do is put it into production.

I know this from personal experience. Admittedly, I know almost nothing about cars. We don’t own one and when we need one we rent and take whatever they give us at AVIS. Most of the time we get a Chevy or Pontiac and it is obvious to even me that they are essentially junk. Every once in a while, though, they give us a Toyota and from even a glance it’s obvious that it’s a superior product.

But then two weeks ago when we needed a car to visit Rona’ mother in southern New Jersey they wheeled out a Toyota Prius hybred.

Wow!

Of course I needed lessons in how to start it (you just push a button on the dashboard—there are no cranking sounds from the starter since there isn’t one)—and you have to get used to the lack of sound and vibration from the reviving engine (there again is no sound because the gas-fired engine doesn’t start—just the silent electrical motors). So instantly you know you have entered into a very different automotive universe.

I could go on about the differences between the Prius and conventional cars but will spare you and mention just a couple of more things—most of the drive was south on the New Jersey Turnpike and our little beauty was peppy, kept up easily with traffic, and was not blown about by the gusty crosswinds. Then, the roundtrip was about 150 miles and since we had to refill the gas tank before returning the car to AVIS I wondered how much we would need. Amazingly, less than three gallons. I was curious enough to run the exact numbers and found with delight that we averaged more than 45 miles per gallon.

When we got home I did a little research about the Prius and was again amazed—I thought it would cost $30-40,000 but in fact it goes for “only” $22—25,000. And I’ll bet it is built in one of Toyota’s plants right here in the U. S. of A.

The point—what the hell is wrong with our Big Three?

And why don’t we simply require them, if they want the bailout money, to build Prius-like cars, millions of them, within two to three years?

That may sound like “socialism” or “big government” intrusion in the market, but isn’t this what the Bush administration has already led us to? $700 billion and counting to banking and insurance institutions sounds like a version of socialism to me. So why not in this case do some actual good and, while we’re at it, help save the planet?

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