How To Fix A Flat

Tom Friedman, writing in his NY Times column, weighs in on the proposed rescue plan for the Detroit automakers. And he is not thrilled by the idea.

Last September, I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?

How could these companies be so bad for so long? Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it. It led to a situation whereby General Motors could make money only by selling big, gas-guzzling S.U.V.’s and trucks. Therefore, instead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers.

In case you haven't figured it out, Tom is not a big fan of bailing these folks out, and with good reason. They haven't shown any leadership in the past thirty years, and this will probably just postpone the inevitable. There are other car companies that can profitably manufacture autos in this country, Toyota and Honda to name two.

This has been an epic failure of leadership, from the automakers, Michigan politicians and government officials, union leaders...the list goes on and on.

I wrote several months ago that if we had let Chrysler fail 30 years ago, we might not be in this situation today, because it would have been a stark wake-up call for the rest of the crowd that they needed to change how they did business to survive. But, we didn't, so we just bankrolled a slow spiral downward to where we are now.

Helping them more now isn't the answer. It's not the right thing to do, regardless of the job losses and economic hit we'll take. Which is exactly why we'll bail them out again.