Bail Out the U.S. Auto Industry?

In the wake of the $700B+ bailout for the financial sector, there seems to be a lot of grumbling about the possibility of loaning U.S. automakers $25B to get them through the economic downturn. People on both sides of the political spectrum can be heard to protest this violation of free-market principles, the heart of Western capitalism. The rationale goes something like this: "If they'd been spending money developing the fuel-efficient cars that everyone wants, they wouldn't be in this mess. They deserve to go under!" The problem with this argument is that until the price of gas very recently reached $3.50 a gallon, fuel-efficient vehicles were not what Americans wanted, as evidenced by the incredible number of oversized gas-guzzling vehicles on the road today.

The fact of the matter is that U.S. auto manufacturers have made exactly what we've asked them to, based on our buying habits. That they are now on the ropes is our fault as much as it is anyone else's. Consider this: With the major quality problems of the 1980s behind them*, they've managed to maintain nearly 50% of the U.S. market share in the face of formidable foreign opponents like Honda and Toyota. This doesn't sound to me like a dinosaur of an industry that's ready to gasp it's last. What's really happening here is that the retreat of consumer spending is putting extreme pressure on many industries, especially those manufacturing high-priced durable goods. But this sudden dip in demand isn't because the products in question aren't wanted by consumers - it's because the recent indiscretions in the financial sector have got everyone avoiding big-ticket purchases.

Setting aside the likelihood that it would further deepen this recession, is it fair to let companies that employ hundreds of thousands of American workers go bankrupt because mortgage bankers were so blinded by greed that they worked against even their own best interests? Is it right to put adherence to an economic theory before the welfare of the American populace? And yes, the majority of us are at serious risk if we continue down the global free-market survival-of-the-fittest route. Because we've reached the point where we have very few industries left in this country, and those that do remain are being rapidly dismantled and shipped overseas. And what will happen then, when we have nothing but a service economy left? We can't all work at Wal-Mart and McDonalds, and even if we could we wouldn't be able to afford anything but the cheap, low-quality products sold by our own employers.

No, we need to wake up and realize that the best interests of the American people are not served by adhering to a system that measures success by how much money corporations earn. Rather, we should be using the standard of living of our citizens as the metric that guides us. And the first step in that direction should be to retain and even expand the number of well-paying jobs for non-college-educated workers in this country. Because a middle-class with a high standard of living guarantees plenty of consumer spending for the quality products we should be making right here in the U.S.A.

I say we should lend a hand to the domestic auto industry and help ensure our children's standard of living.

*I know about the quality improvements because I worked at J.D. Power and Associates in the 1990s and saw the cap close between Japanese and American model vehicles, according to consumer opinion.