In a Op-Ed piece in today's New York Times, Mitt Romney boldly invites Americans to view the auto industry through the economic lens of 1954. As a foray into the troubled waters of the biggest industry crisis of our time, Romney's plan epitomizes how Republicans think about the economy: by pretending we live in a Dickensian version of the Eisenhower era.
When transported back in time to that imaginary Republican past, the actual challenges of 2008 vanish (poof! all gone)--challenges like renewable energy, resource stewardship, sustainable building, healthy communities. Also gone are the opportunities those challenges bring. Thus, in Romney's Op-Ed, we climb into the Wayback machine and travel to an imaginary time where the only problems ailing Detroit are labor, overpaid labor, unproductive labor, and labor unions.
The specifics of Romney's proposal can be summed up in a sentence: Instead of Washington providing Detroit a bridge loan of $25 billion to cover short term credit vanished in the comatose credit markets, we should force GM, Ford and Chrysler into bankruptcy proceedings. Bankruptcy, says Romney, is the only way to guarantee that the Big Three make the kind of tough decisions necessary to rebuild a better industry.
And that is where we hop into the time machine and travel back to the 1950s:
I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support -- banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around -- and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit's automakers.
I know Romney's 'I love American cars,' line all too well. Like Romney, I was also born in Detroit (at a hospital that just announced a massive round of layoffs). Confessing love for American cars, however, is a way of talking about the auto-industry that dates back to, say, the 1970s. In 2008, most Detroiters understand that companies like Toyota build cars in American plants with American workers and American parts--and they are just as 'American' as cars built by the Big Three with parts and labor in Mexico and Canada.
But that is just the beginning of Romney's step back in time. Next, we move from the 1970s to the 1950s with Romney's nostalgia for dear-old-dad.
Now, most people from Detroit have fond memories of George Romney for one reason or another (unless you lived in the city in 1967 when Romney declared a state of insurrection so he could send tanks downtown to quell the public disturbances). What lies way back in the 1950s, according to Mitt, is a perfect model for saving the industry: the miracle of the American Motors Corporation.
If you are younger than 75, you probably remember AMC for selling the iconic Gremlin--a V-8 'compact' car and 1970s icon that eerily resembled a quadruple amputee frog. George Romney's innovation came earlier in the form of the Rambler.
George Romney did not actually design or invent the Rambler so much as he streamlined its production, pairing down AMC's entire line in the process. These changes, together with savvy marketing, enabled the media nimble CEO to make AMC competitive with the bigger Ford, GM, and Chrysler for much of the late 1950s and early 1960s.
But ultimately, AMC went the way of the Dodo bird because the problems the American car industry faced in subsequent years had less to do with production streamlining than with the general worldview of the industry.
As gas became more expensive and consumers became more concerned about pollution, foreign car companies began to produce smaller and more efficient cars. Moreover, these cars were produced in factories that increasingly gave workers decision-making autonomy relative to management.
Meanwhile, the American industry started to flounder in a series of debilitating peaks and valleys throughout the 1980s and 1990s. In this environment, the autoindustry came up with its biggest innovation to date: to get around emissions standards, trucks can be marketed as 'safer cars.' As a result, we now live in a schizophrenic car industry world where people demand higher fuel efficiency, but at the same time are afraid that small cars are 'unsafe.' And so we get 'innovation' from Big Three executives in the form of oxymoronic product lines, such as 'luxury hybrid SUVs' and 'fuel efficient V8' sedans.
For Mitt Romney, none of those realities matter. All that matters is the notion of 'streamlining' he lifts from the studies of his dad's success in the 1950s and 1960s.
Along these lines, Romney's plan to rescue the industry consists largely of a taking Paul Bunyan's axe to automotive workers. How does this happen? Well, step one is to deny bridging loans to the Big Three so that they are forced to go into bankruptcy. Once in bankruptcy, Romney explains, the automotive industry can finally get down to streamlining production, by which he means the first step of getting rid of 'the burden' of the American automotive worker:
Midway through his piece, Romney actually proposes something that makes sense--that we should fire the current crop of rust-covered auto execs.
First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.
That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota's Avalon. Of course the Avalon feels like a better product -- it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.
Golly gee, Beaver. Sounds like union busting to me. And yet, this is exactly how Republicans talk about American workers: 'Vote for me, Joe The Assembly Line Worker! And stop being such a burden, wouldya?'
Romney goes on to explain that the current crop of management in the Big Three has an insane view of executive compensation, the one good point Romney makes in his Edsel of an Op-Ed.
In the end, words like 'energy,' 'environment,' and 'sustainability' do not even show their faces in Romney's plan. All of those core issues that must define the future of the industry--if it is to have a future--are front and center in the minds of American voters, but they are decades away from a Republican party that has ridiculed them as liberal hoaxes. Thus, Romney's plan is little more than a rewording of the infamous, bureaucratic axiom from Dicken's David Copperfield:
Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
Scrooge Romney aside, what Republicans fail to see is plain to anyone with a moral conscience and increasingly apparent even to some who lack one: a bankruptcy for any of the Big Three would bring eruptions of unemployment so destructive it would make Krakatoa seem like a baby's burp by comparison. Sure, millions of auto workers would lose their jobs from Michigan to California (that's right...it would not just be pain for the Mitten State, but everywhere). But that would just be the beginning. Every industry in America would also be destroyed by the eruption of unemployment that would result from a Big Three bankruptcy.
Just yesterday, for example, hospitals in Michigan began announcing layoffs--hospitals! In 2008, the people whose working lives sustain the industry also sustain hundreds of manufacturing and service industries in their communities, chief among them the healthcare industry. If the Big Three goes, hospitals will not be far behind.
If GM or Ford are forced into bankruptcy by the 1950s thinking of the Republican Party, we can likely expect the Christmas headlines to describe the deaths of entire communities suddenly unable to sustain any services in the legal economy.
When the American people agreed to invest in the recovery of the financial markets through the TARP program, we did so specifically so that the crisis in the commercial paper market would not result in a domino of industry failures leading to economic depression. GM--and soon Ford--are the first test cases of that trust the American people gave the Democratic Congress and the Bush Administration.
Now is the time to compel change in the auto industry, not rush into bankruptcy and hasten a wave of layoffs.
Now is the time to use the bully pulpit of the President to shed deadbeat auto executives and set in motion a three stage process towards rebuilding the automotive industry according to agreed upon principles of sustainability.
Now is the time to reject Republican proposals to pretend we live in a fictional version of the 1950s and keep our minds focused on the real challenges we face--in the real world of today.
(cross posted from Frameshop)