With all this free money floating around and every CEO worth his salt lining up at the government trough ready to bury their faces and feed heartily on the taxpayer’s generosity, I think it’s time we began to look around and see what other companies - past and present - we should also claim to be “Too Big To Fail!”
For instance, a prime candidate for a government bailout would have to be John Jacob Astor’s American Fur Company. Sure it’s been bankrupt for 160 years but I didn’t see any limitation attached to that bailout bill, did you? Hell, if the Medici’s had an American subsidiary we could probably bail out that Renaissance era company too.
The fact is, the American Fur Company failed and it’s your fault. Tell the truth now, when was the last time you bought a beaver hat? Don’t you realize that thousands of fur trappers have been thrown out of work because you selfishly decided to be a slave to fashion rather than thinking of those trappers, trading post managers, export facilitators, dock workers, and ship captains who lost their jobs as a result of the switch from beaver pelts to silk in hat making?
And, of course, you know where that silk is coming from, right? This may have been the first instance of a Chinese attack on our economy. Haberdashers, seduced by cheap imports of silk, ought to be ashamed of themselves. The American Fur Company must be saved else we will lose our competitive edge in the world’s fur trade. Then there are the national security implications which are just too horrible to contemplate.
So we should give some of that $700 billion in bailout money to the descendants of John Jacob Astor and power up the fur trading business again so we can all buy a stinky, misshapen, butt-ugly hat made from the skin of cute little beavers who are trapped in steel jaws that, when sprung, clamp down on their leg, forcing the helpless creatures to either gnaw off their own limb or die a slow death by starvation. But if it will save American jobs, it will be worth it, right?
Similarly, we could save the “Big Three” American automobile manufacturers who have run into a skein of bad luck recently. Of course, that streak of bad luck has lasted 35 years and for all practical (and aesthetic) purposes, the US auto industry has been dead since then. But if we’re going to save The American Fur Company, we might as well try and pump some life into the moribund car manufacturing sector, right?
Actually, this might prove to be a bigger trick than trying to make beaver hats all the rage again. This is because there is a reason that Detroit has lost its positions as the Mecca of car manufacturing; they make sucky cars that no one wants to buy.
The Big Three can complain all they want to about the high cost of union benefits, unfair competition (Translation: It is unfair the Japanese are smarter, more innovative, and more quality conscious than we are.), and “green” regulations that add cost to their products. They are basically calling the American consumer stupid for actually wanting nice looking, trouble free, fully functional, safe, and adequately serviced autos. The gargantuan salaries paid to auto execs have not produced one single model that can outsell the Toyota Corolla.
For all their redesign, retooling, rethinking, and re-inventing the “corporate cultures” in Detroit, they have accomplished nothing in their efforts to compete with Japanese manufacturers. The excuse used to be that their plants were so much newer than ours. That is no longer the case as the average American auto assembly plant is almost just as recently built as the average Japanese plant. It’s not the age of the plant that matters anyway. It’s how the cars are built. And the Japanese have embraced new techniques, new technologies that give them a leg up in the competition.
Then it was the excuse that Japanese workers make much less than American unionized workers. That may have been true at one time but today, it is very close and getting closer all the time. The difference today is almost entirely due to health and pension benefits. But instead of losing market share because of this, the Japanese have been steadily increasing their sales numbers.
Face it. Detroit is in a fix of its own making. Shortsighted managers, unions who still believe that benefit packages should reflect 1970’s realities, a stubborn resistance to higher CAFE standards that would allow them to compete with the fuel efficient Japanese cars, and an inability to figure out how to make a decent profit on smaller cars. The fact that the enormous falloff in sales of SUV’s and other big car, high profit models was entirely predictable, the Big Three got caught with their pants down when gas prices got so high, people were paying a third of their weekly paycheck to fill up.
Despite all - failure at every level including executive, manufacturing, marketing, and labor - we are now supposed to rally around the cry “Too Big to Fail!” and hand these incompetents $25 billion (for now - more later, I promise you).
I say no way.
President-elect Obama wants to nationalize the auto industry:
Top advisers to President-elect Barack Obama are helping to draft an auto industry rescue plan that would bring new government oversight, including the possibility of an auto czar who could ensure the money was being used wisely.
Aides said Obama is also open to an oversight board that would perform the same function as one individual. The proposals come as the estimates of the cost to fix Detroit’s three largest automakers continue to mount.
“Certainly he wouldn’t believe in it being a blank check,” said an Obama adviser, who spoke on condition of anonymity due to not being authorized to speak publicly on the topic. “He wants oversight to be making sure the auto companies have figured out how to become viable, ongoing concerns.”
Let’s be clear here. This would not be a “temporary” solution. Government “ensuring the money is spent wisely” sounds an awful lot like being able to approve or veto business decisions. If that’s the case, why shouldn’t the government be able to fire the boobs who are currently in charge and replace them with people they think could do a better job?
The point isn’t how much money they need or how much government control would be involved. The fact is that these companies are as dead as John Jacob Astor’s American Fur Company and for similar reasons; an inability to adapt to changing market conditions and create a product that enough people want to buy in order to make the companies profitable. There’s a reason no one buys beaver hats anymore. And its the same reason that no one wants an underpowered, ugly, cramped Chevrolet Aveo.
I feel sorry for the thousands of workers who would lose their jobs if these companies went belly up. But the fault does not lie with the American taxpayer who those representing the workers and executives of failed companies want to saddle with their inadequacies.
We aren’t going to start the fur trading industry again by asking taxpayers to fund a rebirth. Neither should we try and restart the American automotive industry by asking taxpayers to save something that’s already dead.