the intellectual bankruptcy of the big three

I knew for certain that the automotive bailout was destined for failure when I read the CNN headline, “Big Three auto CEO’s flew private jets to ask for taxpayer money.” The momentum is clearly building against them.

I’m not generally one to agree with the likes of Mitt Romney, who came out today and said that we should let the Big Three fail, but, Jesus Christ, the CEOs of the Big Three are making it incredibly difficult for me to believe that they’re serious about making the kind of substantial change necessary to save their industry.

I don’t know that I’m necessarily a proponent of the “let them go bankrupt” philosophy, but I’m sure as hell on board with Carl Levin when he suggests that the CEOs of the Big Three should step down. The thought of the three of them, in their three private jets, all going from Detroit to DC, boils my husky, grub-white ass. I know the estimated $80,000 it cost to fly them into Washington is just a drop in the bucket compared to the billions the Big Three burn through each quarter, but the symbolism speaks volumes. These men don’t want to change. They want to continue business as usual, and they want us, the American people, to subsidize it.

What we need is a leader of an American automotive company who leads by calling for bold change. We need someone with a vision. If we had someone like that, I’m confident that Congress would get onboard. We need a leader willing to say, “We are not putting one more dollar into the design of gas-powered automobiles. Gas is not the future of America. We are, from here on out, in the business of creating electric vehicles that people will want to drive. We intend to restructure our company, sharing ownership with our employees, in exchange for their commitment to renegotiate labor contracts in light of the economic realities of today. We would like the government’s assistance with research, and tax credits for early adopters, as well as with the building of a national alternative energy infrastructure capable of powering the zippy, fun-to-drive automotives we intend to build. We’re a resourceful people, with access to the best workforce in the world, and there’s no reason to imagine that, if we set our goal as energy independence, we will not get there.” Of course, that will never happen.

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  1. Meta
    Posted November 20, 2008 at 8:06 am | Permalink

    Just like the CEO’s of the financial companies who wouldn’t take the bailout unless their bonuses were covered:

    The chief executives of General Motors Corp. (GM) and Ford Motor Co. (F) said Wednesday they wouldn’t accept a $1 salary in exchange for government aid to their imperiled companies, as the head of the former Chrysler Corp. did a generation ago.

  2. Posted November 20, 2008 at 9:14 am | Permalink

    My favorite overheard comment from yesterday was that they could have at least shared a single private jet!

  3. Mark Goodstein
    Posted November 20, 2008 at 10:24 am | Permalink

    Michael Moore was with Larry King last night. Here’s video-

  4. Posted November 20, 2008 at 11:18 am | Permalink

    Your blog has an overly agressive spam filter. It blocks referrals from my blog to your article.

  5. Curt Waugh
    Posted November 20, 2008 at 11:30 am | Permalink

    I don’t know that I’m necessarily a proponent of the “let them go bankrupt” philosophy…

    Bankruptcy is never a “let them…” anything procedure. It is an active restructuring of a company based on the fact that they can no longer pay their bills. Debts are restructured. Management is broomed. Contracts are broken and re-written (introducing the potential for union busting). It is an actual PLAN by which the company changes. It’s the farthest thing from “letting” anything do anything.

    These CEO dudes don’t want it because it means they lose the ability to pay themselves enormous sums of money for doing nothing. They will likely lose their jobs. And these days, a $20 million golden parachute ain’t what it used to be.

    Is it the best answer? I don’t know. I suspect it might be. But it is, by no means, a hands off, let them die procedure.

  6. Curious
    Posted November 20, 2008 at 12:11 pm | Permalink

    I’m curious if you drive a car Mark, and if so what do you drive?

  7. maryd
    Posted November 20, 2008 at 4:20 pm | Permalink

    Would you buy a car from a company in bankruptcy? Would you buy a car from a company restructuring or recovering from bankruptcy?
    For the middle class worker, it is all about the money, the raises, the bonuses, and especially the COLA and benefits. It is what helped UAW workers fuel our economy, send their children to college, make their mortgage payments and help their college educated kids survive in their non-union, low benefitting jobs. Our retail friends enjoy black Friday due to the many workers connected to the auto industry. And surely as impolitic as it was, is it only “Detroit” (repeatedly treated as if an expletive) CEOs that ride around in fancy private jets, eh?

  8. krid
    Posted November 20, 2008 at 4:20 pm | Permalink

    Come on think about it. Do you really want some guy who has laid off and is about to lay off THOUSANDS AND THOUSANDS of personnel to fly coach on Northwest….. Even if it was first class, it is a enormous security threat… These companies have these planes for reasons… one of those reasons is security….

  9. Paw
    Posted November 20, 2008 at 4:27 pm | Permalink

    Yes, first class is so so terrifying.

    Your argument is ridiculous. For the cost of flying a private jet, a CEO could have afforded to buy a dozen seats for personal security each way.

  10. Brackache
    Posted November 20, 2008 at 6:30 pm | Permalink

    What’s wrong with a phone call?

  11. mark
    Posted November 20, 2008 at 9:01 pm | Permalink

    Hey Curious,

    I drive a hybrid Civic. If you search through the archives of the site, you’ll find that I’ve written about the choice quiet a bit. I’ve had the car for six years now. It was one of the first generation of hybrids. No domestic automakers were offering them at the time. I knew that I’d never make my money back on it, even with the tax credit, but I wanted to buy it so that I could demonstrate there was a market for such technologies. My hope was that Honda and Toyota might get enough sales to make the Big 3 take notice and get off their asses….

    So, was that the “gotcha” answer you were hoping for?

  12. mark
    Posted November 20, 2008 at 9:04 pm | Permalink

    Oh, and before that I drove an American-made SUV.

    I looked objectively at the facts and decided that SUVs were bad for the planet, and that I couldn’t drive one with a clear conscience.

  13. Posted November 20, 2008 at 9:25 pm | Permalink

    And before that he drove a tank, soviet made, but then he realized that he had to get out of Afghanistan.

    Sorry, flight of fancy.

    The fucking people running the big three are either astonishingly inept and short-sighted or criminally negligent. Running up their pay while diminishing stock value and ruining companies.

    Somehow the way that the Detroit Lions are doing this year and how they are managed seems to reflect their ownership having ties to the Big three.

  14. Curious
    Posted November 21, 2008 at 11:51 am | Permalink

    Mark, yes, that was even better than the gotcha answer I was looking for, thanks for the reply.

    Most people buy cars to use as tools to move them and their things from one place to another with the features that they can afford. Most people do NOT buy cars to make a statement, to “demonstrate there was a market for such technologies.” as you did. If one cannot make fiscal sense of a car purchase even with a tax credit, that is as clear a demonstration as can be made that there is not a SUSTAINABLE market for those technologies at that time.

    The big 3 have made repeated attempts to make frugal, high mileage cars such as the Geo Metro and Ford Festiva which were consistently received with wild popular accolades and acclaim each time…

  15. Curious
    Posted November 21, 2008 at 12:03 pm | Permalink

    Oh and if you really care for the planet, don’t drive a car, or at the minumum don’t buy new cars when there are used cars that are more than adequate for your purposes that already exist. If you bought each successive variant of new eco-friendly car model I think you are harming the planet much more than you are helping as a result of both the resources used to produce your new vehicle(s) combined with the disposal of your old vehicle(s).

    As an aside it is amusing to me how one can find the prospect of increased production of either lead based or lithium based batteries as “good for the planet”.

  16. Curt Waugh
    Posted November 21, 2008 at 12:14 pm | Permalink

    Hey, Curious — You ever buy a TV? Any idea how expensive those things were when they first came out? No normal person could ever hope to buy one. But some companies with foresight said “This is the future” and built them anyway. Over time, the high-end, bleeding-edge markets help to pay for continued development that amortizes to the rest of us.

    They did with again (or are doing it) with LCD TVs.

    They do this with every consumer electronics.

    They did it with automatic transmission.

    They did it with airline travel.

    They did it with computers.

    Oh, and Toyota is doing this with the Prius (and Honda with their hybrids). This idea that no product can be launched until we all can afford one doesn’t follow history or logic. Mark is a classic “early adopter”. Look it up.

  17. Curious
    Posted November 21, 2008 at 3:48 pm | Permalink

    Curt: Mark was also clearly an early adopter of affordable large SUV’s, which were previously not available to normal non-commercial consumers until people like Mark subsidised their development and volume/capacity increase which made them affordable to even more people. By this and your examples early adaptors are merely those who purchase the newest trinkets at greater cost than the trinket’s worth. That this makes these trinkets less expensive later is no revelation or greater benefit to mankind.

    No I have not bought a TV recently because there is nothing wrong with my non-flat, non LCD TV. I push the buttons, I watch the inane drivel that appears on the screen, I turn it off.

    I have never bought a new car, never been to a mechanic and I prefer manual transmissions or even better to take an effective public transportation system instead of being forced to use a car. The waste involved with producing new trinkets like cars and TV’s year after year is shocking to me.

    So, that car companies can stay in business at all selling new cars (to people like you and Mark) year after year is amazing to me. But people being the emotional creatures that they are, that some people really like small imports (Curt and the “recent” Mark) and others really like big domestics (people like the “old” Mark) is not surprising so much as disappointing.

    I prefer something called consistency. Thinking things through to their logical end and seeing things for what they are. Not jumping on the most recent brand or trend because it feels good emotionally. Try it. It may feel almost as good as being an early adopter, and much less expensive for sure…

  18. Posted November 21, 2008 at 4:57 pm | Permalink

    I will never, ever buy GM again, if for nothing else, the quality sucks. They must make more money on service than the actual sale price of the car. Total crap. Believe me, I tried to go GM for my last car and I just couldn’t do it. I tried because I like the people at my GM dealer, but the product was just subpar for the car that I was in the market for.

  19. kjc
    Posted November 21, 2008 at 5:27 pm | Permalink

    haha. this is the beatdown thread. i’ll read more after i get home on the bus (having decided to ditch my car RIGHT NOW).

  20. Curt Waugh
    Posted November 22, 2008 at 10:20 am | Permalink

    Curious, you’re not even close on most of your points. First, I never made any mention of what car I drive yet you seem to make some claim that I drive a small import. Not true. I buy hand-me-down GM products from my parents. I made my purchases because they were driven by the classic “little old lady from Rochester”. I have no idea what I’d buy new. I haven’t ever had to do that. *sigh* I will tell you that my 2002 Malibu is a very capable family hauler that I enjoy driving. Is it as good as an Accord? I have no idea; I’ve never driven an Accord. But it is a million times better than my old ’92 Corsica, which was an unrepentant piece of shit.

    In any case, you’re also way of base about the rise of the large SUV. Mark was not an early adopter there. SUVs were an extremely mature product that suddenly became a mass-market phenomenon in a population with tons of money and nowhere to spend it. You used to be able to buy a pick-up pretty cheap (still can). But some marketing gurus at EVERY AUTO COMPANY IN THE WORLD figured out that they could slap on $10,000 worth of gizmos and sell the things for $50,000. This is, in fact, the exact opposite, from a marketing perspective, of Mark’s purchase of a Civic hybrid.

    You also just LOVE to talk about yourself, as if you have it all figured out and you can’t imagine why the whole world isn’t as wonderfully “consistent” as you. You even claim to be “disappointed” that everybody doesn’t want the same car (again, as you). The world is a constantly changing place, man. The minute we stop innovating, we die. Literally. If we can’t find the new, our species is doomed. This area, of all places in the midwest at least, thrives on constant innovation. And it’s a blast to live here for that reason.

    Following your argument, why stop at one single consistent automobile? Why not stop at horse and buggy. Hell, what’s wrong with just walking? Exactly how far back do you want to take this?

    Innovation isn’t waste. Innovation is vaccines and telecommunications and exploration and robotics and space travel and microcircuitry and art and the interwebs (the tubes, the tubes!). You use the term “logical end”. What logic? Who’s logic? What end? No matter what “end” you espouse here, there were millions of early adopters who you have to thank for it. There is no end to this process. The only real end is death. Life is change.

  21. mark
    Posted November 22, 2008 at 2:52 pm | Permalink

    Just to set the record straight, I never said that I bought a new SUV. I’ve had two, and both were bought used. One was rebuilt by a auto shop class in rural Kentucky out of several crashed cars.

    I personally have only bought one new car in my life, and that was the Honda Civic Hybrid. I thought I explained myself about that, but, judging from your comments, I guess you didn’t understand. I’ll try again…

    I did not buy the car to “feel good about myself” as you suggest. I bought the car, and I encouraged others to do so, because I understand a very simple premise – companies don’t make things if they don’t think there’s a market. At the time I bought my hybrid, very few were on the roads, and the American auto companies, even though they had the technology, didn’t seem to be pursuing it. I thought that buy buying one, I’d demonstrate that there was an interest in getting away from the big gas-guzzlers that Detroit was pushing.

    And, yeah, you’re right about the environmental issues related to the batteries. I did consider that. On the other hand, I also realized that there likely wouldn’t be a second generation of the vehicle if the first one didn’t sell. And, I was assured that components could be safely recycled. And you’re also right that, if I were perfect, I wouldn’t drive at all. I do take the bus on occasion, but I could do better. We all could. It’s the human condition. We can all do better.

    As for price, I did pay more for the hybrid than I would a normal Civic, and the savings in gas, as I calculated it, wouldn’t have been enough to make up for the difference over the likely life of the car. As the price of gas climbed over $4 an hour, though, that equation changed. My point was, I didn’t do it strictly for the cost savings. I did it because I wanted to demonstrate there was a market for new solutions. If I could have bought a Smart Car at that point, I probably would have done it.

    And, for what it’s worth, a lot of people make decisions like this every day. People buy things, for instance, from local merchants all the time that they could perhaps get more inexpensively at WalMart. They do so because the recognize that there’s a value in having a local store. Lots of people go out of their way to patronize new restaurants, like Beezy’s, because they know it’s hard to get going in business (and, in this case, the food is damn good)… Fuck, I blog hours a night not because it’s in my best interest – I do it because I think there’s a need for it in the community. Believe it or not, not everyone is motivated strictly by self-interest and greed. Some people, if you can imagine it, see a value in community. It’s amazing to me that this concept is so foreign to you.

  22. Curious
    Posted November 22, 2008 at 10:00 pm | Permalink

    Mark: Well, I see there is no common talking point, just people writing things talking past each other. Let me be clear. Your blog post was exlplicitly about the intellectual bankruptcy of the big 3. I merely pointed out that lots of people bought the intellectually bankrupt product of those automakers for a long time, whether new or used, and only until very recently when eco-friendly has become cool (and gas expensive) are people now wishing that the automakers had, to the contrary of what was both high volume and profitable, invested in product that would take a long time to be either profitable or capable of high volume. Consumers must share the blame, especially the ones that contributed to this intellectual bankruptcy. You owned SUV’s, you should accept that he is partly to blame.

    I do believe that everyone should be motivated by self interest and greed, and that is why I only by vegetables from Dos Hermanos or the co-op (well sometimes Hiller’s), why I do not shop at Walmart or Kroger, because my long term best interests are best served by the people that live and work in the same place I do. Why would your arguments for support of local restaurants and establishments not apply to local carmakers as well? It is your neighborhood and community that would benefit, us, here, now if you bought local product, specifically because “there’s a value in having a local store”.

  23. Curious
    Posted November 22, 2008 at 10:05 pm | Permalink

    Curt, innovation is not necessarily progress. If cars were viewed for what they are, appliances, they would be banned from widespread personal use. No other appliance that we use on a daily basis has anything approaching the fatality and injury rate that cars have for such a simple task of getting from one place to another. Michigan had an effective public transportation system at the beginning of the last century, and no, I would have no problem walking to some terminal to take some form of public transport to my job or out for the weekend. Maybe someday this technology might be feasible…

  24. Curious
    Posted November 22, 2008 at 10:14 pm | Permalink

    Oh, and Curt, unless you believe the earth is only a few thousand years old, you may want to pick up a history book, for either this contintent or the world, which will show ample evidence that the human species does not require constant innovation to live and thrive. Actually it could be (and is) argued that the innovation-rich cultures are the direct cause of the demise of cultures around the world that had the inherent qualities of communtiy that Mark speaks of. We have legal gambling with flashing lights and hybrid (or 100% electric!) cars on highways that go nowhere useful across what used to be prairie, and on one knows where the word Huron or Algonac or Michigan came from because those cultures were the fertilizer for our culture of innovation. Yay.

    What our specices needs to continue on is humanity, not innovation, and part of that is accepting your share of the blame when it is deserved, or offering realistic, pragmatic ideas to solve problems. Calling out obvious, petty complaints, or rhetorical “solutions” like immediately abandoning gas powered vehicles in absence of any practical replacement is neither a proposal or a solution, it is a sound bite, or blog bite as it were. I am to blame for many things of my own, but nothing I wrote here, because I don’t spend time telling people what they ought to do. I may mention what I do, but that is becaue I am not arrogant enough to believe that everyone should do as I do. I am clearly more comfortable “talking about myself” than telling people what they ought to do or what they should believe. I find this no bad thing.

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