What color is your lifejacket?

Here’s a couple of terms for you to ponder. Well, the same one really, but different definitions.

"Bail out" is something you do in a sinking boat in the hope of keeping it afloat.

OR:

"Bail out" is to exit a burning plane before it crashes.

Similar, I’ll grant you, but notably different as they apply to the proposed auto industry bailout.

"If you go down in the flood, it’s gonna be your own fault..."

On the surface (if I dare use that term) the proposed bailout is intended to allow the auto industry protection from the ravages of the financial crisis while it (hopefully) recovers. In theory, a loan from the government now would protect the auto industry from having to go bankrupt, and allow them to continue to do business while the economy recovers enough to buy new cars again. In the interim, the auto industry would (again, in theory) "retool" to produce cars that the American public will actually want to buy. Their business operations would (in theory; see a pattern here?) be streamlined to operate more efficiently, more economically.

Sounds pretty good, but it has a few problems. Unless sweeping changes in Detroit’s business practices are mandated by law, I don’t see them happening. The history of the automotive industry is one of changing as little as possible at any given moment, and when change is mandated they try to find a "loophole" (if not a reversal by the next administration) in any new law or regulation that has mandated any kind of meaningful change. In short, I don’t see change happening, unless the "old guard" in charge of the Big Three are thrown out. (Which is a road strewn with landmines; read on.)

(There’s a movie about all of this; Tucker; The Man and his Dream. It’s about Preston Tucker, who tried to produce a better, and much safer, car back in the late ‘40s. I loved this movie.)

Think about it. The automobile industry has resisted safety features (like seat belts, safety glass and air bags, to name a few), mileage standards, crash test standards, a plethora of mileage-increasing measures, electric cars (any kind of alternate fuels, for that matter); in fact Detroit has resisted any changes in their product line that would cost anything to develop or produce.

I remember when California mandated an increase in gasoline mileage (avereged over all of the vehicles in any manufacturer’s fleet) that spurred the development of an electric car, the EV1, by General Motors. Factory space was found, parts and materials were allocated, and production had actually begun (the initial vehicles were available for lease in California) when there was an administration change; the then-new Bush administration was more willing to do whatever the auto industry asked, as was the new Republican governor in California (Arnold the Barbarian); the regulations were "rolled back," the car was canceled, and every one that had already been produced was crushed and recycled. Even though the people who had driven them generally loved them. (There’s yet another movie about all of this, Who Killed the Electric Car? that I haven’t seen.)

This is typical of what has gone on in the auto industry for decades. And I don’t think they’re likely to change until they’re forced to. But the problem with mandating anything is that Detroit will do as little as they can and hope that the next administration will be more to their liking. This is how they always operarte.

Besides, there already is a provision in the law which protects any corporation from their creditors, giving them time to reorganize and retool and possibly pull themselves back fro the abyss. It’s called bankruptcy.

Going down in flames

Then there’s the other metaphore; the one about the burning plane, remember? I very much fear that this will be the road that Detroit takes; rather than put forth any effort to save their industry, if no bailout is forthcoming they will likely just let it fail and get themselves out of it as best they can. That’s the potential danger of not giving them a bailout; they may just take one themselves, and leave no one at the controls. And like a jumbo jet, the auto industry is just too big to let fall wherever it happens to fail, with no capable hand on the stick.

So I’m of two minds on this; on the one hand, letting the industry go bankrupt may be the best thing for them, giving them the necessary "breathing room" to save their industry themselves. On the other hand, I fear that if left to save themselves they might do just that—save themselves, and the rest of us can clean up their mess.

The Blues Viking

The opinions here expressed are mine and if you don’t like them you can get your own damn blog.