Reality and Detroit

Allowing the big three auto manufacturers to fail would be a further blow to the economy.  But according to Louis Uchitelle in the New York Times today, the effect would be considerably less dramatic than bailout supporters are claiming.  "In time," he writes, "foreign car companies would pick up the slack by stepping up production in their plants here, many industry experts and economists say."

"In time" would come sooner than most believe:  "The big foreign makers are established enough to take control of the industry and its vast supplier network more quickly than is widely understood." 

No question but that Michigan workers would be hurt, but not for long.

"... Other employers would take their place over time. As the foreign companies stepped up production to replace what would be lost by an American company’s collapse, the transplants would add to their existing work force of 78,000, replacing many of the lost jobs, although at lower wages, with fewer benefits and at nonunion factories in other parts of the country. The auto industry’s share of the gross domestic product would probably also revive, if the transplants were to build in the United States the vast majority of the cars they sold here, holding down imports."

Of course, research done by the Big Three has been useful to other industries.  That loss would be felt. 

Anyone else been listening to the auto companies' biggest defenders lately?  They give us a picture of an entrenched, privileged, and self-regarding industry which has thumbed its nose at American consumers for decades.  I wouldn't mind a change to domination by more responsive and responsible foreign automobile manufacturers.   Rather than deciding once again to send good money after bad, shouldn't we continue to support the continuation of the important research by other industries?  Shouldn't we be looking at "bailing out" the workers instead of their improvident employers?

Comments

[BigThree]

We as Americans have been force fed the idea that we need to continue supporting the Big Three auto manufacturers in this country. They have known for many years this was coming and have turned their heads or better yet, put them in the sand. If you look at the tecnological changes in the last 20-30 years, cars have changed considerably. Yet the fuel economy remains the same! Foreign manufacturers picked up on this years ago and have considerably gained market share. We in America continue to be tied to the oil giants and fuel economy has hampered our growth toward efficiency and eco-friendly consumption. I agree with those that think it is time to let it go. Move on to a better return on our investment and minimize our fuel costs.