Boztopia.com

So the talks to lend automakers money to survive broke down last night, leading to the expected misery on Wall Street this morning. The spin on the cable news shows and in the corporate press was that it was all the unions’ fault for having the temerity to demand honest money for honest work, rather than accept the model of so many other hollowed-out American businesses, and take pay cuts, losses of benefits and health care, etc. I don’t really care much about the CEOs wanting to take a $1 salary as a condition for the bailout, especially when you consider the net worth of Chrysler CEO Bob Nardelli, the guy who ran Home Depot into the ground and has now capitalized on that first shining failure, still has investments and payoffs that lend him a cushy income. Guys like him could take a $1 salary for years and never miss it for a minute, so seriously, fuck him.

GOP members who opposed the bailout are being hailed as heroes, which makes sense until you realize how much of their opposition was based in crass political calculation. Some of them, like Richard Shelby and Bob Corker, represent states who have heavily wooed foreign automakers into building plants in their states, with non-unionized workers who make half as much as their counterparts from the Big 3. Others realize that Bush is on the way out, and have no incentive to support him or his aims, so they’re agitating just like they did with the Wall Street meltdown and TARP passage.

But Bush, never one to pass up spoiling a party, has signaled that he will indeed shift his position and consider using funds from the untapped $350 billion set aside for the Wall Street bailout to rescue the automakers. I’ll explain why this is a good idea after the jump.
First, politically, this puts the onus right where it belongs–back on Bush. Just as the Wall Street meltdown was the culmination of years of catastrophic abuse and deregulated industries run amuck thanks to Bush’s giving the keys to Greenspan and saying “Go nuts,” this will be yet another example of the modern conservative philosophy of privatizing the profits and socializing the risks–helping out yet another failing industrial sector with money from taxpayers, without our permission, oversight, or control. By refusing to accede to Senate Republicans’ demands that the UAW take it in the neck to pass the bailout, the Dems actually look better in the long run.

Second, by taking money out of the already-allocated $700 billion, it doesn’t tap the $25 billion in loans that were put aside to sponsor development into fuel-efficient models. Given the relatively small(!) amounts the Big 3 were asking for, another $25-$30 billion out of that honey pot won’t cripple Obama’s administrative goals too terribly, should he (as I suspect he will) redirect much of the remaining fund to his policy initiatives. If the original plan to give the automakers money from the fuel-efficiency loan package went through, that really WOULD have been bad news.

Third, since I mentioned Obama, this puts the ball squarely back in his court. Just as the albatross of rescuing a failing industry will ultimately rest with the legacy of Bush, the responsibility of saving and transforming it will rest with Obama. And he has options available to him, if he chooses to exercise them. That can open the door to all kinds of new rules for transiting the automakers (those that survive) to building electric, fuel-efficient, smart, and hybrid models that are designed for a new model of travel and transit that doesn’t involve massive mansions in exurbia or befouling the air with gas made from oil bought from Chavez or the House of Saud.

And that really gets to the core of my ambivalence about rescuing the automakers. It makes me grind my teeth to see money being thrown at corporations who have built their profits on an increasingly obsolescent business model. Like Lessig, I am tired of seeing mismanagement and malevolent ignorance rewarded, particularly when said ignorance is actively destroying our planet. If the financial sector falls, our modern lives will change, but if the auto industry doesn’t change, our entire global society could go kaput.

But unlike Lessig, I understand that it’s not so simple to say “Let them fail” and be done with it. If even two of them enter bankruptcy, the potential losses to the American economy would be catastrophic:

Should all of the Detroit Three’s U.S. operations cease in 2009, the first year total employment impact would be a loss of nearly 3.0 million jobs in the U.S. economy— comprised of 239,341 jobs at the Detroit Three, 973,969 indirect/supplier jobs and over 1.7 million spin-off (expenditure-induced) jobs. The employment picture recovers somewhat in 2010 (2.5 million jobs lost) and 2011 (1.8 million jobs lost), due to increased U.S. production by the international automakers, and the process of dislocated workers finding new employment.

We’re talking disruption of a supply chain that includes auto sellers, parts manufacturers, repair shops, and gas stations–millions of workers and businesses. This is the awful truth about the oil economy–we’ve built almost half of our entire economic backbone on a system that is inherently unsustainable. If the global economy was even marginally better off than it is now, we could absorb the shock, but it’s not. And tell that to any one of the Michigan auto workers who is being blamed for decades of bad decisions made by a short-sighted, indolent set of executives.

So right now, what we need to do is offer Detroit a bridge loan or enough cash to keep them on their feet in the new year, when a new administration, a new Congress, and a new set of policymakers come in with better plans on how to transit a failed business model to a more efficient plan, one that involves building cars that get more mileage for the gallon and do so with less pollution. Ultimately, we have to move completely away from the automobile as our mode of transportation, and fully embrace transit and light rail as safer, smarter transportation options–but we’re not there yet. We have to retool the auto workers into building infrastructure and “green collar” jobs–but we can’t do that in an environment suffering the systemic shock of yet another industry’s collapse.

So let Bush take the dubious credit for “saving” the auto industry and have this nailed to the wall along with all of his other miserable failures. Let’s clean the slate and come back in 2009 with a better, smarter plan for rebuilding the auto industry while protecting the ability of workers to unionize. Right now, we’re standing still, but we’ll be moving forward soon enough, so a holding action may seem to be the best move.