Dangerous Bias Against Detroit
Clearing up misinformation about the auto industry’s troubles
Nearly every current poll shows that most Americans oppose federal assistance for General Motors, Chrysler and Ford, which must be worrying news for members of Congress as they ponder whether to support the proposed $15 billion emergency loan package. Political analysts warn of the consequences for lawmakers who support the âbailout everyone loves to hate.â
Like any survey that asks people to answer simply yes or no, however, the polling on the auto bailout reveals little or nothing about the information (or misinformation) behind the negative response. As they prepare to vote, the legislators should also consider how voters will feel when the nation suffers the full consequences of a cratering auto industryâand find out that the facts were not quite what they seemed to be.
Media coverage of the auto crisis has been powerfully biased against assistance to the industry, in part because reporters, editors and TV producersânot to mention the corporate ownersâhave yet to shed the outdated free-market fundamentalism that has shaped American journalism for so many years. The worst example in recent weeks has been the constant repetition of skewed statistics on autoworker compensation, which was said to exceed $70 per hour.
Such stories were meant to emphasize the supposed greed
of the unionized workforce. Yet that $70-plus figure, which actually
includes pensions and health benefits to retirees, grossly distorted
what Detroitâs assembly mechanics receive in their weekly paychecks.
And it most certainly stoked hostility to those workers and the
industry among Americans who listened to the crude propaganda.
Then there was the incessantly repeated story of the stupid auto executives who flew to Washington for congressional hearings on their private jets. That was true and deplorable, of course, but scarcely of great relevance to the issue of whether America should preserve its manufacturing base and a million jobs in auto and related industries.
Auto Industry Hit By Credit Squeeze
Americans may not know about the problems of the automotive business
seems at least as pertinent as what they have been told so far. The
chances are that voters outraged over those mythical $70-an-hour wages
have no idea how heavily the livelihood of autoworkers in competing
countries is subsidized by their governmentsâstarting with health care
and moving on to child care, pensions and a host of other benefits that
American workers have not begun to imagine.
Such comparisons tend to be absent from most mainstream analyses of the auto crisis. Equally relevant and usually missing, too, is the news that competitor nations are preparing to provide many billions in aid to their car companies. Right now, the European Union is considering a loan package to the continentâs auto industries that may exceed $50 billion.
Washingtonâs first $15 billion loan to the Big Three will likewise come from a Department of Energy program to encourage new green technology. So what is the difference? In Europe, there is far less controversy over preserving critical jobs and the industrial base. And in Europe there is broad recognition of a basic fact: The precipitous drop in sales confronted by the automakers has been caused by economic conditions beyond the control of those companies. As credit dried up, so did car sales.
None of this is meant to suggest that the management of GM, Ford and Chryslerâ or the United Auto Workers, for that matterâshouldnât pay a high price for their failure to restructure in years past and their resistance to modernizing their products and processes. Taxpayers must be protected, just as they were when the government loaned billions to Chrysler in 1980.
But it is ironic to
think that the Bush administration and Congress would swiftly
appropriate hundreds of billions of dollars to save the same firms
whose stupidity and criminality drove the economy downâwhile begrudging
a far smaller amount to a major industry brought to ruin by the
As each Wall Street bailout receives approval, with or without appropriate conditions, we are assured that the risks of bankruptcy are simply unacceptable. If American International Group or Citigroup went down, who knew what hell might break loose? There was some merit in that argument. The truth is that we are just as ignorant of what destruction will ensue in the broad economy should government allow auto to go broke. If and when that happens, the opinion polls will shift overnight. But it will be too late.