I hate when I agree with the Washington Post. Fortunately, it doesn’t happen often. Unfortunately, it happened today.
The Post’s lead editorial, “Detroit at the Brink”, bears the subtitle: “The carmakers cannot get out of their crisis unless they first get out of denial.”
Yup. Rather than looking inward, the Detroit Three CEOs flew in to Washington to blame the alleged credit crunch for their financial woes.
“It’s completely due to the credit crisis,” GM’s Rick Wagoner said.
Come on. Others may disagree, but it seems to me that their financial crisis stems from producing products that people don’t want to buy at the prices the companies want to demand.
Now, there are factors that drive up the costs of domestically manufactured automobiles. As many have pointed out, the twin villains most responsible are the labor unions and the federal regulators. Between them, the value-busting union contracts and the environmental regulations, like the CAFE standards, and the molly-coddling requirements for seat belts, air bags, Liddy lights, etc., add thousands of dollars to the price of a new car.
But why didn’t the three chummy competitors cite these factors as at least contributing to their current woes? Why pin the blame “completely” on the “credit crisis”?
Perhaps because that would suggest that handing over $25 Billion of the taxpayers’ money is not a viable long-term solution? Perhaps because they’ve decided that kowtowing before union bosses is safer than fighting them? Perhaps because, having decided that sucking on the government teat is a sound business strategy, they didn’t want to offend their overlords?
I honestly don’t know whether good free-market reforms, like repealing excessive regulations and passing right-to-work protections, would help the Detroit Three. Their CEOs seem pretty much beyond redemption as managers to me.
But it would certainly lower consumer costs and help keep better-managed companies in business.