Of all American Industry, it would be difficult to point to one more poorly managed or more self-destructive than the American automobile industry.  One has to ask the question, “How did that happen?”

The American Automobile industry was once the model for the industrialized world.  In the 1940’s the automobile industry helped support the war effort and helped the world defeat fascism.  Following the war years, the auto industry, fueled by cheap and plentiful oil, forged ahead with technological innovations aimed at bigger, faster, and more powerful.  In the 1960’s, they made an attempt to satisfy the American tastes for monster cars and monster engines, while dabbling in “compact cars” that were smaller and more fuel efficient.  At the end of a less-than-successful run of “compact” cars, the U.S. auto industry surmised that the American public didn’t like compact cars – and never could figure out why every Volkswagen Beetle shipped to the U.S. was snatched up immediately after delivery to the showroom.  In the early 70’s they watched with arrogance and disdain as every Toyota Corona and Nissan pickup imported here was adopted by an American driver before the salt water was completely washed off the car. 

As problems occurred due to increasingly poor quality of the American cars, as stories leaked out that auto manufacturers actually had meetings to decide how many customers had to die before it was worth their while to redesign a product they knew was defective, many Americans decided they had been duped too many times and turned their backs on American cars, many vowing never to buy another. 

Trying to have it both ways, U.S. manufacturers told you it was patriotic to buy American-made cars, while they moved their manufacturing out of the United States to Canada, Mexico, Brazil, and other places, the domestic content of everything except Domestic pickups spiraling downward. 

At the same time, Honda, Toyota, BMW with the Mini Cooper, Volkswagen, and Mercedes Benz with the Smart Car have all proven that small economical cars need not be cheap or junky.  It was never true that we hated small economical cars, we just didn’t like the Falcon, the Comet, the Chevette, the Lark or the Vega.  Does anyone listening remember the GMC Whim?  The $1100 super-sub-compact that was flying off showroom floors in 2001 – gone.  Does anyone remember the GM EV1 electric car?  The owners almost created a cult following who actually sued GM to get their cars back.  They can build them, why don’t they?

Now these same U.S. auto makers have lined up outside the Bailout Bank of the United States of America, with their hands out yelling, “Me too!”  Their executives borrowed a page from Lee Iacocca’s biography and are promising they will work for $1 per year (no, they aren’t including their stock earnings or options).  They are threatening “gloom and doom” the likes of which the U.S. economy has never seen if they are allowed to go out of business. 

And a part of their argument may be correct.  The United States represents the single largest market for new automobiles in the world.  New car sales in America is a 400 billion-dollar-per-year treasure of which every manufacturer in the world wants a piece. 

We as American citizens, as the actual lenders in this debacle, are forced to ask ourselves one question.  Do we trust these guys?  When we look back at the history of the American auto manufacturer, what do we see?  Have they ever shown leadership with products that we needed or did they pander to the least sensible of our desires?  Have they ever voluntarily incorporated safety features they knew would save lives, or did they wait until the Federal Government or the Insurance Industry forced their hand and mandated that those features be incorporated.  Did they encourage research and experimentation, or wield their corporate wealth and political power to crush any possible competitor no matter how shaky that operation might be. 

At least two of the three American auto manufacturers have the largest pool of engineering and design talent that exists anywhere.  They design and manufacture automobiles that are competitive in markets all over the world.  If they cannot survive, other manufacturers from around the world will rush to our shores to re-hire the auto workers and build the cars for this market.  While the balance of trade, the large profits that will leave our shores for the home country of the manufacturer should concern us, it would not be unusual for congress to find a way to impose taxes and tariffs that would enable us to keep a substantial part of that money.

The auto industry’s employment practices are out-of-date, their products have become irrelevant, their facilities (except the executive offices) are anything but state-of-the-art. 

They also still possess enormous clout and resources within the financial world.  They are not without resources.  Do they need our tax dollars?  I don’t think so.  If they don’t get the bailout will they really cease to exist?  I don’t believe that’s true either.  If the 700 Billion to 2 Trillion bailout of the financial industry hadn’t occurred would they have even considered asking for a government bailout?  Probably not.  I am forced to ask myself this one question.  The Auto industry and the Oil industry have been connected at the hip for nearly a century.  The oil industry has hundreds of billions of excess profits lying around in their coffers.  If the oil industry isn’t jumping up to bail out the U.S. manufacturers, why should we?

No industry in history has ever touted the merits of the capitalistic free market system more than the American auto industry.  Let them live or die by their own words.