Remember when all a president had to do was lead the entire free world? The job has gotten tougher. Meet Barack Obama, the Lee Iacocca of his generation.
Iacocca led Chrysler back from the abyss three decades ago. President Obama is about to become the principal shareholder of both Chrysler and General Motors, courtesy of the bankruptcy courts and about $100 billion of federal financial muscle. Two icons of corporate America will survive, at least for the moment, and let’s not quibble about the fact that Chrysler not long ago was a subsidiary of Germany’s Daimler.
The administration hopes to slim down the two automakers, make them lean and mean, and turn them loose to compete in the now-diminished global car market with less-favored but better-managed players like Ford, Toyota, Honda, Hyundai and Everyone From Europe. On the horizon are emerging carmakers in India, China and elsewhere.
In nature, weaker members of the herd (Chrysler and GM) succumb and leave more resources for the strong. Current industrial policy in Washington gives two of the industry’s most bloated animals a safety net. Call it survival of the fattest.
Why are we saving these companies? Notwithstanding the auto parts industry in some Rust Belt swing states, their demise does not threaten the global economy. Underfunded pensions and retiree health benefits will still be underfunded when the newly slimmed companies lack profit margins to support them. Some jobs will be saved, but tens of thousands will be cut initially, and the rest are in jeopardy if the restructuring fails and the companies eventually succumb. Why not let natural economics take its course?
Because Obama, like Iacocca before him, has a vision. Iacocca wanted to give Americans the cars they wanted before they knew they wanted them. He brought forth the space-saving “cab-forward” design and the minivan. Obama sees a world where Americans will be clamoring for, or at least tolerant of, the Green Machines that he thinks most of us should be driving in a few years. But somehow, he does not seem convinced that we will get them unless he puts a car company or two on the government payroll to give them to us.
“People want economy and they will pay any price to get it,” Lee Iacocca once said. Barack Obama seems to believe it. With him in the driver’s seat, prepare to pay up.