American Motors?

It has been pointed out to me that I was a little hard yesterday on Ralph Waldo Emerson, charter member of the Transcendental Generation, and I accept the point.  Anyway, it isn't necessary to be invidious in defense of Henry David Thoreau.  His work stands all on its own. It's just that I think Thoreau, as a seminal thinker, stands in the company of such social philosophers as Karl Marx and Sigmund Freud.  I think of Emerson in the tradition of Michel de Montaigne and George Santayana, great writers and thinkers whose specific contribution to understanding the human story is a little harder to pin down. On the other hand, and long before the effects of the Industrial Revolution were fully realized, Thoreau saw the severe limitations of proletariat life.  I think this is why his work still resonates in modern times: he took Emerson's essay on "Self Reliance" to heart and wrote things which seemed outlandishly iconoclastic, in some respects, but which history has nevertheless vindicated.  We remember the prophets who were not honored in their own times precisely because of their courage.

And in that spirit: when this Big Three Bailout story first began unfolding, it occurred to me that lending money to the automakers made no sense whatsoever, especially in the amounts demanded. On the other hand, it is also counterproductive to allow all of those factories, skilled labor, parts manufacturers and distribution networks to disappear.  America needs manufacturing a lot more than it needs another investment bank full of fast-talking swindlers trading credit default swaps.  It's just that the fast-talking swindlers on Wall Street happen to be represented, in the person of Henry Paulson, by a fast-talking swindler emeritus "supervised" by a careless and feckless President who can't stand the sight of billionaires suffering for their greed and stupidity.

Plus, Americans need jobs and transportation.  So the thought that occurred to me was to nationalize the car companies, lock, stock & barrel.  I see where Michael Moore has arrived at the same conclusion.  It's actually a no-brainer, and since there are practically no brains on Capitol Hill, it's almost a perfect fit.  The financial math is pretty simple.  The Big 3 now want $34 billion to stay in business.  That will be money down a rat hole; no old school bank lending officer would give them the money.  The total market capitalization for General Motors (value of its outstanding shares), according to Yahoo Financial, is about $3 billion.  Its value as an enterprise (presumably, sale as a going concern) is about $33 billion.  So for the same amount of money contemplated as a bridge-loan-to-nowhere, the United States could simply buy General Motors outright.  If Congress actually perceives value in GM as a going concern, it makes more sense to acquire it than to finance it.

I think this approach might be an early test of the reality behind the "change we can believe in" slogan of the Obama Administration.  The safe play, of course, is to do what Congress and the Executive always do and simply give away money to popular causes.  When the Big 3 nevertheless go bankrupt, as they will inevitably go under current management, Congress (with "looking good" as its operating credo), can then blame the "shortsightedness" and failure to adapt of the auto execs.  Congress doesn't really care about results, after all; the key consideration is whether their failures are not so bad as to prevent reelection.  The Democrats have done a good job lately of painting the Republicans as the lousier of the two lousy parties, and that is their stunning "achievement."  The Democrats remain, however, a very lousy political party, and overall they are just as responsible for the godawful economic and environmental mess the United States has gotten itself into.

One can cite, of course, previous experiments in the Soviet bloc with state ownership of auto companies, such as the laughable Lada and East German Trabant, cars so crummy they inspired a kind of kitschy affection.  The Trabant was apparently made out of pressed sawdust, or something, and had an engine like a lawn mower.  Extreme examples.  But the plant and skilled labor of the Big 3 are far superior to these dubious precedents, and furthermore, the United States doesn't really need a new generation of internal combustion autos.  We need to switch to a more varied mix of electric automobiles for short haul driving (the preponderance of American motoring), and rolling stock and engines for passenger rail.  The Israelis, right now, are aggressively pursuing a national strategy of electric cars in cooperation with an international consortium, and they intend to use an infrastructure of renewable electricity for recharging. These things can be done, although there are risks involved, and inevitable false starts, posing problems for a member of the House of Representatives who reflexively thinks only in terms of two-year time periods. Congress prefers to pursue paths which guarantee failure but appear to be prudent and doctrinaire, such as our sacred commitment to free enterprise.  Then, while running for reelection, a Rep or Senator can always blame those darn auto execs for their "failure of vision."

It will be interesting to see whether Barack, when he has the chance, follows the road less traveled.  It will be an early test of his own belief in himself, in his own Self Reliance.