a letter to M. Gerson, and America at large

Michael Gerson understands one thing about the auto industry: Ford and GM cannot be allowed to fail. Chrysler, maybe, but Detroit's two biggest brands are too big to allow to fall. the ripple effect in the US and around the globe would almost surely send the world into a deep recession if not worse. these are global companies directly employing hundreds of thousands and indirectly employing millions.

GM and Ford would not just be loss of a US manufacturer it would result in the loss of jobs in the neighborhood of 5-1o million just based on their failure. then the ripple effect based on all those people no longer being able to make their mortgages, rent, and cutting way back on their consumer spending. as that drop ripples through the world, the result could be a new depression.

to address what the free marketers will counter, yes Toyota and Honda and VW and the rest would fill some holes, but the production shut down and immediate drop off would not start to fill back up for years or decades as those companies move in to old Ford and GM factories and retool to produce their products. and even when that happens, the new guys arent going to pick up the retirement and health care costs of all the retired UAW guys. we will as taxpayers.

propping up these giants is essential. to not save them would be dime smart and dollar stupid. look at the long run. the costs of these guys failing will have ramifications for decades.

i also want to address the why. the Big Three are suffering from a consumer and media bias that is a holdover from the 80's and early 90's. their cars are not junk and they are every day moving to make the cars that consumers want. the Malibu is one of the most fuel efficient and highest rated cars around. people point to trucks ans SUV's as the downfall of the US autos. US companies made what people bought. and people bought lots until fuel went sky high, then demand plummeted. consumer habits have changed faster than car companies can respond to.

Ford and GM both have a full line of cars, sure the smaller ones may not be as attractive as foreign rivals, but those companies have been competing in places where gas has been high for decades because of taxes and import costs. no they are not free from blame, but the American consumer also has to share the blame for buying what they do.

in the end you have to just realize what is at stake and how to fix the problem. when Chrysler was rescued from the brink the government actually made money and a similar agreement could be reached this time around. we can fork over money for an ownership stake that the companies can later buy back when they turn around. this way, if it works, the car companies win and the taxpayers are paid back. if they fail, now or later, were all fucked, so we need to try, but in a responsible way.