07 April 2009

Should we bail the bastards out?

Initially, I supported the bailout of the auto companies. The idea of GM and Chrysler crashing and tens of thousands of workers losing their jobs was too much to contemplate. Then I watched the documentary "Who Killed the Electric Car?" and I changed my mind. The documentary, a remarkable tale of corporate chicanery, details how General Motors trashed their own car. They hadn't wanted to make an electric car because the big money in the auto industry is in service and electric cars require very little service. However, California was threatening stringent emission standards which GM, supported not surprisingly by the Bush Administration, was fighting in court, and they needed a plan B in case they lost. The electric car was Plan B. As it happened, they won. They then proceeded to call in all the electric cars they had leased and crush them. That, of course, is why they leased the cars rather than sell them. The lessees loved their cars and vigorously protested their destruction, but to no avail. GM, the Bush Administration and the oil companies won; California, the drivers of the electric cars, and the environment lost. The "free" market got hustled as it frequently does. And now GM wants a handout, a reward so to speak, for its malfeasance.

So should we help them out of their self-imposed misery? It's not as if people are going to stop driving cars. The automobile market will still be there although possibly for different types of vehicles. Workers would suffer, but then GM's manufacturing work force in Canada is predicted to fall to 6,000 from 22,000 a decade ago anyway. A collapse of GM and Chrysler may simply make room for other companies to step in and start making cars for the 21st century. They will probably be foreign, of course. Japan, South Korea and China are all well ahead of North American companies in producing green cars. China's BYD is building a car so appealing to investors that Warren Buffet's MidAmerica Energy Holdings has bought ten per cent of the company and will help distribute its cars in the U.S. China intends to make electric cars its forte. The answer to job loss may be to encourage companies like BYD to set up shop in North America, as Honda and Toyota have done. We might have to pay out a lot of unemployment insurance in the meantime, but will it be more than the $3-billion we are offering to bail out GM and Chrysler? And would it not be worth it if the result was a much greener automobile industry?

Foreign car-makers have honed the art of making a profit from small, efficient cars while the North American giants intend to continue to rely on bigger vehicles, crisis or no crisis. GM has shown no interest in building electric cars in Canada and I doubt very much the environmentally-challenged Harper government will pressure them to do it. So maybe it's time to let market evolution take its course. Let the dinosaurs die out, or at least restructure themselves into viable enterprises, while we welcome the new species of auto-makers that are better adapted to their environment.


  1. In answer to your title question: Emphatically, NO.

  2. No matter which way it goes, Bill, it's a damned shame. Ronald Reagan introduced North Americans to a genuinely toxic form of hubris that we've been playing into for the best part of 30-years. Suddenly we're finding out that Reagan was lying - we can't defy gravity after all.