U.S. sputtering without industrial policy

By Warren Brown

We have neither an industrial nor an energy policy. Is it any wonder our economy is a mess?

The United States, a onetime nation of broad-shouldered cities where goods were made and sold, is becoming the moral equivalent of the hollow corporation. It rapidly is turning into a place where little is designed, developed or manufactured — except profits and losses gained and suffered from gambling on Wall Street.

That is one reality.

Another is that America, a onetime First World nation, is becoming a Third World country, one that has no manufacturing infrastructure but, instead, does the lowest-wage bidding of foreign-owned companies that have received hundreds of millions of dollars in tax incentives and other financial breaks to set up shop in “business-friendly” states.

“Business-friendly,” in this context, often translates to “nonunion” — states such as Alabama, Georgia, Kentucky, Mississippi, South Carolina, North Carolina, Tennessee and Virginia — states that might as well hang signs warning: “Union Organizers and Union Members Not Welcome Here.”

It is no accident that almost every major foreign automobile company — BMW, Honda, Hyundai, Nissan, Mercedes-Benz, Toyota and Volkswagen — put assembly plants or other facilities in one or several of those states, often with the eager assistance of state officials blessing the arrival of the foreign companies with tax breaks and other goodies.

The foreign-owned enterprises often have been praised by their supporters in state and local governments and in media outlets as generating the right kinds of jobs — employment that lifts formerly jobless and minimum-wage people from poverty without giving them the average $56,650 a year in wages or the expensive medical and pension benefits enjoyed by United Auto Workers-represented production workers at General Motors, Ford or Chrysler.

It seems a “good wage” is one that does not encourage serfs to start thinking of themselves as masters of their fate.

It is ironic.

Middle class

It was GM, Ford and Chrysler in conjunction with the UAW that helped to create a viable middle class in America, especially in the nation’s African American and other minority communities. It was GM, Ford and Chrysler that helped America win World War II and fight the Korean and Vietnam wars by producing many of the weapons and much of the equipment used by the United States in those conflicts.

But here we are today engaged in a debate over whether we should bother “bailing out” Detroit, whether we should allow the Big Three to die an ignoble death in our current economic milieu of wildly fluctuating fuel prices, crippled banks, failing insurance companies and frozen credit markets.

After all, the thinking goes: we don’t need the Big Three as long as we have BMW and Toyota. Well, here’s hoping that we continue to live in peace with Germany and Japan.

Gee, the Big Three critics say, Detroit screwed up. Detroit made all of those gas-guzzling cars and trucks when Americans were demanding fuel-sippers. They ignored the directives of Congress, the Environmental Protection Agency and the National Highway Traffic Safety Administration to produce fuel-efficient, clean-burning cars and trucks.

That is a convenient lie.

The truth is that the Big Three catered the long-running, drunken ruckus that was America’s celebration of having the cheapest gasoline in the developed world. Blaming the Big Three for that revelry is akin to blaming the maids for changing the sheets in a house of ill repute. It’s worse than hypocritical.

BMW came to that party with gas-guzzling sport-utility vehicles. So did Toyota, Nissan and Mercedes-Benz. Honda sat in the parlor with a few less-than-economical midsize SUVs, contemplating whether it should invest in a V-8 to go upstairs and have fun with the high-rollers.

Put simply: Car companies play to market. If the market demands small, fuel-efficient vehicles, as markets historically have done in Europe and Asia, that is what the companies operating in those places — including GM and Ford — make. If the market demands big vehicles and big horsepower, as the U.S. market historically has done, that is what car companies — including Toyota and Nissan — make.

Also, if consumers, drunk on cheap gasoline and assisted in that wantonness by a Congress that refuses to make them pay the real price of their profligacy, demand gas-guzzlers, that is what they will get.

All of those things being the case, it is the worst kind of hypocrisy for government officials and media pundits to now wag fingers and say that Detroit deserves death for its sins. Instead, what Detroit needs — what we all need in this country — are energy and industrial policies that make sense.

UDo we or don’t we want American ownership of vital manufacturing industries, such as automobile and steel? If we wish to maintain ownership of a manufacturing infrastructure, we’d better find a way to do it, including direct loans to the industry if necessary.

UDo we or don’t we want a national energy conservation program in which consumers bear a fair share of the responsibility for using fuel more wisely? If that is what we want, let’s pass and implement the necessary rules and regulations to bring it about.

UDo we place a value on maintaining international leadership in the development of future technologies, including alternative fuels and propulsion systems? If that is a value, let’s do something about it, including drafting the domestic car companies into a viable government-industry partnership, and end this nonproductive, go-nowhere debate over “welfare for Detroit.”