As we debate the necessity of the automaker bailout, there's always the question of who is in the best position to assess the need for such a drastic and expensive step. Listening to everyone is a good idea, but because I'm a rational liberal I tend to give more credence to economists who have studied these issues, public policy experts, and a balanced weighing of the various industry and labor arguments. The New York Times did an interesting experiment the other day, sending reporters to talk to regular folks in Michigan, where the Big Three are based, to get their take. Many of the people interviewed were skeptical:
Ms. Davison, 34, lost her job as a graphic designer for a real estate publication when the company she worked for failed. She said General Motors, Ford and Chrysler should have made changes to their cars and work force years ago.[...]
Like some others interviewed, Ms. Davison was unsparing as well in her criticism of the United Automobile Workers. “I've watched that Ron Gettelfinger on TV,” she said of the union’s president. “He talks about the need to restructure, but they needed to look at that a long time ago.”
John Raterink, a tool and machine maker who works at a small shop in Grand Rapids that supplies parts to the auto industry, opposes a bailout even though his livelihood is tethered to the car makers. Mr. Raterink, 46, points a finger at the Big Three for a lot of economic misery. [...]
“Do I think things could get worse?” Mr. Raterink said. “Absolutely. But bear in mind that we've already been dealing with this since the last quarter of '99. If I have to pull myself up by my own bootstraps, I hope G.M. faces that same reality of pulling themselves up by their own bootstraps.” [...]
“They weren't offered any bailout,” he said of those who lost their jobs. Then, of the Big Three and the mismanagement he perceives, he added, “The wolf you let loose is at your door.”
Some of the responses made sense. Davison sees the problems of the auto industry as unrelated to her, and thinks it ought to have done a better job running its business. She's not really taking the greater economy in her state or country into account. Others quoted in the article are worried the bailout will mean higher taxes. That's not necessarily true or, I think, even likely, and reflects a rather typical misunderstanding of national fiscal policy. But Raterink's response is even more interesting. The consequence for him if there is no bailout is unemployment.
His fatalism in response to GM's consistent mismanagement doesn't surprise me, but his rationales for opposing the bailout -- CEO's are lame (yes), he's not getting any help (yet), and things have been bad for a while -- don't quite add up for me. I feel like this interview didn't go on long enough to get to the heart of his concerns. But his objections to the bailout also show that the government has not been selling the idea right: Raterink sees this is as a gift to CEOs, but so far Congress has been relatively tough about imposing sanctions on GM and also seems ready to force them to do the kind of retooling everyone (including the people in the article) thinks is necessary.
So how much credence should we give to Raterink's views? I don't agree with him; I think Jon Cohn's arguments are persuasive. No doubt conservatives will accuse me of supporting central economic planning while ignoring local views, but I'm not sure the people making the local arguments in this piece really understand what they're asking for. Which brings to mind another question that I wonder if the Times asked these various Michiganders: What do you think we should do instead? Perhaps I'm drawing the choice between the bailout and nothing in too polarizing a manner, and maybe these local sources see a third way I'm missing.
--Tim Fernholz