Big 3’s new add campaign

Posted by Marc Hodak on December 14, 2008 under Unintended consequences | Read the First Comment

Here are five reasons I believe a bailout will accelerate the decline of the American auto makers:

Congress will run the auto companies: Everyone will report to a car czar. Who do you think the car czar will report to? Anyone following the travails of the Big 3 know that their problem was not a deficit of politicized decision making. It’s almost inconceivable how bad it will get with Barney Frank moving from back seat driver to one of several hands on the steering wheel.

Why would I buy a car from a loser: Even if Congress keeps its paws off of car maker operations, most car buyers will note that only the American auto manufacturers are on the dole. They will figure that Toyota, Honda, Kia, etc. must be better car companies since they haven’t been whining, threatening, or cajoling for handouts. Why would someone buy a car from a bad company? The government stamp of “welfare queens” on GM, Chrysler, and the UAW can’t help their image.

I gave at the office: It is well-documented that as government taxes and spending increase for certain welfare programs, private giving to those programs drops. Every time people look at a GM, they will think, “They already have my money.” Some might succumb to the sunk cost fallacy, but I think it’s more likely that people will question why they should send voluntary dollars after their mandatory payments.

Management pisses me off: Many people were turned off by the spectacle of CEOs flying in their private jets to petition Congress. They were then turned off by the cynical pandering of those executives driving to Washington in non-production hybrid vehicles. Wagoner, Nardelli, and Mullaly are not the most sympathetic characters. The Big 3 would have probably invested huge ad dollars in not putting their faces all over the media for two solid months. But they apparently would not have spent $15 billion to avoid it.

The UAW pisses me off: Gettelfinger is only marginally more sympathetic, but his union has spent a lot of their goodwill in this campaign, too. Sure, many people still think of the union as “for the worker,” but a lot of data has poured forth highlighting the gold-plated lunch-boxes these workers carry. The average Joe, worried about keeping his job so that he can support his parents on Medicare, has heard the UAW arguing to keep much higher salaries and benefits for their laid off workers, who by the way are entitled to superior medical care. Even union members, most of whom don’t belong to the cushy UAW, poll against the bailout.

HT: Commenter on Coyote’s blog