Our Decision Makers Must Learn About The Economics Of The Auto Industry

Congressmen and others with little economic knowledge are illogically attacking the auto makers. They talk about events that happened decades ago as if they were happening now and explain how bankruptcy will help Detroit.

One says car manufacturers shouldn't have emergency funding because they fought seatbelt legislation in the 1960s.

Another columnist wrote that it would be good for auto workers to lose their jobs because then they will find work with better companies.

An economist without auto-industry experience says bankruptcy would be good because competently run auto makers would then buy up the pieces and continue manufacturing.

In a speech at the Los Angeles auto show, Renault-Nissan CEO Carlos Ghosn made it clear there is no buying up the pieces in Renault or Nissan’s future, nor likely any other auto company’s, because money is no longer available from the credit markets.

The Detroit auto chiefs were given a homework assignment to create a business plan showing that they can survive long-term. That’s fair. GM, Ford and Chrysler still have baggage that people outside Detroit can't understand, suchas the United Auto Workers union jobs bank and a small fleet of private jets.

But Congress also needs a homework assignment. It needs to learn that Ford and GM still produce the two most popular vehicles sold in America: the Ford F-150 and Chevrolet Silverado pickup trucks.

Congress needs to review the fact that Detroit supports thousands of suppliers. Also, among their many accomplishments, GM, Ford and Chrysler have opened the way to middle-class citizenship for millions of Americans. This includes tens of millions of minorities, either through direct employment or by purchasing billions of dollars worth of products every year from minority-owned businesses.

Most of all, Congress needs to study the fact that if they the auto makers die, a huge part of this country will die with them.

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