Don't Forget American Automakers' History of Goodwill

NEW YORK --

It is easy to feel disassociated from Detroit in this city of imported products, services, celebrities and mannerisms. It is easy to laugh at the stumbling, homegrown industrial giants of the Midwest in this bastion of urbanity and sophistication that makes money the old-fashioned way -- changing it from one hand to another, often at profitable interest rates; and then running to the federal government for help when the elaborate Ponzi scheme of lending, borrowing and insuring comes crashing down.

Here is where newspaper columnists -- Thomas L. Friedman of The New York Times comes to mind -- routinely dismiss the idea of federal aid to an ailing Detroit, suggesting that the city and its automobile industry be consigned to the scrap heap of history, having failed dismally in their core mission to design and develop the kinds of cars and trucks Americans really want.

It is sophist nonsense, of course, the kind of tale spun by people who haven't bothered to check the numbers, and who have paid even less regard to the history of their supposed knowledge.

The truth, all things considered, is that Detroit has done reasonably well. The American Three -- General Motors, Ford and Chrysler -- still hold an estimated 47 percent of a home market that is wide open to competition from car companies all over the world. Until July of 2007, domestic automobile manufacturers historically held more than a 50-percent U.S.-market share. But in a country where consumers have made Wal-Mart the retail king -- that's Wal-Mart, one of America's biggest importers of foreign goods -- that was bound to change.

If you are a free-trade advocate, have no fear. This isn't a treatise in defense of protectionism. It is simply a more accurate assessment of reality, the bottom line of which is that free trade isn't free.

American consumers, in their passionate pursuit of the very best goods at the lowest possible prices, have undermined their own economic well-being. It is rather difficult to maintain high salaries and premium health and pension benefits in a business environment built on profitably moving a maximum number of high-quality products at bargain prices. Something has to give.

In the automobile industry, it was union influence and organizing. Unions failed miserably in wooing the U.S. workforces of foreign automobile manufacturers -- nearly all of which strategically have set up shop in nonunion or "pro-business" states, usually in the South and Southwest.

Those nonunion, foreign car companies have been successful because American consumers want them to be successful. Why not? If consumers can get great cars from Toyota or Honda free of the costs associated with United Auto Workers union-represented labor at General Motors, well, that is what they're going to do. They're not going to look for the union label, let alone pay more for it.

But the more American consumers make those kinds of decisions -- choosing goods and services unburdened, or less-burdened, by health-care and pension costs -- the more they reduce the protective power of UAW contracts and similar labor agreements. GM could have all of the good intentions in the world; but if Honda, aided by less-expensive labor contracts, can build a car as good as GM for less money, Honda has the clear advantage.

That is an inconvenient truth that pundits here and in similar redoubts of sophistry delight in ignoring. They'd much rather beat up Detroit for mistakes in product judgment real and imagined, as if foreign car companies have made none of the same errors. It's baloney.