An Inauguration of the Wrong Ideas

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By Warren Brown
Sunday, January 25, 2009

Dear President Obama:

Welcome to Washington. I offer this as the inaugural address you should have given, considering your demonstrated lack of understanding of the real problem affecting the domestic automobile industry in your pre-inaugural interview with the editorial staff of The Washington Post.

My fellow citizens: I am not the Messiah. Neither is Lawrence H. Summers, my top economic aide. Nor are there any messianic types in the working group assembled by Mr. Summers to evaluate the state of the U.S. automobile industry.

We've assigned Mr. Summers and his group this task in anticipation of Detroit's automobile executives returning to Washington, preferably in the cars and trucks they build, to ask for an extension of the $17.4 billion in low-interest government loans made to them last year to help them stay in business.

Before I say more, I'd like to point out that neither I nor Mr. Summers nor, to my knowledge, any member of his working group has ever designed, developed, engineered, manufactured or marketed a car or truck, or run a car company or an automobile dealership. But that's okay. This is Washington. Here, we have a long tradition of gathering experts of dubious competence and questionable experience to oversee expenditures of vast sums of taxpayer dollars.

Consider our investments in Iraq and Afghanistan. We studied the situation in those places. We learned the particulars, the nuances of the cultures. We gave those foreign governments substantially more money than we will ever lend American car companies. Look at what we got in return -- two of the most sustainable, viable democracies in the greater Middle East.

So we have some idea of what we're getting into in dealing with Detroit. The place is a mess. We know what's needed to straighten it out.

The first problem, as we see it, is that Detroit isn't making the kinds of cars Americans want.

General Motors, Ford and Chrysler collectively hold 48 percent of the new-car market in the United States -- that's 48 percent of the world's most open, most competitive vehicle market. But what's 48 percent of nothing? Nobody wants those Detroit cars and trucks. We're going to change that or force the Detroit companies to file for bankruptcy.

Detroit makes too many sport-utility vehicles and pickup trucks. The Americans are laggards in fuel economy. They should follow the examples of Toyota and Nissan, both of which are losing sales and cutting production in the current global recession.

Look at Toyota. Why can't we have a company that produces great little fuel-sippers like the gas-electric hybrid Prius? Never mind that cheap gasoline has undermined sales of that model enough to force Toyota to indefinitely delay construction of a Prius plant near Tupelo, Miss. Never mind that, again because of cheap American gasoline and high American demand for SUVs, Toyota originally planned the plant to roll out more SUVs -- a plan abandoned when U.S. gasoline prices soared past $4 a gallon for regular unleaded last summer.

And please let us ignore that pickup trucks and SUVs were as profitable for Toyota as they were for GM and Ford and that Toyota used those truck profits to fund its green-motoring image with the clever little Prius. Detroit should be more like Toyota.


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