When Congress does finally vote to bail out Chrysler, as I fully expect it will, I hope some tenacious lawmakers have the nerve to add a few social codicils to the contract.
One that has already occurred to several senators is the opportunity to require broadened ownership of that troubled corporation. It should agree to distribute stock ownership to the workers and their communities, the people who live or die on the private decisions made by Chrysler's management.
A second would be to put genuine public representation on Chrysler's board of directors. We will already have Douglas Fraser there, speaking for the membership of the United Auto Workers. I nominate Ralph Nader as a "public scold" to speak for the rest of us.
But, personally, I would settle for a much more modest concession from Chrysler. Somewhere along the line, Congress should extract a promise from Lee Iacocca, the chief executive and estimable salesman. A promise to stop whining. If Washington will pony up the $1.5 billion in credit to keep Chrysler afloat, Iacocca will promise to stop whining about Washington.
Get it in writing.
I am singling out Iacocca -- and he deserves it -- because he, more than any other executive in Detroit, has imaginatively identified himself with the anti-Washington campaign that the auto industry has waged for more than a decade. He is a powerful speaker and, surrounded by superb flackery, Iacocca revels in the role of beleaguered entrepreneur -- trying to make cars and a few bucks while those terrible regulators and politicians impose frivolous restraints upon his manhood. Poor baby.
It is a testament to the power of propaganda that the conventional wisdom is now disposed to see Chrysler as this sickly little kid getting bullied by Washington and the two big boys, Ford and General Motors. Chrysler, let us remember, is the 10th largest industrial corporation in America. Its sales last year were $16.3 billion, larger than those of ITT, Arco, U.S. Steel, DuPont, Procter & Gamble and the other 490 corporations on the Fortune 500. Poor little Chrysler.
Granted, if Chrysler was badly managed, that happened before Iacocca's watch. He was chief executive of Ford before Henry fired him. But what I am talking about is not "good" or "bad" management in the Harvard Business School terms of trade, but a much deeper struggle over social values and the automobile. If Washington bails out Chrysler, the least we can demand is a formal statement of surrender on this score from Iscocca and his brethren, an acknowledgement that they gambled and lost on the most fundamental question -- what kind of automobile America wants and needs.
To appreciate the full sweep of this struggle, one should recall that the social critique of the American automobile really began in the early 1960s, when smaller foreign cars first invaded and appealed to a limited market of American buyers. Daniel Patrick Moynihan and Ralph Nader, among others, brilliantly described the antisocial qualities -- the highway deaths from unsafe vehicles, the air pollution, the wasteful use of resources in gargantuan size and frivolous features.
Detroit's response was to ignore the indictment. The auto industry rather cleverly resisted what it now calls "down-sizing," mainly because the basic economics of auto-making are simple: The greatest rate of return is on larger cars, more profit dollars per investment dollars.
Anyway, Detroit could say with market-tested accuracy that most Americans wouldn't buy smaller cars, that "safety features" wouldn't sell cars because they violated the cowboy-macho-aviator fantasies of buyers, that air pollution was an ephemeral concern of a small elite -- the same people who bought those funny little foreign cars.
In the long run, Detroit didn't realize that politicians do their own version of market-testing and, sometimes, congressman and senators see new public values emerging before big business does. Detroit was slow and essentially wrong about its own market, about the rising price of oil, about the political market for regulation. The congressional politicians who imposed the new social values on the auto industry were, on the whole, right.
If you doubt this, spend an evening concentrating on the TV ads for automobiles and ask what qualities are now being marketed -- safety over speed, economy over waste, engineering efficiency over symbolic ostentation.
The three majors resisted as long as they could -- not because they are dumb or evil or peculiarly antisocial, but because it was clearly in their economic interest to market larger cars as long as they could.So they fought a series of intense political battles in Washington to postpone and dilute the new regulatory commandments.In the short run, Detroit won most of those battles -- stalling the moment of truth when they would have to redesign the American automobile, insisting that it really couldn't be done. The technology simply didn't exist, blah-blah-blah. Iacocca was the lead tenor in a decade of whining.
As president of Ford, he produced a public-relations gem -- a specially built, 5,000-pound Maverick weighted down with all of the regulatory gimcracks that Washington was supposedly demanding. This horse won't trot, he said. Get off our backs or you will destroy this beloved creature, the free-spirited automobile.
Iacocca played cute. Several years ago, when GM began to shrink the size of all its models, including even Cadillacs, Ford took the opposite direction -- blatantly promising Americans in its advertising that Ford was still selling those great, big, oversized cars of yore. Meanwhile, Iacocca kept coming to Washington, demanding legislative relief from the new social imperatives.
In any case, the supposed technological barries were fundamentally phony. The changeover does require a redeployment of huge sums of capital, but GM, Ford and Chrysler have always known how to manufacture attractive small cars -- they were already making them and selling them in foreign markets. What we are now witnessing, after years of resistance, is the unifying of these two separate auto markets, American and overseas.
General Motors, notwithstanding its reputation as the 800-pound gorilla, is demonstrating more skill and foresight in this transition than its smaller competitors. GM has created a new generation of "future cars" that are widely acknowledged as the best anywhere, better even than the European and Japanese counterparts. The so-called "X-cars" represent a great leap forward for GM (once it gets to the far side of the recession) and have spawned a new industry cliche: General Motors will be the Toyota of the Eighties.
I hope that is correct, for it means that, while political Washington is stewing over the Chrysler mess, the United States has a new and largely uncelebrated asset for the coming decade of international trade competition.
In the mid-1970s, GM made a fundamental decision that meant investing development capital in the future auto, instead of elaborating on the obsolete past.
GM's president, Elliot (Pete) Estes, is different from Iacocca. He is an engineer, not a salesman, someone who came up through the ranks and still talks with the kind of gruff directness which no amount of flackery can conceal. I remember interviewing him once about five years ago on these issues and he was dutifully ticking off the industry complaints against Washington, the standard Detroit line on how impossible it was. Finally, with a burst of natural irritation, Estes brushed away all of the propaganda arguments.
"Shoot," he said, "we can build any kind of car the American people want to buy."
I like that spirit. It appears that GM has proved Estes was right, and I hope it prospers as a result.Americans do want a different kind of automobile and, certainly, they need one.
Even Iacocca concedes this now.Perhaps Iacocca will also have the grace to admit now that, in this long-running argument over cars, Washington was right and Detroit was wrong.