The staggering losses recently reported by the auto companies underline anew the need for national policy to reindustrialize America. For the efforts made to prop up one company, or even the industry as a whole, plainly do not suffice.
A much broader approach -- an approach that helps winners as well as losers by both institutional and financial means -- is required. So much so that the Carter administration is on the verge of making reindustrialization a central feature of the president's drive for reelection.
The plight of the auto industry can hardly be exaggerated. All four major manufacturers are running in the red. About 280,000 auto workers have been laid off.
More than twice as many workers in related industries -- steel, rubber, glass -- are also out of work. The bite is particularly sharp because it affects a concentrated area -- the major cities of the industrial Middle West.
Recession, of course, explains some of the trouble. Autos represent the most postponable of all consumer purchases, so when times get hard, the market falls off sharply.
On top of that comes a strong preference for fuel-efficient cars initiated by the gas lines last year. The Japanese, who produce cars with excellent miles-per-gallon performance, are actually selling more autos than the sold last year. American manufacturers can sell all the small cars they can produce.
A final consideration is a long-term trend. With one vehicle on the road for every two persons in the country, the American car market is close to saturation. Autos, like steel, chemicals and rubber, are bound to be a less important component of the American economy over the next 20 years. Even American manufacturers will be shifting more and more of their production facilities abroad.
In these conditions, the $1.5 billion loan guarantee accorded Chrysler earlier this year is a spit in the ocean. It remains an open question, to put it gently, whether Chrysler can recapture enough of the market to survive.
Nor is the program for the industry as a whole, announced by President Carter when he visited Detroit on July 8, good enough. It mainly worked to cushion the effect of the auto slump on workers, dealers ad localities. It does nothing to help companies finance the rapid retooling required for the massive switch to smaller cars.
Most important of all, the program concentrates only on an industry that is bound to level off in the future -- a certain loser. It sets a precedent for giving similar help for other losers -- steel, for instance, and chemicals and shipbuilding. But it does nothing to provide the skills or capital or general conditions helpful to the industries of the future -- the winners, so to speak -- that will eventually have to provide some of the industrial jobs now connected with the manufacture of autos, steel and ships.
The manifest shortcomings of plans to help Chrylser in particular, and the auto industry as a whole, imparted urgency to discussions, long under way within the administration, of a program for revitalization of American industry across the board. A basic draft has now passed from a task force of economists through a Cabinet committee to the office of the president's chief adviser on domestic policy, Stuart Eizenstat. The program is still in the works, but the basic elements are clear.
First, the program envisages changes in taxed depreciation schedules that give all industries -- winners as well as losers -- an incentive to modernize and grow. Second, there are plans for some new institutions to make funds available for more general research and development and to firms that require special help in accumulating the capital necessary to get off the ground. Third will come a big emphasis on job-training and other educational aids designed to promote efficiency.
Finally, there is foreseen a set of government-labor-business committees. In these groups, business and labor -- as the price for government help -- will be engaged to follow policies regarding wages and prices and work rules that are consistent with national goals of holding down inflation and promoting greater economic growth.
The administration is particuarly keen on the approach because it sets up a contrast between the president as a man with a program for meeting the future and Ronald Reagan, whom the Democrats like to portray as a mere symbol of nostalgic longings.
It is symptomatic of the interest that White House speech writers are now casting about for a term of their own that can put Jimmy Carter's special brand on what some of us have been calling reindustrialization.