Should GM Fail?

All this talk about bailing out the American auto makers really rubs me the wrong way. Did they happen to show up on Congress' door because handouts (with conditions or not?) are being made? Has anyone bothered to look at why American auto makers are in the condition they are? Doing so just might prevent them from getting even one cent of taxpayer money.

Let me share with you a story from when I was a kid that has biased me to Japanese cars to this day. When I was around 12 years old, my parents bought a Datsun 810 Maxima (now the Nissan Maxima). The car was essentially a four door sedan with the Datsun 280Z engine. Quiet, powerful, and would tell you with a voice your door was open. I recall the price was around $11-$12K. One night the car was parked outside and we had guests who pulled up in their red 2-door "K-Car" and parked beside the Maxima. I began to compare them (seeds of an analyst) and looked at style and how the doors closed--which is what really got me. The Maxima doors closed with ease and even seemed to seal the passenger compartment. The K-Car was like a tin can--literally. Then I found out the cars were about the same price--I couldn't believe it!

From that point forward I could not help but notice the stark differences in quality between American cars and Japanese cars. Very soon after that the Honda Accord became the top selling car in America. Toyota, Datsun/Nissan, and Mazda weren't that far behind. The Ford Taurus was in the mix at some point, and may still be at times. Why in the world could America not produce higher quality cars? Why would they not make changes? I've got one word for you: unions.

For a time in America, unions served an important purpose for ensuring America's work force was not abused and taken care of. With such leverage with companies, these organizations realized the power they gained by being the collective advocate of the workers to the employers. Over time, two things occurred: union power got corrupted and employers learned to take care of their own. American automakers have been at the mercy of the unions--to a point to where their coffers are almost dry from making up the difference of losing money on every car sold. Non-unionized auto production plants, like the one in Smyrna, Tennessee is not unionized and votes away the United Auto Workers every year. Why? Because Nissan apparently takes care of its people, and still manages to turn a profit.

Nissan was not always turning a profit. In the 1990s, Nissan was running in the red and close to shutting down. I doubt going to any government to ask for a bailout ever crossed their minds. What did they do? They got some consulting help, retooled their strategy and their image. Sales increased, and now Nissan sits as one of the more innovative automakers in the United States. Since 1995, I've had at least one Nissan in my garage (at times two) because they are well made, highly reliable, and fun to drive (I love that Maxima V6!). I don't know how I will ever lose that American car stigma, even though I know quality is much better than when I was a kid.

So, should America's automakers get bailed out? Not my call. But I would tell the automakers to retool their strategy, implement innovation more aggressively, and tell the unions the United States would make the best cars in the world without question if they weren't around.

We'll be OK

I've hesitated blogging today because of gloating readers who would tell me I'm just bitter about the election results. While I am disappointed, I'm realistic and do want to engage on what to expect in the near term, and possibly far term.

The election is over and we know who our next President will be. While everyone is recognizing this as historical because we have elected our first African American President, I'm seeing it as historical because we have elected an incredibly liberal man that we still don't know a lot about. That's not an original thought; I was hearing this on more than one network.

While we are hearing, "Real change has come", what does that really mean? And what does this "Yes we can" phrase mean? Based on past performance, I can only assume the yes we can was about "yes we can control the Presidency and both houses of Congress", and that being the case now is inevitably going to create some real change ... and all change is not necessarily good. We'll change to what we've seen before in our history for a time (more left leaning), not change to something we've never seen before. While I could be surprised, let's consider the past performance of the Democrats ...

Look at how the Democrats have behaved when out of power and in power. Specifically looking at 2006 when the Democrats gained power back in the House, Speaker Pelosi was talking like she was divinely sent to bring bipartisanship to the House. That didn't happen, just look at the House's approval ratings over the past two years (just when they couldn't get any lower ...). After observing Tom Daschle and Harry Reid, I'm convinced there's a disease called DMLD--Democratic Majority Leader Disease--where the Senate leader of the Democrats loses a significant amount of rationality as shown in making points against their opposition (just really had my morale upped with, "This war is lost"--good one!). Then with the financial crisis, all this blame on the Republicans--but I deduce it was either both parties or total blame on the Democrats. If the Republicans were at fault, we'd have a line of them at the door of the Senate for the Democrats to "investigate." But no investigations have taken place ... hmm.

The Democrats control it all right now, and to them congratulations are in order. I don't expect them to reach across the aisle at all. They don't have to--they are the ones in power. Will they try to shove some far left legislation down our throats? Probably--but not many ... A third of the electorate is moderate, and they will only tolerate so much.

We can expect more than one Supreme Court Justice to take advantage of retirement while we have a Democratic President--that way their ideologies don't leave the bench. I have a lot of concern for that--especially for the Boy Scouts of America. They escaped mandatory accepting of homosexual leaders by a single vote; if the issue is revisited with a more liberal bench, I would expect the Boy Scouts to close shop--because it's about moral principles, not tolerance. Can you imagine that? Lord Baden Powell, the founder of the BSA, told that his organization was being disbanded because the government was making them violate their own moral principles by allowing homosexuals to lead boys and set the example? That's sure not fair to boys who want to develop into men, and frankly selfish of people with those immoral tendencies. We could expect the government to then create their own version of the Boy Scouts, but when has government done anything really well, except for Defense?

In the end, I think we'll be OK. We endured four years of Jimmy Carter to get to Ronald Reagan. I can wait.