Perhaps, in that alternative universe, Alternative Barack Obama lost the 2008 election to Alternative John McCain. Or, maybe, Alternative Obama simply chickened out of forceful intervention to rescue two-thirds of the Alternative Detroit Three.
Whatever the reason for the inaction, we can all be glad we’re not living in Alternative Michigan. In that universe, the Renaissance Center in the Alternative Detroit, the GM Tech Center in Alternative Warren, and Chrysler’s headquarters in Alternative Auburn Hills are vacant and a lot of factories have gone idle. Alternative Michigan also is bound to have unemployment that rivals or exceeds levels seen during the Great Depression. It also is, no doubt, a powder keg for social unrest as mass joblessness and despair take their toll on the social fabric of the entire state.
Yep. Alternative Michigan has to be a pretty awful place to be right now. They’re livin’ in Mad Max times. So it’s perplexing that all the major Republican presidential candidates are on record as saying the auto rescue was a mistake. What they’re really saying is that the dystopian situation of Alternative Michigan is exactly what ourMichigan should be facing right now.
OK, at this point, some of you will begin to challenge my premise. Maybe the Chinese would have swooped in with enough capital to save them. Perhaps GM and Chrysler could have emerged from a regular bankruptcy as lean, mean import-fighting machines. And even if GM and Chrysler had failed, wouldn’t that have opened up peachy-keen opportunities to re-think our economy and re-deploy our workforce in new ways?
Sure. And maybe C-SPAN will start getting better TV ratings than “The X Factor.”
People who make a living taking a close look at the auto industry and its economic impact think the collapse of the Detroit Three (for a lot of reasons GM and Chrysler probably would have dragged Ford down with them) would have generated anything but a rosy scenario for Michigan and the nation.
Back in 2008, when the auto rescue was being debated, the Center for Automotive Research (which, despite being based in Ann Arbor is no commie outfit) predicted incredibly dire consequences from a “major contraction” of the Michigan-based automakers. Among them:
- The rapid loss of 2.5 million to 3 million jobs in the U.S. – many of them permanently.
- The collapse of the domestic auto suppliers, which could have disrupted production for every company making cars in the U.S. – including the foreign companies.
- Increased prices for imported parts and supplies that would have been needed to substitute for the loss of domestically sourced items.
Mark Zandi, chief economist at Moody’s Economy.com, said in December 2008 that, for every one lost job in auto assembly lines, another nine jobs would have been lost “at auto suppliers, auto dealers, steel and metal suppliers, plastic and rubber companies, health care providers, trucking and freight operators, and others.”
Keep in mind that all this would have happened at a time when the economy was already losing hundreds of thousands of jobs every month and demand for goods and services was shrinking rapidly. The chances that all those autoworkers would have found gainful employment elsewhere – or could all have launched Subway franchises or eBay businesses to replace their lost incomes – would have been slim.
So, while saving jobs in the auto industry was costly (optimistic estimates put the ultimate cost of the auto rescue $14 billion), it’s not like the collapse of the domestic auto industry would have been cost-free. Most of the auto refugees would have been thrown into the nation’s stretched-thin state unemployment compensation systems. Applications for Food Stamps – already shockingly high – would have soared into low-Earth orbit. Depending on how one does the math, it’s plausible that the taxpayers got off cheap.
Given all of that, I sure am glad to be living in this universe –the one in which GM and Chrysler are profitable and actually hiring people – instead of in Alternative Michigan. And I am very glad that President Obama was making the decisions back in early 2009.
