As the saying goes, be careful what you wish for -- you just might get it. Just ask American car makers.
In December, the CEOs of General Motors and Chrysler flew, hat in hand, to Washington. They needed billions of taxpayer dollars to stay out of bankruptcy court, company executives said.
Unfortunately for all of us, they got their wish. And more than they thought they’d bargained for.
On March 30, President Obama ousted General Motor’s CEO. He also ordered Chrysler to join forces with a particular suitor (Fiat). And he vowed to stand behind your car’s warranty. Our commander-in-chief is now our car czar, too.
GM and Chrysler have no one to blame but themselves. As the Brits might say, once the automakers took “the Queen’s shilling,” they belonged to her army. They had no choice but to follow federal orders. And since taxpayers now have a multi-billion dollar stake in these companies it follows, as night follows day, that Washington could demand changes in GM’s management.
No wonder some banks are now returning federal bailout money. They’d rather risk failure than virtually guarantee it by having policymakers in Washington tell them who to hire and how much to pay.
So what might a government-owned automaker look like?
“The United States of America will lead the world in building the next generation of clean cars,” Obama announced on March 30. Yet the president’s own automotive task force wrote recently that GM’s electric car -- finally approaching the streets after years of design work and billions of dollars spent on research and development -- remains “too expensive to be commercially successful in the short-term.”
Worse, Obama’s team adds, “GM earns a large share of its profits from high-margin trucks and SUVs, which are vulnerable to a continuing shift in consumer preference to smaller vehicles.” So it seems the government will demand that GM manufacture compact cars.
But -- and this is the multi-billion dollar question -- is there really a consumer preference for smaller vehicles?