Cafe de Mello

I suspect that by the end of the week congress will again have achieved gridlock on the question of whether to bail out the big three US automakers—effectively denying their request for assistance. They will of the minority who, for a variety of reasons, are against the bailout will block the will of the majority, who favor it, and congress will again richly deserve its 19% approval rating.

Some of this gridlock might have been avoided if the question at the start had not been "should we bail out the US automotive industry?" but "Under what conditions can we effectively bail out the US automotive industry?"

The "should we?" question leads immediately to partisan, philosophical differences. Asking the "Under what conditions can we?" question leads to problem solving, and those who refuse to participate in that discussion would show themselves to be rank partisans.

The answer to the "Under what conditions can we?" question should be a precursor to, and determine whether there is any debate on the "Should we?" question. Obviously, if there is no way that we can effectively bail out the industry then we should not try.

There are numerous examples of attempted automotive bailouts in other countries. Most have been unsuccessful. Seemingly, the sole exception was the French bailout of Renault in the 1980s. Under new management, Renault focused on cutting costs and producing new car models that were ultimately successful.

The French model may or may not be applicable to our current crisis. One factor that does not bode well for our success is the spreading of the credit crunch to automotive parts suppliers. It would do little good to put the industry back in readiness to produce cars, but find the automakers unable to get the parts they need. We should be looking at all parts of the equation before making a decision.

Leadership that assures that the right question is asked first could come from either congress or the administration, and answers to the "Under what conditions can we effectively bail out the US automotive industry?" question could also come from both sources. However, until we have an answer that points to a successful process for supporting the automotive industry, no bailout should be attempted.

I will go even further, the fundamental question of "Under what conditions can we effectively influence any other sector of the economy (the banking industry, the credit crisis, the mortgage crisis, etc.)?" needs a more definitive answer before any more of the bailout funds are distributed. Without that determined, we cannot insure that the conditions placed on those companies receiving the money are likely to produce any good effect. Even if the answer is latter shown to be wrong, at least we would have been following a reasonable plan, rather than just shoveling money at the problem and hoping as we seem to be doing now.