If a camel is a horse designed by committee, I can’t imagine what a car designed by a committee of politicians will look like.
by Congressman Mac Thornberry (TX-13)

The talk from Main Street coffee shops to the halls of Congress is now dominated by how to “save” or bailout various industries in the American economy.  Unfortunately, too much of this conversation is driven by a political need to do “something” regardless of whether that “something” will actually get the economy growing again.

We could be on the edge of a very dangerous precipice.  Some of the proposals for the domestic automobile industry involve a virtual government takeover of those companies and the appointment of a government “car czar” to go with the $14 to $34 billion of taxpayer dollars.  We are hearing politicians telling the shareholders of General Motors and other domestic automobile manufacturers who should or should not run their companies and what kind of cars they should build.

Three months ago, the government took unprecedented action to prevent the collapse of the financial services sector of our economy and to stabilize the credit markets.  It is hard to judge whether that effort has been successful because we can never know what would have happened to banks and businesses all around the country had action not been taken.  But it was clear that the entire economy – every industry and sector – depended on access to credit.  Shielding specific industries and specific companies from dealing with their problems is a different thing.

Last week, a toy company and a large media company declared bankruptcy.  Why should they not receive taxpayer money too?

With automobiles, Ford has said they do not need or want an immediate loan, as is being proposed for GM and Chrysler.  Millions of Americans are building cars for other companies and have not asked anything of the government.

No one has argued that $14 billion or $34 billion is all that is needed to get the domestic companies on the path to success.  The idea that if we extract enough money from the American taxpayer, we can override market forces and basic laws of supply and demand is just wrong.

As always, a little perspective is helpful.  A December 7 report on National Public Radio discussed the Ellis Brooks Auto Center in San Francisco.  The late Mr. Brooks began his business in the 1930s and his widow, children, and grandchildren still operate the company.  Between 1935 and today Brooks was a REO dealer, a Studebaker dealer, a Kaiser-Frazier dealer, a Hudson dealer, and on April 14th, 1955, he became a Chevrolet dealer.  The Brooks dealership plans to terminate its relationship with Chevrolet this month, ending a 53-year new car dealer relationship with GM.

In the 70-plus years the Brooks family has been in the car business, REO, Studebaker, Hudson, and Kaiser-Frazier have all come and gone.  While economists and automobile enthusiasts will debate why each of these companies failed, the bottom line is that both the American economy and the Ellis Brooks Auto Center survived the rise and fall of those brands.

Ultimately, the marketplace for the material and labor which go into a vehicle and the marketplace to sell vehicles will decide whether any particular company and its shareholders and workers will succeed or fail.  And that is the heart of the problem; car companies survive and prosper by building and selling cars.  After all the lobbying is done and after all the bailout money is spent, there is no guarantee that they will build a car we want to buy at a price we are willing to pay; only the market can do that.

So what should be done?  The normal course for large companies in trouble is to submit to a “pre-packaged bankruptcy proceeding.”  The company can continue to operate, but there would be an opportunity to revise the high labor contracts which prevent these companies from being competitive.  There would also be an opportunity to bring in new management and restructure the companies.

In addition, the federal government should do all it can to encourage economic growth and job creation so that people in all industries can benefit.  But that does not mean that the government should run those industries or dictate to companies what they must do.

If a camel is a horse designed by committee, I can’t imagine what a car designed by a committee of politicians will look like.  Substituting the judgment of a “car czar” or a committee composed of the heads of the six different federal departments for the choices buyers make in the market is the wrong way to create a 21st century American auto industry capable of competing in the world market.