Hypocrisy and the Big Three bailout

Detroit’s my hometown. I was born in the city, spent the first ten years of my life within the city limits, at least until my parents moved to the suburbs. Given that, I’ve been watching events unfold with regard to the impending bankruptcy of GM and Chrysler (and, less likely but still possible, Ford) with increasing dismay. The economic devastation that would be visited upon Detroit were even one, much less all three, of the Big Three to fall would be beyond imagining. On the one hand, my disgust at the mismanagement at the top that wants to see the heads of the Big Three executives on a platter (metaphorically speaking, of course) leads me to say: Just let them go under. Ditto my general support for free market capitalism. On the other hand, the “creative destruction” of capitalism is still destruction, and in this case the destruction would be horrific to Detroit and devastating to the nation as a whole. Consequently, political philosophy clashes with practicality. This clash is made harder to take given that apparently the U.S. has already decided that giving hundreds of billions of dollars to the financial industry is fine and dandy, but lawmakers balk and go all pious and pontificating on us when the automakers ask for a fraction of that amount.

Don’t get me wrong, the performance of the Big Three executives last week was embarrassing. They didn’t seem remotely capable of explaining in a coherent fashion what they would do with the money if Congress loaned it to them, and they couldn’t even give lawmakers a good estimate of how much money they’re spending a month or why they think they need the amount they’re asking for. Worse, they are about as tone deaf as can be. After all, they should have been savvy enough to know that appearances matter. They weren’t. They gave Representative Brad Sherman a huge opening to take his grandstanding just one step too far to the point of burning stupidity when he asked the executives if they’d sell their jets and fly coach back home. (If he had stopped before that point, his performance would have been a tour de force of political grandstanding; caught up with admiring himself for just how awesome he thinks he is, he just took it one step too far and descended into demagoguery.) I can understand the anger, although it’s rather amazing that only a fraction of such anger was directed at the banking executives, who were given far more cash to save their asses with at the cost of far less flak.

Mitch Albom actually sums up the situation very well. Key gems:

Which makes me wonder why you’re so against our kind of business? The kind we do in Detroit. The kind that gets your fingernails dirty. The kind where people use hammers and drills, not keystrokes. The kind where you get paid for making something, not moving money around a board and skimming a percentage.

You’ve already given hundreds of billions to banking and finance companies — and hardly demanded anything. Yet you balk at the very idea of giving $25 billion to the Detroit Three. Heck, you shoveled that exact amount to Citigroup — $25 billion — just weeks ago, and that place is about to crumble anyhow.

Does the word “hypocrisy” ring a bell?

Indeed it does, especially from some of the most unctuously sanctimonious of our legislators:

Sen. Shelby. Yes. You. From Alabama. You’ve been awfully vocal. You called the Detroit Three’s leaders “failures.” You said loans to them would be “wasted money.” You said they should go bankrupt and “let the market work.”

Why weren’t you equally vocal when your state handed out hundreds of millions in tax breaks to Mercedes-Benz, Hyundai, Honda and others to open plants there? Why not “let the market work”? Or is it better for Alabama if the Detroit Three fold so that the foreign companies — in your state — can produce more?

Way to think of the nation first, senator.

I suspect there is more than a little of that at work in Congress among the opponents of the bailout package, as well as more than a little hatred of the UAW. No doubt opponents of the bailout are hoping that big auto unions would be destroyed once and for all if GM were forced to declare bankruptcy. But, as badly as the Big Three executives performed last week, what bugged me more was the dripping, smug, self-righteous, self-satisfied sanctimony coming from legislators:

Besides, let’s be honest. When it comes to blowing budgets, being grossly inefficient and wallowing in debt, who’s better than Congress?

So who are you to lecture anyone on how to run a business?

Ask fair questions. Demand accountability. But knock it off with the holier than thou crap, OK? You got us into this mess with greed, a bad Fed policy and too little regulation. Don’t kick our tires to make yourselves look better.

Which is exactly what a lot of legislators are doing.

I still haven’t decided on the bailout. The thought of the government supporting a failing company still rubs me the wrong way, but in this fiscal climate staring into the abyss I wonder if helping the Big Three out is not the lesser of two evils. I can also sympathize with the argument that states that it would be bad for our national security to allow so much of our industrial manufacturing infrastructure to fall apart. Certainly, if one or more of the Big Three fail, we’ll be looking at a new Depression in Detroit and a much worse recession nationwide. But, more than anything, it still galls me that these same legislators who handed over dumptrucks full of money to save the hides of the the greedy bankers and investors who are responsible for the financial mess we find ourselves in, all the while having facilitated it over the last couple of decades with policies that made such a catastrophe more likely, are now pious and oh-so-superior as they hold the feet of the auto industry to the fire and make the Big Three executives abase themselves before Congress before considering giving them even a tiny fraction of the largesse bestowed upon the financial industry.

As always, hypocrisy, thy name is Congress.