The LA Times (of all places) today reports that:
President Obama's plan to save failing U.S. automakers -- and make them the instruments for creating a cleaner, greener transportation system -- marked a major step across the line that traditionally separates government from private industry.
His announcement Monday of a new position on bailing out Detroit went beyond a desire to be sure tax dollars were not wasted in bailing out struggling companies. It put the Obama administration squarely in the position of adopting a so-called industrial policy, in which government officials, not business executives or the free market, decided what kinds of products a company would make and how it would chart its future. …
"When did the president become an expert in strategic corporate management?" said Rep. Tom Price (R-Ga.), chairman of the conservative Republican Study Committee. "The federal government is famous for its mismanagement, yet this administration continues to demonstrate its certainty that Washington always knows best."
Sen. Bob Corker, a Tennessee Republican, called it a "power grab" that "should send a chill through those who believe in free enterprise."
Industrial policy is bad policy. By putting managerial decisions in the hands of bureaucrats, many of whom have never run a for profit business of any sort, it invites politicization of the process. Take, for example, the way in which the Nirvana fallacy seems to be driving the Obama task force's views on preferable product lines:
Some participants in the deliberations, speaking on the condition of anonymity because of White House restrictions on allowing people to speak freely, said the task force operated from an underlying belief that consumers would ultimately be attracted to more fuel-efficient cars despite current data showing many such cars languishing on dealer lots.
"Philosophically they blame these companies for not having produced enough responsible small vehicles," said Dan Luria, research director at the Michigan Manufacturing Technology Center, a consulting firm for automaker suppliers. "But they don't deal with the fact that the companies would have been insolvent years earlier if they had done that."
(BTW, when the Bush administration forced people to speak "on the condition of anonymity because of White House restrictions on allowing people to speak freely," people howled. How long will Obama continue to get a free ride?)
This sort of thing is not surprising, considering how badly out of step the members of the task force are with the typical American consumer:
Among the eight members named Friday to the Presidential Task Force on the Auto Industry and the 10 senior policy aides who will assist them in their work, two own American models. Add the Treasury Department's special adviser to the task force and the total jumps to three. … At least two task force members don't own a car ….
Worse yet, the cars they drive are not just mostly foreign, they're also mostly old and boring:
- Larry Summers: 1995 Mazda Protégé
- Peter Orszag: 2008 Honda Odyssey and 2004 Volvo S60
- Jared Bernstein: Honda Odyssey
- Austan Goolsbee: 2004 Toyota Highlander
- Gene Sperling: 2003 Lincoln LS
Gearheads don't own minivans and they either own collectibles or buy new cars every couple of years.
The only conclusion is that these are people who know nothing about cars and care less. (Especially the enviro wonks who don't even own cars!)
Of course, the real problem is that the task force and its senior aides are comprised almost exclusively of career Washington policy wonks, with very few career businessmen in the mix. It's a recipe for trouble.
