Dreams and disaster happening at the same time.

Dr. Antonio de Nicolas' brother has just been elected the 30th Superior General of the Society of Jesus! History is made! Click here.
New superior urges Jesuits to strengthen service to poor. Click Here
Province Express - Father Adolfo Nicol�s. Click Here

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  News Anchor's
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  My Favorite Martian
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  Looking For Love
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  Margaret and Joel

Rick Wagoner of GM, Bob Nardelli of Chrysler and Alan Mulally of Ford came to Washington, DC on their private jets with their hands out. Two days later they went home with their hands empty. Congress, it seems wants a plan that would demonstrate that the Big 3 would return to profitability if they got the $25 billion they were asking for. It seems that the legislators are a bit testy about handing out money after the Hank Paulson switcheroo of the-end-is-nigh-so-give-me-$700-billion-to-buy-toxic-assets-immediately to we-only-need-less-than-half-of-that-and-we’re-just-going-to-give-it-to-the-banks-anyway plan. One can almost imagine Rick, Bob and Al doing a Larry, Mo and Curly imitation of pulling noses and poking eyes on the limo ride back to the airport and yelling “I thought you had the profitability plan!”

It would be hysterically funny if it wasn’t so tragically sad. The US automobile companies are the poster children for what has gone wrong in our country. Mr. Wagoner, who heads the neediest of the car companies, keeps trying to tell us that GM made the cars that America wanted. Never mind that he and his colleagues spent hundreds of millions lobbing against higher CAFÉ (Corporate Average Fuel Economy) standards. Never mind the additional millions spent on television commercials showing SUV’s splashing through mud holes and enticing suburban moms and dads to think of themselves as jungle explorers as they drove the kids to the weekend soccer game . The oil companies wanted their product consumed and the auto companies were more than happy to oblige. We all participated so no one should feel like a victim here.

We can’t feel like victims but it will be hard for the automobile workers not to. They are going to loose their jobs by the tens of thousands – that will happen even if there is some strange process that results in Congress approving the loan before GM runs out of money. In addition to the problems with the product that they produce, critics point out that auto workers get paid too much, have health care that is too costly (meaning it actually covers employees when they get sick) and the pension benefits are too high. Those auto workers are just making too much money – that’s the problem.

It’s interesting that when you look at the assets on a balance sheet of any company you find things like buildings, inventories, receivables and other tangible and intangible things – but no people. People are on the other side of the ledger. They are an expense. They don’t add to the value of the company; in our accounting system, they actually subtract from it. If you can get less people to do more you are more profitable. We all believe that; we’re all ready for the auto workers to take a hit. We have the most skilled and productive workers in the world and we are ready to flush them because they are on the wrong side of the ledger. But, I digress.

Is there anything the automobile companies can do that would salvage at least part of the industry? There are actually many options. Tesla makes a plug-in car that can go 120 miles on a charge. It’s ridiculously expensive but they are targeting up-market and they have production technology. Luxemburg, France, Australia and India all have production versions of cars that run on compressed air. AFS Trinity has produced two hybrid SUV prototypes that get 150 miles per gallon right here in the US. There are many other designs out there, some are production ready; some will be soon. Is there any way to leverage this new technology into these three old ossified companies? Perhaps.

There are signals that some of the established megalithic industries in our culture are trying to get ahead of the curve. It was reported last week that the health insurance industry was making a pitch to cover everyone if the government would mandate that everyone had to buy insurance. Let’s not kid ourselves that this is out of the beneficence of these companies. Hopefully the new administration will hang on to our collective wallets with both hands when they go into those negotiations, but it does indicate that the healthcare industry sees the writing on the wall.

Would it be possible to set up a consortium funded by the government to develop these technologies and offer the Big 3 licensing options? Could we set up a controlled bankruptcy proceeding that would stabilize the process while the retooling (which is already going on) is accelerated even faster? It’s a tall order. There would still be massive layoffs but there would also be the possibility that workers could be rehired to produce the new technology in the near future. For everyone who thinks that such a plan is impossible just remember that Microsoft was started by a college dropout and Apple’s CEO only finished one semester. Astonishing things can and have been achieved during the same timeframe that we all ignored the obvious signs of a financial catastrophe. We may have become stupefied over the past several decades but it’s hard to kill the innovative spirit. It may not be probable that we can redirect the automotive industry in such a short period of time, but it is possible.

In any event, it is true that millions of people have been mobilized over the past forty years to produce a product that is less and less saleable or relevant. It’s not alright to watch them all go down in the spirit of unfettered capitalism. Conservative pundits have been opining that Obama is going to govern from the center - which is okay because the center is a long run to the left from where we are now. Government involvement, while it probably won’t change our accounting systems next year, has the potential to remind us that people are the only real value there is.