mind of mencius

A lot of the thinking I’ve done the past few days seems centred on the conflict between business and the state during a recession. Over the past few months (and especially now with the election over), businesses have lobbied government for both money and preferential treatment to see them through the credit crunch and possibility of future deflation. Most of the debate on Capitol Hill revolves around whether these bailouts are necessary for our economy’s survival or implicitly condoning the behaviour that has precipetated our current crisis.

And now US automakers arrive on the scene, hat in hand, looking for US$25bn. The arguments for and against floating “bridge loans” to Detroit are clouded by the nature of the auto industry’s place in American history. Following his creation of the Model-T, that symbol of American innovation and rugged individualism, Henry Ford would also engender US anti-intellectualism with his famous pronouncement that: “history is bunk”. And the success of that contradiction came to inform our perception of these companies, flavouring the manner in which we frame their actions. For a long time our collective narrative was tied to our cars and car-makers, and we were rewarded by the association.

Until the mid-’80s, when increasing competition from Japanese automakers merged with lower shipping costs following the oil shocks of the ’70s, GM, Chrysler and Ford were the darlings of our blue collar workforce. Well-paid, strongly organised and technically proficient, American auto workers were the upstream backbone of US industry, providing the cars that powered small and large businesses alike. Hearing words like Ford or Chevy called to mind lilting melodies, rustic scenery and Men (with a capital M) loading up their trucks.

But somewhere along the way a dissonance emerged between our perception of US car makers and the image they project of themselves. Watching commercial advertising from General Motors or Ford today invokes an odd mixture of pride and sadness. In any given offering, trucks navigating difficult terrain are presented next to the time-honoured trope of the Marlboro Man, that Wrangler-jeans-wearing, solitary figure of our American destiny manifest.

American tobacco companies realised years ago that the Marlboro Man had cancer. Not of the lungs, but of the image. Awareness of the dangers of smoking were no longer the privilege of the educated–every American experienced the negative impact of smoking firsthand in the form of medical bills or social stigma. And so the Marlboro Man rode off into the sunset, an image that could not address the new complexity of the smoker’s identity. Riding the range, could we ever imagine the Marlboro Man weighing the short-term pleasure of that cigarette against his future bills?

Our memory of the Model T and firm belief in the American ability to innovate in the face of bunk history, like our cowboy in the sunset, underwent a transformation in American minds over the last decade. An increasing sense of responsibility toward mitigating personal impact on climate change combined with rising fuel prices to incentivise re-evaluating assumptions about our lives vis-a-vis our mode of transportation. Four-cylinder engines, once the butt of jokes told by sports car owners, were no longer underpowered, they were efficient. V8 engines concurrently saw their social status slip dramatically, giving rise to a new punch line: the gas guzzler.

The attitudinal shift toward efficiency hasn’t occured overnight. But to look at 2008 automobile offerings from US carmakers, you might get that impression. Weighing the strength of that impression against the legacy of their contribution, not only to the American economy but also the American identity, is the unenviable task of US lawmakers. Either choice will likely be unpopular.

Unpopular because the stakes are high and both sides will remain incredibly vocal throughout the industry restructure, government-sponsored or otherwise. Elections in 2010 for the house and senate will be won and lost on how representatives vote in the coming weeks, an unfortunate time to face a lame duck session of congress, the short length of which precludes any possibility of engaging the issue at a length its impact, both symbolic and real, deserves.

The issue will likely never get off the debate floor, but not for lack of trying or good reason. I imagine US auto makers heading straight from Capitol Hill to Wall Street, hoping their appeals will go some small distance to loosen up credit in the short term. In that arena, analysts will (hopefully) have the time and incentive to determine whether the requested loan package represents a sound investment for both parties. And if we as a nation truly believe in the power of free trade and market economics, we agree to abide by the judgment rendered on Wall Street rather than on Capitol Hill.

For the US government, it remains a lose-lose situation. Maybe that is the role of government after all is said and done–to diffuse the overall beating individuals would otherwise bear the brunt of. Whether we choose to pay now in the form of the requested US$15bn bridge loan or later in social welfare for unemployed Detroit families is a decision process rife with pitfalls along the way.