Green Room

You’re killing me, Mitt

posted at 12:47 pm on May 9, 2012 by

As with so many Romney-related flaps, the one surrounding his observation that he could take credit for President Obama’s restructuring of General Motors and Chrysler has been confused and out of focus.  Well, maybe not out of focus, but focused narrowly, and with all the superficiality that can be mustered in 24 short hours, on Romney’s unconscionable triumphalism at Obama’s expense.

The temptation is strong to just let this one go.  But it’s actually a perfect example of where Romney is, um, challenged, and why my enthusiasm for him remains tepid.  The short version of my point is that the president has no business restructuring auto companies and trying to guide them through “recovery.”  He is not empowered by any part of the US Constitution to do this, and it’s a terrible, horrible, no-good, very bad idea in any case.

If I want the services of someone who’s good at reorganizing auto companies, I’ll invest money in a private business.  That’s not what we elect a president for.  The president of the United States, our highest elected public official, needs to keep his paws off the management of private companies.  When he doesn’t, the window is flung open to cronyism, graft, bad business decisions, and distorted, uneconomic incentives.

The US auto industry keeps snuffling up to the public trough – has been doing so for 30 years now – because it is required by the government to operate under unprofitable conditions.  It is tended by the federal government as an interest of politically connected constituencies.  It has been artificially constrained and incentivized for so many years now that to say it has “recovered” is a wholly political statement, bearing no useful relation to the Big Three’s actual profit-loss or earnings picture, stock price, or any other measure of business health.

In fact, Chrysler’s much-touted “payback” of its taxpayer bailout turned out to involve a shell game in which the US Department of Energy is lending Fiat $3.5 billion so that Fiat can pay off its US Treasury loan and pump Chrysler with cash by exercising an option to buy Chrysler stock.  The Washington Times describes the transaction as follows:

So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.

That’s government management in a nutshell.  Romney can’t manage the auto industry better – not from the Oval Office.  No one can.  If he wants to run auto companies, he needs to see if Ford, GM, or Chrysler is hiring.  If he wants to guide them through bankruptcy, he can become a federal regulator or get himself appointed as a bankruptcy judge – and in either case, follow the law on the matter as written by Congress, rather than getting creative and exercising powers the Constitution doesn’t give him.

When Romney speaks of the US auto industry recovering, he is speaking in the language of big, dirigiste government, accepting at face value the short-term effect of a bailout process that has served mainly to perpetuate unprofitable but politically entrenched conditions.  It guarantees that more subsidies will be needed down the road.  The taxpayer had to be billed for getting the Chevy Volt built and maintaining the political sway of the UAW, because those are special-interest mandates that no one would pay for voluntarily.  The bailout under Obama has simply been a pretext for expanding the unprofitable conditions that make the US auto industry unable to truly “recover,” in the sense of not continuing to need bailouts.

A president who doesn’t see this is hard to get excited about.  There is no point in claiming that Romney does see it, when he never speaks as if he does.  About the auto industry bailout, what he ought to say is that it was improperly handled by Obama through executive actions that must not serve as precedents; that it hasn’t turned out to be a good deal for the taxpayer; and that due-process bankruptcy without presidential intervention would have been the right way to proceed and should have been defaulted to.

Romney’s utterances on this topic indicate that he is a big-government politician.  Not only is he not offended by the bailout, he’s not offended by the Obama administration’s dirigiste approach to restructuring GM and Chrysler.  He’s taking credit for it.

In the sense that he would not engage in Chicago-style cronyism, I think Romney would be better than Obama.  (There are a number of other ways in which Romney comes out on the long end of the personal- and professional-integrity comparison.)  But in terms of improper autonomy in the executive, and structural opportunities for cronyism, he would probably either set or confirm some very undesirable precedents while in office.  He needs an active, curmudgeonly Congress to thwart him, early and often.

The president is not the nation’s CEO-in-chief.  Regarding domestic policy, he should talk principle, not business-reorganization specifics.  I’d like to hear more from him on foreign and security policy; on domestic policy, it is far more important to be courageous about the principles of limited government than to be knowledgeable about reorganizing businesses.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

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J.E., I love your usage of the word, “snuffling!”

Can’t remember last time I’ve seen it used.

That one’s worth a whole paragraph 🙂

cane_loader on May 9, 2012 at 12:58 PM

cough, cough

anybody but obama
conservatives will have better relations with mitt (i hope)

losarkos on May 9, 2012 at 1:03 PM

The short version of my point is that the president has no business restructuring auto companies and trying to guide them through “recovery.” He is not empowered by any part of the US Constitution to do this, and it’s a terrible, horrible, no-good, very bad idea in any case.

I’m going to take a bit of issue with your premise, based upon something very specific, and argue that auto companies are a bit of a special case.

In World War II, America’s ability to churn out planes and tanks was predicated upon the ability to have manufacturing lines available that the government, providing for the common defense, could switch over from private auto production to war production. It was key that these resources existed. Remember that there were no 1943, ’44 or ’45 private vehicles made. In ’46, the auto companies restarted the lines, using the ’42 tooling.

This is a gray area, I know, and please rebut me, but in the case of the auto industry historically it has been in the national interest to keep that manufacturing capacity available.

Certainly, the face of warfare has changed from direct to remote-controlled contact (drones, missiles, etc.).

But the inherently destructive nature of free capitalism, as exemplified by Bain Capital, may serve to leave gaps in reserve manufacturing capacity, that potentially affect nation defense.

That would be my argument for giving the government more leeway in overseeing the auto industry, specifically.

That said, maybe we don’t need that sort of instant military manufacturing capacity in the 21st century. I’m conservative in this respect; “better safe than sorry.”

cane_loader on May 9, 2012 at 1:07 PM

To take my own philosophy a bit further, and undercut my own critique as regards to the auto industry, I would submit that the more dangerous national-defense reserve-capacity failure has been in allowing the wholesale dismantling of our shipbuilding yards.

After all, we do have large oceans on either side.

cane_loader on May 9, 2012 at 1:10 PM

I’m with you all the way on this, J.E. I thought it was buffoonish of Mitt to take this stance.

Well said.

Bitter Clinger on May 9, 2012 at 1:19 PM

cane_loader on May 9, 2012 at 1:07 PM

But why would the purpose you lay out require the federal executive to reorganize companies?

The auto companies’ problem was never that they hadn’t been reorganized by Obama yet. Their problems relate entirely to the environment of government regulation and mandates in which they have to operate.

They have a number of problems, but one is that they have developed product complacency over the years — something other big industries have NOT done, or have recovered from — because they have less and less discretion over their own planning and strategy. Their market and their objectives are largely defined for them by politicians, government regulators, and the unions.

Instead of reorganizing them to somehow remain “sustainable” under these constraints — a hallucinatory enterprise to begin with — what a president ought to do is rethink the role and activities of government. That’s what needs to change.

Romney is a guy who sees what needs to be done inside the constraints imposed by someone else. He’s very good at that. But that’s not what we have a president for. A president’s job is to rethink the constraints themselves when they’re producing dysfunction. I have yet to see Romney take that approach. I’m not sure he can.

J.E. Dyer on May 9, 2012 at 2:01 PM

Why the majority of Republicans think that Romney is the best candidate to confront Obama is completely beyond me. Romney continues to prove that he just doesn’t “get” freedom.

One can only conclude that most Republicans could give a damn about liberty. Hence the death struggle with conservatives and the Tea Party for the soul of the GOP.

Arms Merchant on May 9, 2012 at 5:08 PM

I’m a Detroit native currently employed by an auto company, and I agree the Constitution doesn’t have an “it’s OK for a Republican President” clause. Unconstitutional acts aren’t justified by managerial excellence.
Historically the Big three have been very profitable despite crushing taxes and regulations; this is why the UAW received such generous contracts…it was always worth it for the companies to pay.
The thing to understand about the auto industry is that it’s more cyclical than most other businesses. When times are good, car companies do better than everyone else, and when times are bad auto manufacturing does worse than most.
I don’t mean to trivialize the problem of foreign competition or suggest that the big three are captained by free market superheroes, the challenges in this industry often appear insurmountable, but the failure of GM and Chrysler was about one thing and one thing only, cash flow. All three firms employ a business model that requires being in hock up to their eyebrows.
Ford refinance a year early, the other two waited until the whole banking system was on the verge. All three companies have returned to profitability, using the exact same operational pattern and management process that were used before the bailout. No matter what anyone says, cost reduction and efficiencies are only occurring on the margins; no one has learned anything from the debacle.

halfbaked on May 9, 2012 at 7:00 PM

Huh. Why did my totally profanity free and link free comment not post?

Buy Danish on May 9, 2012 at 8:03 PM

I can’t see any reason why your post went to the pending queue, Buy Danish. We can’t manage that queue anymore, but I’ll try copying your post here (it should clear eventually anyway):

Romney is a guy who sees what needs to be done inside the constraints imposed by someone else. He’s very good at that. But that’s not what we have a president for. A president’s job is to rethink the constraints themselves when they’re producing dysfunction. I have yet to see Romney take that approach. I’m not sure he can.

J.E. Dyer on May 9, 2012 at 2:01 PM

But his history suggests otherwise. See RomneyCare. One can hate it but the fact is it broke through previous “constraints”. He introduced new methods at Bain which were revolutionary and changed management consulting. He used out-of-the box thinking to turn around the Olympics.

J.E. Dyer on May 9, 2012 at 9:38 PM

J.E. Dyer on May 9, 2012 at 9:38 PM

Just to be clear, everything after the colon is Buy Danish’s comment.

Since what I copied posted automatically, except that I removed the ellipsis at the end and just used a period, I think the issue with the comment was the ellipsis. From managing my own blog, I can tell you that spam software typically looks for posts that end with ellipses.

J.E. Dyer on May 9, 2012 at 9:41 PM

Thanks, J.E.! Jeez, I had no idea that an ellipse could be read as spam.

Buy Danish on May 10, 2012 at 8:12 AM

Any excuse to whine about Romney. Did we run out of ObaMao problems to talk about? It would be great if the geniuses who are hoping for a Romney loss would spend more time thinking about what an ObaMao second term would look and feel like. You’re “tepid?” I’ve got another word for it…which I shall keep to myself.

cicerone on May 10, 2012 at 9:10 AM

cicerone on May 10, 2012 at 9:10 AM

We appreciate your restraint. Look, I’m waiting for Romney to give a nice big foreign policy speech, so I can (I hope) endorse his views and make positive comments about them.

But it is absolutely essential to call Romney out on the important issues on which his views are as dangerous for American liberty and the survival of our constitutional freedoms as anyone else’s.

Why? Because when Republicans hold doors open to socialism, Democrats send shock troops through them. I don’t think Romney would ever use repressive power against the people, but he is demonstrably willing to use government for purposes that makes that inevitable, when someone else takes office.

Obama is the most important object lesson we have had in the inherent corruptibility of big government. One of his most destructive tools, the EPA, was created by the Republican Richard Nixon. Republicans as well as Democrats spent 70 years sowing seeds for the harvest of the Obama administration, and if we fail to call out and oppose big-government Republicanism now, we are signing our republic’s death warrant.

The long game requires building a narrative about what conservatism and constitutional liberty really are. Romney is not an exemplar of that narrative. He is not a limited-government conservative; he is, rather, a not-Obama.

I will say it over and over again: voting for Romney does not mean voting for his record or the government-heavy solutions he believes in. Those are not conservative ideas. Those are not a good future for America. No one should buy into them, and many who vote for Romney do not. They’ll be voting for Romney because another 4 years of Obama are unthinkable.

Keep this in mind: you can’t, in any case, endorse Romney’s big-government positions and defeat Obama. There is no point in endorsing bad big-government ideas from Romney, because those positions don’t attract voters to a Republican. Voters who prefer big government vote for Democrats anyway, who always make big government sound a lot more fun.

Criticizing Romney’s views where it’s appropriate isn’t going to turn voters away from him. People who are still undecided as to whether we should have 4 more years of Obama aren’t the ones listening to arguments about liberty and conservatism. They’re low-information voters who don’t think much about any of it. They’ll make their decision based on whatever their last strong impression is — and it will be more about Obama than about his challenger.

J.E. Dyer on May 10, 2012 at 11:40 AM

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