Unpacking Romney's Perscription

Mitt Romney is actually uniquely qualified to comment on what Detroit needs to do to save itself - his father was an auto exec who helped make American cars profitable in the 1950s. He wrote an op-ed for the NYTimes, available here. However, there are several problems with this, and I feel it's worth unpacking the whole thing:

"First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers."
Well, in Germany and Japan, the car companies don't have to provide benefits to their workers because their governments are on the ball. What Mitt is doing here is actually quite dishonest - he's saying that workers at these other companies don't have the sweet packages that American workers do, but then failing to note that workers at BMW, Honda, etc., still have those packages, but from a different source. So by not advocating for the government step in, Romney is saying that the workers should be the first to be screwed.
Maybe, in times of need, everyone involved with the compnay needs to take a hit, and this is how workers should take theirs. If so, there need to be guarantees that if the companies become profitable again, that workers won't be cut out of those gains.

"That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable."
Wait a minute - when one thing (one thing!) goes wrong with my car, if I take it to the dealer most likely it will cost me $900. Aesthetic features might cost less, but not by much (the 10-disc CD changer that's broken in my volvo would cost $450 to fix/replace). So how many features are covered by this $2,000 discrepancy between the Taurus and the Avalon? This points to two problems - first, consumers are over a barrel in terms of the markup on these things. Romney is implying that $2,000 makes a huge difference for features on a car. With a budget of $2,000, I would have to choose between replacing my CD changer and fixing my A/C. Second, if, as I suspect, $2,000 doesn't mean too many extra features (of course at the production stage it means more than at my stage, but how much more?), then that means that Toyota is simply choosing to make a better car, and Ford is simply choosing to make a worse car. The $2,000 isn't making the difference, the company's designs and attitudes are.

"Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture. The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat."
At first blush this seems like sane advice, until we remember how Mitt made his hundreds of millions - hedge fund managing. He did not seem opposed to ridiculous remuneration for himself and his investors, so we need to ask where the new-found money from these cuts are really going to wind up. He says:
"Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn."
Interesting that it took him 2/3 of the column to finally get to better R&D. To my mind, that should have been up top, probably before cutting workers' benefits. Because R&D is more than simply a question of hybrid vs. fuel cell - it dictates what cars you're making. And Detroit has been making ugly, shitty cars for years. Cadillac is finally catching up to German and Japanese cars in terms of reliability. My questions - where the hell were they 20 years ago? And why hasn't the rest of GM caught up? What about Ford? The Mustang is an awesome looking car, but you don't want to own it for more than 6 years. Why is this still a problem?

"The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk. In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check."
Right, and in bankruptcy all union contracts become null and void. Would taking care of laborers count as part of "post-bankruptcy financing" guaranteed by the federal government? Probably not if Mitt had his way.

The Electoral Consequences of War Opposition

I'm not the most qualified to make a study of this, but I'd be interested to see if anyone wants to take on this study:

What are the medium to long term consequences for congressmen and senators who oppose moves to war? There is little doubt that they face immediate consequences - witness the Democratic losses in 2002 like Saxby Chambliss and Tom Daschle. Common wisdom (not necessarily the best guide) says that it can be political suicide to oppose a large scale march to war (so Iraq, Persian Gulf, Vietnam, as opposed to Kosovo, Somalia, Grenada). But do these consequences continue over the years? John Kerry opposed the Perisan Gulf War but voted for the Iraq War - so while he didn't win the presidency he seemingly didn't pay a price (in terms of his senate seat) for opposing a succesful, popular war and supporting a disastrous, briefly popular war. Maybe he's a bad example since he's from a reliably liberal state, but what about more vulnerable congressmen?