How the US Lost the Second World War

Here’s a short unbalanced history of Chrysler: Founded in 1925 (out of the detritus of Maxwell-Chalmers). Buys a stake in Mitsubishi in the 1970s and responds to the threat of Japanese imports by selling re-badged Japanese imports. Is purchased by the German automotive titan Daimler-Benz in 1998; burped back up in 2007. Effectively taken over by Italy’s Fiat in 2009.

So. . . remind me again, because I’m easily confused these days: Who won World War II?

I don’t ask this out of xenophobic pique. It’s just. . . interesting.

The typical explanation for the post-War industrial success of Germany and Japan is that the war destroyed aging and outdated industrial infrastructure and required companies to start over from scratch. Devastation wrought desperation as well; producing high quality, efficient products was taken to be a matter of personal survival as much as national pride.

The US, meanwhile, brimming with national pride and Victor’s Hubris (cousin of the guy who wrote Le Miz), was spared domestic war damage, chased efficiency experts like W. Edwards Deming out of the country (to Japan, BTW, where he was paid rapt attention) and continued to make cars in Model T barns into the 1970s.

There is ongoing jousting about what killed Chrysler and GM and, to a somewhat lesser degree, lamed Ford: piggy executives, regulatory meddling, the Great Recession, insurmountable “legacy” costs, fat cat unions. My vote goes to “stubborn inefficiency,” on a variety of fronts, with “naïve indifference” a close second. European and Japanese auto makers have had a variety of goads to efficiency for decades: from the basic space constraints in “Little Europe” and “Island Japan” to war-ravaged infrastructure to consistently high fuel taxes over a period of many years now.

The Adam Smith purists (who seem to have done a pretty spotty and shoddy job of reading the works of their deity) fulminate about the corrosive effects of industrial policy; that’s silly: Germany, Japan, and South Korea have, for the most part, pursued effective industrial policies; for the past few decades, we have pursued short-sighted, crony-crippled industrial policies.

And the howls of protest from the likes of GM have evolved (one might better say “pirouetted”) more to the tune of momentary convenience than to long term coherence: for most of the 20th Century GM was at the vanguard of fighting off the Stalinist Specter of National Healthcare (The Canadians are coming! The Canadians are coming!); more recently, they’ve stripped their gears shifting into reverse, and started lamenting the competitive disadvantage of being saddled with a workforce with business-supported healthcare and pensions.

It’s a blow to the pride of any (Honda-driving) American, to watch one of our flagship industries finally realize the seriousness of its wounds and fall over. Sadly, I do think that “what’s good for GM is good for America.” And that’s downsizing.

But “good” doesn’t necessarily mean easy. . .

This Old Roof: Obstacles Retrofitting

The home energy audit guy never even got to open his magic bag of compact fluorescent light bulbs; the only incandescent we have left is a bathroom heat lamp. And I was able to show *him* a thing or two about LED lighting; the four bulb array over my desk: 160 watts incandescent, 60 watts using compact fluorescents, but only 6 watts of LEDs.

We’ve got an Energy Star clothes washer, fridge, and dishwasher, too.

What he had to offer—what the feds, the state, and my gas company are willing to chip in toward—those things I can’t do.

We could use more attic insulation, for example, and the utility would pick up 75% of the first $2000—which would be most of the cost. But. . .

As a matter of code compliance, they can’t insulate unless the roof has vents, which mine does not and cutting holes in this old roof—due for replacement when we bought the house, almost twenty years ago—would be a BAD idea.

We don’t just need a new layer either—that’s been done and done and done—we need to strip everything off, right down to the older asbestos-laden shingles that would be a hazardous waste disposal issue. A $12,000 job, if we’re lucky, and I’m not aware of programs under which gummint at any level is paying me for that. Same obstacle to installing a solar water heater—the $8000 cost brought down to a tempting $3000 out of pocket, when you add back all the rebates and credits.

The house was built in 1914; the boiler is original equipment. Started out burning coal, was converted to oil, then converted to gas. We could get a good deal on replacing our cast iron snow man. But. . .

That would mean tenting part of the basement, stripping (what else?) asbestos off the boiler and the connecting pipes, then smashing the thing to pieces to get it out of the house.

Unless someone puts cold water in it when it’s hot, and cracks it, moreover, that boiler’s going to outlive me. A newer, somewhat more efficient unit? My plumber gives it, maybe, ten years.

Never mind the US, I’d like my *family* to be energy independent. I’ve won the light bulb game; I’ve got most of the right appliances.

For the bigger items, it’s not the cost of technology that’s holding me back; it’s the cost—and the limitations—of owning a 95 year old house.

The average US house is about 34 years old; just over a quarter of our housing stock is more than fifty years old. If we are really going to push down home energy usage, we’re going to have to more comprehensively address the problems associated with retrofitting.

Automotive Bailouts: The Neverending Story

With GM now having elbowed its way to the front of the queue, The Detroit Three—with barely a burp or a thank you for the $25 billion they were just given to cajole them in the direction of cars efficient enough to perhaps help them survive—are back at the government nipple.

GM claims, with some credibility, that it has only months to live if it doesn’t get another cash infusion and fast. The combination of pathos and avarice is fascinating. I’m reminded of that sweet little plant in Little Shop of Horrors—the one that needed human blood (oh just a LITTLE more) to survive.

I don’t think many civilians, myself included, know what the bankruptcy of one or more of the Detroit Three would look like (I’m seeing more and more publications adopt this over Big Three, for obvious reasons).

Speculation ranges from a hardnosed: not much; Toyota would buy the viable factories and the number of vehicles sold, and auto workers employed, in the US would remain more or less the same.

To. . . apocalyptic: The. World. Will. End.

I don’t have any philosophical problem with government intervention. Within reason, and under the right circumstances, I don’t have any problem with government loans or subsidies. I have a great deal of sympathy for the plight of the line workers, both those directly employed by the industry and in the ancillary industries that domestic auto manufacturing supports. All of that said, it isn’t clear to me who, if anyone, would be meaningfully helped by another bailout or series of bailouts.

It has been alleged that almost a third of health care spending in the US every year goes to the last thirty days of life. Granted we don’t have little readouts on our foreheads that tick down those last thirty days; one could go through fifteen days of expensive and intensive intervention and then live another twenty years in decent condition; a good percentage of the time, however, that money and those efforts end up being thrown at people who clearly have no meaningful chance of recovery, and no meaningful chance of a decent quality of life if they do recover.

Similarly. . . Well going back more than thirty years now, the American automobile industry reminds me of those cancer patients still smoking by holding the cigarettes to the holes in their throats. Doesn’t make sense to give them money for cigarettes; not clear that having them on oxygen is good for them or for anyone within the blast zone either.

David Halberstam pointed out one evocative example more than twenty years ago, in “The Reckoning: How Japan Beat the United States in the Auto Industry War and Rewrote the Rules of International Business Competition.”

The short version is: In 1958 Ford invented E-Coat painting technology (give paint a positive charge; give auto body parts a negative charge; you get full coverage in every nook and cranny and substantially increased rust resistance). This quickly became the industry standard, foreign and domestic. Ford, however, took until 1975 to get the technology into *half* of their factories; it wasn’t until 1984—more than 25 years later!—that they finally upgraded every one of their plants.

Can American industry innovate? Yes. Are they willing to invest in the future at the expense of this quarter’s profits? Detroit hasn’t been much inclined in that direction for quite some time now.

Airlines mostly keep flying through bankruptcy; retail chains also, for the most part, remain in business as they work through Chapter 11; not clear why the same would not be true of the Shrinking Three.

I oppose capital punishment and can’t therefore in good conscience advocate for executing a large swath of the American Automotive Nomenklatura (although we might consider this a form of euthanasia). If the federal government is to step in (which seems all but inevitable): 1. Executives should have their epaulettes torn from their shoulders, their ill-gotten gains stripped from their Swiss bank accounts, and be shown the door—Lead Parachutes for Everyone! 2. Everything possible should be done to safeguard the pension and medical benefits of retirees. 3. The government should have its loans secured by the companies’ assets. 4. There should be ironclad fuel economy standards imposed on the industry.

President-Elect Obama says he wants to rejuvenate the American Economy by getting us off imported oil and facilitating the growth of a sustainable transportation and industrial infrastructure. Well, Green Power to him! He’s likely to be involved in an automotive bailout even before he takes office. If he does what he’s said he wants to do, I’ll be very happy.