Those Auto Companies Again

David Leonhardt regularly contributes economic articles to the New York Times in his column called ‘Economic Scene’. Today’s is very useful because it continues the discussion over the proposed bailout of the ‘Big Three’ auto makers. Here it is: Economic Scene – Figure Skews Debate of a Bailout for Detroit – NYTimes.com

Apart from the fact that he dissects the wage numbers carefully for us, I bring it to your attention for his last paragraph. He ends the article with the insight that had we as a nation wanted to ‘save’ these particular auto makers we would have bought their cars.

And this is the central point to bear in mind. As I have said before: the plight of the ‘Big Three’ is not solely a result of the economic crisis. In fact the crisis is simply drawing attention to a much more intractable problem. An ever shrinking number of people want to buy the cars GM, Ford, and Chrysler make.

Were it simply a matter of cutting costs then a bailout might help. it could by breathing room for the companies to cut wages etc. But the issue is deep rooted and therefore unlikely to be resolved by any amount of taxpayer money. The American car buying public has voted with its feet. They just don’t like the products the ‘Big Three’ produce.

And that is a very long term problem.