-Peter Pan
I'm not sure who wished for the car czar first, but I'm willing to bet they won't get their heart's desire. I'm not expert in these things, but it just strikes me as a bad idea.
I'm going to sound Republican here, but stick with me. One of the follies of government is that it thinks it can fix everything itself, and two of Washington's favorite fix-it remedies are the commission and the czar. One buys time, and the other shifts accountability. Both tend to waste time and money.
The latest fix for the car industry is that we hand them a $14 billion check (the term officially morphed from bailout to bridge loan) that will come with a nanny to help the car companies make better decisions. No one can argue that automakers have some serious decision-making challenges...after all, these are the guys who make cars so crappy that they didn't even want to drive them to Washington. Only when they thought $25 billion...oops, I meant $34 billion, was at stake did they buckle up for the road trip. I'm not mad at them. It'd take about that much to get me to drive one, too.
So these guys who stunk at making decisions and drove their companies into the ditch, now beg us for a bailout, I mean bridge loan. We can't just hand them the money. We need some checks and balances. We need.... A CZAR. Here are four problems with the czar idea:
1) No business in government: Government doesn't think or operate like the private sector. Like it or not, the engine of business is capitalism. Companies are driven by competition and profits. We measure success by money and stock value. That's it folks. There is no other real report card for business as a whole. Government doesn't think that way. They are egalitarian. They are looking out for the greater good. To make everything right for the taxpayer. To establish justice. To ensure domestic tranquility. To provide for the common defense. To raise their poll numbers. Chrysler has a different agenda; they want to kill GM. They don't want the same opportunity as their competitor. They want a better one. That's the nature of business, and government doesn't get that. That brings me to my second reason.
2) The friend of my enemy: This one czar will open up the books of both companies to decide who needs and gets help...or how they should negotiate deals..or restructure loans?? That ought to make them both shudder. Companies guard their inner workings like Fort Knox because a leak in their strategic direction or technologies can set them back years in market share and profitability. Now you'll have the same guy/office poring through your books as well as your competitors. Can you ever trust that process, no matter how much they say it's safe? Did the mob ever trust the witness protection program? I know the government is there to help but please... That brings me to the third reason.
3) Money where your mouth is: The czar has no real stake in the outcome. Other than being able to add "successful car czar" to his or her resume, there will be no lasting impact like his job lost or her stock value plummeting. If the whole experiment fails, the czar will write a book and go nurse his or her credibility back to health in a think tank. People who were at his mercy will languish with the results. If you want to call the shots, you need some skin in the game. That brings me to my last reason.
4) It's not who you know, it's what you know: Will this person be required to have auto industry experience? What metrics will we use to determine Mr. or Ms. Czar's success? Do you really want the same guy who picked Mike "Brownie" Brown to run FEMA choosing someone to navigate Detroit through its storm? Would you be more inclined to buy a car from a Detroit company because a Washington suit was calling the shots? I think we all know the answer to that one.
Now you're thinking...we just can't hand money to auto execs with no accountability, can we? No we shouldn't, but accountability doesn't require us to micromanage the process. When a bank loans you money for a car, they don't send someone to the car lot with you to make sure you don't by a Buick with high mileage, but when the transmission falls out, you're on your own.
A guy named Arnold Berk spent $15,000 of his own money to place an ad with his proposal for "A Contract between Main Street and Wall Street." He has a couple provisions that tie very real accountability and consequences to any government help. Here's my favorite:
The CEO and top 25 officers must pledge their personal real estate as collateral for this loan. This includes property held jointly with spouse. Their principal residence as well as any other real estate they may own as an individual or with spouse.
No need to hire a czar when a guy's house is at stake. Now that's not just accountability, that's motivation. Go ahead and fly to Washington while we measure for drapes. You think that would get their attention?
But... we wish for a czar to build our cars. As one analyst commented, "that only delays the funeral."
If your heart is in your dreams
No request is too extreme
When you wish upon a czar
As dreamers do
-Peter Pan
