The auto industry generates jobs in mining and manufacture of copper and steel, as well as making of plastics and computer chips. It also generates jobs trucking cars to dealerships, creating and buying advertising and the like. The result: Each lost auto industry job takes down nine additional jobs. By contrast, Cole said, a lost financial services job will take down only two additional jobs.
Had the auto industry collapsed in 2008, nearly 3 million jobs would have been lost. Personal income — the paychecks with which we pay for our lives — would have been reduced by $151 billion. Over three years, Americans would have lost $400 billion in pay while the country would have lost $156 billion in taxes and revenues, according to a key 2008 Center report, of which Cole was lead author.
So, had he reconsidered his findings since then?
No, he shot back. By taking out a few key suppliers, last year’s earthquake and tsunami nearly shut down Japan’s auto industry. To understand the 2008 crisis, just exponentially magnify that impact.
“Most people think each auto manufacturer has its own unique set of suppliers, and so the failure of one manufacturer would have virtually no impact on the others. But in reality, many suppliers work for the entire industry,” he said. A GM shut down would have rippled onto Chrysler and Ford through their mutual suppliers. The ripple effect would have taken months, or perhaps years, but it would have been devastating. “GM would have taken down the entire auto industry,” he pronounced.
True, Romney did not advocate an outright auto industry suicide. Rather, he advocated that GM and Chrysler go through a “managed bankruptcy,” rescued with tens of billions of private sector dollars.
This might have worked, if the banking system were not crashing, with credit markets frozen. But the credit markets were frozen, making such massive borrowing impossible. Republican laissez-faire economic theory, as implemented by President George W. Bush, crashed into the iceberg of reality – with totally predictable results. Only the feds had the resources necessary to save the industry and to circumvent a national Great Depression.
Not only would the American auto industry – including Ford, which did not participate in the federal bail outs - have gone down; our loss would have rippled into Canada and Mexico, whose manufacturing plants also depend on American suppliers. Domestic plants operated by foreign manufacturers would also have severely cut back or failed. As the post-2008 economy picked up, we would have been left importing cars from Germany and Japan, having lost a crucial economic pillar, he said.
Nor is Cole alone in saying this. "A bipartisan group of auto industry executives, government officials and financial experts have said that if General Motors and Chrysler had followed (Romney’s) advice at the time and gone into bankruptcy, implosion (of the auto industry) is exactly what would have happened,” reported the New York Times.“(It) would have caused far more severe job losses and even liquidation.”
Even Mike Jackson, a Romney supporter and chief executive of AutoNation, the country’s largest auto industry retailer, called Romney’s position, “A circle that can’t be squared.”
Roger Farmer, chairman of the Economics Dept. at UCLA and author of How the Economy Works; Confidence Crashers and Self-Fulfilling Prophecies also concurs with Cole's assessment. “Jobs are relationships which take a long time to build up,” he told me in a phone interview. “When we break those relationships by destroying a factory, they do not come back overnight. In the worst case scenario, which we were facing in 2008, we would lose an entire industry.”
True, he said, “If the country no longer has a competitive advantage, it would be better to let that particular sector go over the long term, and develop something we are better at – bio med or high tech, for instance. One industry grows at the cost of another in a natural process.”
But 2008 was not a long term trend. It was a sudden meltdown, born of policies as reckless as those of the Titanic’s captain blindly speeding through icebergs. Held hostage were his passengers – here, the American economy.
And so, we hit the iceberg. But rather than figuring out how to best save lives and lower the lifeboats, Romney wanted to argue about the ship’s structure, and how losing more lives (jobs) would lead to better ship building in a theoretical future. If the cold, black water were coming to get you, would that be your primary concern?
Understandably, Romney is disinclined to revisit this – nor will Michigan governor Rick Snyder, who endorsed Romney while circumventing his “Let Detroit Go Bankrupt” thesis. Instead, Romney is relying on Tevyia’s “Rich Man” argument. “Trust me,” his narrative begins as he dismantles the middle class lifestyle. "I'm rich."
The problem is, few Republicans – and none running for President – will stand up to this. So, Tuesday’s vote will center on which candidate can best satisfy the Republican fringe while the rest of us will have to wait until November to point out the obvious. The truth is that there are many ways to become rich, not all of which enhance the public good.
Bernie Madoff, for one, was also a very rich man, and few will argue that America was better off because of him. The question voters might ask, then, is not how rich a man is, but how he made his money, and how his policies would help – or hinder – the everyman from making his own. So far, Romney’s answers, like those of his increasingly shrill rivals, have been far from convincing.By Joseph Hanania, Aslan Media Columnist