The Big Three and the big issues

The more one looks at the issues confronting the automobile industry, the more one is struck by how many of the challenges now facing this country they reflect in microcosm — if one can call a multibillion-dollar industry that employs hundreds of thousands of Americans directly (and millions indirectly) a microcosm.

It's not only because billions of taxpayer dollars are at stake, then, that any government response to the appeals of GM, Ford and Chrysler for a bailout bears close watching — whether it comes now or after the new year. The way this drama unfolds in the days, weeks and months ahead also may tell us much about how Washington might address some of the central issues of our time.

In historic terms, the declining fortunes of the Big Three reflect the larger trend toward a U.S. economy based more on services and ideas and less on manufacturing. Behind this trend lie the tectonic forces of globalism: corporations with worldwide operations have moved manufacturing to places where labor is cheapest and where labor laws are least stringent.

Until and unless international trade agreements begin to seriously address parity among nations in these areas, U.S. automakers will continue to find themselves driving the wrong way down a one-way street. So one of the big questions facing the Big Three (and the reason why their CEOs were joined by the head of the United Auto Workers in testimony before Congress this past week) is whether they can continue to operate with labor contracts that, despite recent modifications, largely reflect a bygone era of union strength.

Will the inevitable changes to come at the Big Three eliminate the past (as reflected in retirement benefits) and present contract gains of the UAW? And if so, will this sound the effective death knell of America's privatesector unions? Or will our government seek longer-term strategies to bring international labor standards more in line with those in the U.S.? Further, will promised health-care reform relieve some of the burdens of skyrocketing health costs — particularly in care for an aging, retiring population — now placed on American corporations?

And then there is energy policy. For years, the automobile industry lobbied against tougher fuel-economy standards, and the cars it built — the SUVs and trucks it can't sell now — reflected that. But when there's talk about tying demands for better mileage to any bailout, the industry often replies that when fuel prices are low, consumers will want big gas guzzlers — and if they can't get them from Detroit, they will buy them from Japan. Even at their highs, U.S. gas prices are the cheapest in the industrialized world, and if the government really wants people to buy fuel-efficient cars, so the automakers' argument goes, it should impose a floor on the price of gasoline.

One can decide for oneself whether this argument is made in good faith or simply to call Congress' bluff. But there is logic in it, and with energy reform at the top of President-Elect Obama's agenda, watching Congress' willingness to engage this and related questions now might provide a gauge of the political courage that newly empowered Democrats will bring to the challenges of the present.

Issues relating to globalism, America's declining manufacturing base, energy policy and the future of U.S. labor — not to mention demographic shifts, the credit crunch, the environment, transportation infrastructure and educational policy — can all be found in the crisis facing the Big Three and its possible solutions. As we prepare for an administration that campaigned on promises of "change," the way Congress and the next president handle this situation provides a potential test case for just how much things might actually change in the next four years, and how much they're likely to stay the same.