Beware the Auto-Crat
We’re not getting a car czar. We’re getting a new version of the Decider.
There's a scene in Fiddler on the Roof where somebody comes up to a rabbi and asks whether there's a proper blessing for the czar. The rabbi, no fan of the czar's ever-watchful eye and ruthless oppression, responds that there is indeed a blessing. "May God bless and keep the czar ... far away from us."
Car company CEOs must feel awfully Jewish right now.
Nobody knows exactly what the final auto bailout legislation will look like, but we do know it will probably include a "car czar." Democrats say the omniscient and omnipresent position is a must; without it, taxpayers won't have the kind of oversight necessary to make sure a full-scale failure doesn't happen again. Since the CEOs bungled their businesses so badly, they figure the government can whisper friendly advice into Detroit's ear that will turn the industry around. But it's not the entire government that will be whispering the advice—it's just one man. And that one man has a nearly impossible job, so impossible that he may suffocate the car industry.
In the bill, the czar goes by his professional title, "president's designee." The word designee is mentioned at least 70 times in the Democrats' draft bill. According to a circulated draft, he must have "appropriate expertise in such areas as economic stabilization, financial aid to commerce and industry, financial restructuring, energy efficiency, and environmental protection." So, to summarize, he needs to be a mix of Ben Bernanke, Henry Paulson, Jack Welch, Arnold Schwarzenegger, and Al Gore. Oh, and if he knew something about the car industry, that would be helpful, too. If the search committee needs them, I've got a needle and a haystack it can borrow.
And it gets better. A rundown of his responsibilities, according to the Democrats' draft:
- decide how much money each company gets from the government, using the automakers' requests as a guide
- decide which companies deserve the money first, based on the proximity of their death knell, the potential impact on the economy, and their restructuring plan
- decide if they're acting in "good faith," if the car companies can't get restructuring plans in by March 31 and, if their faith is good, give them an extra 30 days to finish the plans
- decide whether to provide "long-term financial assistance" to help make their restructuring plans a reality
- decide what constitutes adequate progress toward their restructuring goals
- decide how to punish the car companies if they aren't making adequate progress
- decide whether the original, seven-year loans need to be extended; if so, determine the extended repayment plan
- decide whether to approve or veto "any asset sale, investment, contract, commitment, or other transaction" worth more than $25 million (this means the czar has the ultimate say on any major business move)
- decide whether to take equity (invest) in the car companies using taxpayer money-if so, decide how much equity to take
- decide what qualifies as exorbitant executive compensation, and don't allow it
- decide whether he needs additional powers. If so, submit a report to Congress asking for them.
There are, quite obviously, a host of concerns here, but two are bigger than the rest. First, there's the possibility of self-censorship. If the car companies know that the czar is looking over their shoulder, they're likely to make only moves they think can get approved. That isn't a free market, nor does it allow the companies to evolve into the kind of companies they want to be. Instead, they become the kind of companies the car czar wants them to be. It'll be a reprisal of the third-grade playground: All the kids have their eye on the bully, hoping that they don't do anything to wake the dragon. In the process, their behavior starts to be anchored to their understanding of the bully's expectations. Natural personalities aren't allowed to flourish.
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