January 27, 2006

A tale of two cities: Detroit and Washington

This past week’s business news has been dominated by bleak reports from Detroit’s fixers. All of America’s “big three” automakers announced deep cuts. GM posted a huge loss for 2005 - $8.6 billion. Ford announced plans to cut its workforce by almost a quarter. GM’s decline is even chronicled in the popular culture. This week’s Sundance Film Festival includes a movie critical of GM’s decision to shut down its promising and popular electric car line. Meanwhile, across the Pacific, South Korea’s Kia quarterly profits spiked by 84%, and Toyota may assume GM’s traditional position as the world’s biggest carmaker sometime this year. Obviously, people haven’t stopped buying cars,

Within the beltway, Detroit’s troubles are overshadowed by the unfolding Abramoff congressional bribery scandal. Washington’s reaction seems along the lines of a Detroit fixer’s: attack the problem, not with downsizing this time, but by upsizing the rules that limit what kinds of money can legally be given by lobbyists.

Fixes, like the ones being tossed out daily by both Republicans and Democrats, tend to inspire more creative ways to work around them. A real measure of progress would be draining the swamp: using equivalent creativity to remove the need for money by political campaigners.

Detroit, if it is to move forward, has to start building cars people need and want to buy. Easier to say than do, but it is far from impossible, though it’s unclear the road to this kind of growth will be paved with downsizings and cutbacks.

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