If I were a candidate for public office, I would not turn to Mitt Romney for advice. If I were building a million-dollar country mansion, I would not make Romney my interior decorator. If I needed jokes for a standup act, Romney would not be my writer. But if I lived in a nation threatened by a automobile industry collapse, Romney would be at the top of the list of experts whose advice I heeded. The reason: Everything in his life has prepared him for this task.
To understand Romney, one must understand that his entire professional career has been an homage to his father, a successful automobile executive who helped turn around Detroit during another period of financial peril. Romney learned, quite literally, at his father’s knee, and then spent his adult life replicating, and outdoing, his father’s success in the business world. Romney’s record as a corporate financier is one of a disciplined, sometimes ruthless, and determined son. Romney became rich because he had a smarter business mind and a fiercer work ethic than the other guys. (Too bad for him, hard work and smarts are just two of the many requirements for a candidate for president.)
In today’s New York Times, Romney writes an op-ed called “Let Detroit Go Bankrupt.” He proposes firing the management of the big three, rejecting the short-term bailout now on the table, and forcing the American automakers to deal with their substantial pension and labor disadvantages, when compared with foreign automakers. His thesis:
If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed. Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.
[D]on’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost. The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.
There is, of course, a great irony to this sort of op-ed. It was Romney, after all, who won the Michigan primary by attacking John McCain for telling voters that some manufacturing jobs “are not coming back.” Romney the Politician always seemed to be pandering to one group or another. It was hard to believe him after a while. But Romney the Businessman is another thing altogether. The same thing that made him a lousy candidate–an obsession with seeing everything as a Harvard Business School case study–makes him the kind of person you want to listen to in a corporate financial crisis.
*The headline is a joke. I am not in the business of making personnel recommendations to Barack Obama. Though I can’t help thinking about what a stir Obama would make if he did something like that.
UPDATE: Another argument in favor of bankruptcy can be found here, by the Times’ Andrew Ross Sorkin.
ANOTHER: Commenter Pourmecoffee notes properly that it is unfair to just blame unions for the mess. Corporate management must own it too. (They can begin by contemplating the wisdom of their private jets.) Also Matt Yglesias has some good historical perspective on the Big 3 union dilemma. And the argument that management matters is further proved by TIME’s report from Bill Saporito on the relative health of Ford to General Motors, despite similar union arrangements.