Opportunity

NewWork Opinion

NewWork Opinion

However, this opportunity is NOW. We cannot afford to wait because we may never be able to leverage all these opportunities at once again--economic stabilization, national security, environmental protection, manufacturing leadership. We cannot afford to wait because our economy is at stake. We cannot afford to wait because other countries will do this if we don't. There are no other options that offer the same synergies at this moment in time. This should be at the top of President Elect Obama's agenda when he takes office early next year.

Discussions about saving the auto industry are controversial. Ironically, however, considering all of the bailouts, this one has the most promise for putting our country on the path to prosperity. Why do we give financial institutions such as insurance companies hundreds of billions of dollars, but hesitate so much to save the industry that can turn our economy around? Do we really want to let the industry collapse with General Motors so close to putting the ground-breaking Chevrolet Volt on the market? Do we really want to let the industry collapse with Ford's new hybrids that may be more efficient than Toyota's? Do we really want to quit now with so much at stake?

Fortunately, a structure exists that can rebuild the auto industry and reshape our economy. The Catholic Framework For Economic Life (CFEL) was discussed as a global business model a few years ago at BNWW. This article outlined how public sector initiatives could be used in the context of the CFEL to enhance public well-being. Many individuals have embraced the CFEL, not because they are Catholics, but because it makes economic sense. The CFEL emphasizes sustainability, inclusion, and fairness for all participants and stakeholders in the economy. The 10 points comprising the CFEL, which appear bracketed in boldface below, are applied to the auto industry, but can also be applied to any other area of the economy as well.

1. [The economy exists for the person, not the person for the economy] A new national mindset needs to be created that recognizes that our economy should serve all of us, not just a select few. Currently, the U.S. economy is not working well for almost everyone, including auto workers who face mass layoffs. The new auto industry must be both fair and sustainable. It is an economic reality that GM, Ford, and Chrysler may need to trim legacy costs and current benefits to become more competitive. Thus, new mechanisms need to be implemented to meet worker needs, such as more reasonable benefit plans, universal health care coverage, etc. A new win-win relationship between employer and employee must be developed.

2. [All economic life should be shaped by moral principles. Economic choices and institutions must be judged by how they protect, or undermine the life and dignity of the human person, support the family, and serve the common good] The approach used to address auto industry problems must consider the long-term needs of all stakeholders. Both short and long-term consequences must be considered. Whether it is Chapter 11 bankruptcy, a bailout, a hybrid approach, or something else, it must work for all involved.

Perhaps Chapter 11 bankruptcy is appropriate to renegotiate unreasonable contracts if it protects the common good. If this approach is used however, it may also require some type of government protection or guarantee of existence for the manufacturers, at least for a period of time. Consumers need to know they can still buy a car from a bankrupt firm, and that it will be around in the future for parts, service, etc. Government leadership in providing such a structure is moral and protects the individual as well as the common good.

3. [A fundamental moral of measure of any economy, is how the poor and vulnerable are faring] A reengineered auto industry can work. It can even thrive. On the other hand, if we allow the industry to collapse, there will be more poverty. If we make the right choice to invest in it, not only can we save many of these jobs, but we can create new "green" jobs that add to the tax base. Expanding the economy via the CFEL will lift more people up economically and enhance the quality of life for all. Investing in the auto industry in the context of CFEL, provides an exciting opportunity for all of us not just to survive, but prosper with vehicles for the future.

4. [All people have the right to life, and to secure the basic necessities of life (e.g., food, clothing, shelter, education, health care, safe environment, economic security)] Increasingly, more and more people are having difficulty obtaining the necessities of life. This includes auto workers, so a restructured auto industry must consider the stability of these needs. The CFEL, through government leadership, does this by helping individuals become more self-sufficient. Retraining programs and educational opportunities for the jobs needed in the future, including "green" jobs will provide more economic security. While the focus of this article is on the auto industry, the CFEL model can be applied to all other areas in the economy as well.

5. [All people have the right to economic initiative, to productive work, to just wages and benefits, to decent working conditions, as well as to organize and join unions or other associations] In the auto industry, there is a lot of blame to share for the current state of affairs. Was the UAW too greedy or were the manufacturers mismanaged? Or was it a combination of both? Government intervention is needed to create a new balance that is fair and sustainable. Whether it is through existing labor unions or some other mechanism, an equitable system must exist for recovery.

In other industries, there has been a significant deterioration of income, benefits, and job security for complex reasons. Globalization and outsourcing are primary ones, and has been discussed in context of the CFEL. For our economy to function well in the future, employment stability, compensation, etc. will need to be rethought. In short, we need to redefine what a worker is and does. The CFEL establishes basic boundaries for employers, employees, government, and other stakeholders in the economy to follow.

6. [All people, to the extent they are able, have a corresponding duty to work, a responsibility to provide for the needs of their families, and an obligation to contribute to the broader society] Workers as well as corporations have new responsibilities that they must embrace. The world is more competitive and workers must "step up to the plate" with employers in more flexible win-win relationships so the company can continue to exist and employ them. Individual workers must also be held accountable through the use of new methods for measuring contributions. Family life and societal well-being can be enhanced through new systems of cooperation and reciprocity. The public sector has a critical role in providing incentives and disincentives through new polices to achieve this.

7. [In economic life, free markets have both clear advantages and limits; government has essential responsibilities and limitations; voluntary groups have irreplaceable roles, but cannot substitute for the proper working of the market and the just policies of the state] Given our current economic crisis, there is little doubt about the importance of sound public policy. If there is a silver lining in these difficult times, more individuals than ever realize "unbridled" Capitalism will not always work. Responsible public policy must return to our economy immediately, including the auto industry.

8. [Society has a moral obligation, including governmental action, where necessary, to assure opportunity, meet basic human needs, and pursue justice in economic life] Other governments understand this, including the Europeans who are also discussing rescue efforts for their own auto makers. Governments that are successful in restructuring their industries to meet the demands of this new era, are the ones that will enhance living standards for their citizens. The economic conditions and realities from this crisis will create unprecedented opportunities for those governments that are competent and fully engaged in moving forward. It will also create unprecedented dangers for those governments that remain complacent, or unwilling to engage in constructive partnerships with the private sector.

9. [Workers, owners, managers, stockholders, and consumers are moral agents in economic life. By our choices, initiative, creativity, and investment, we enhance or diminish economic opportunity, community life, and social justice] All of us must be more engaged and involved in our economy for the common good. Consumers must adopt new living patterns (like not borrowing money they cannot repay). Managers and stockholders must emphasize long-term sustainability more.

10. [The global economy has moral dimensions and human consequences. Decisions on investment, trade, aid, and development should protect human life and promote human rights, especially for those most in need wherever they might live on this globe] We have the opportunity to lead the world again with manufacturing. Nowhere is this truer than with the auto industry. A new generation of vehicles can make the world both safer (increased global security through alternative energy sources) and cleaner. A new generation of vehicles can expand the global economy and improve living standards. The U.S. has the ability and the opportunity to lead the world to the next level of global development.

Significant government intervention is necessary for retooling the auto industry. I understand the logic and concerns critics of an auto industry rescue plan have. They are justified concerns that need to be addressed. We cannot just throw money at the problem. We cannot have the same people in charge. We cannot have the same bloated costs and structural barriers that prevent the industry from moving forward. But, we also can't "throw the baby out with the bath water."

Many individuals might normally advocate a more anti-interventionist, free market approach to industry problems. Under normal conditions, many might be skeptical of government mico-managing and telling the private sector what to manufacture. Many might normally support letting the market decide what it wants to buy. But these are not normal times. The market now needs clarity, direction, and new leadership. Continuing a laissez fare, hands-off public sector approach with the auto industry is dangerous.

On the other hand, the CFEL model provides guidelines and needed structure to move the country forward. We did it before during World War II by putting the auto manufactures on a war footing to produce military equipment. New York Times columnist Thomas Friedman wrote about this in his just released book Hot, Flat, and Crowded: "Everyone had to sacrifice and everyone had to participate - from 'Rosie the Riveter' to your grandparents in their victory garden to General Motors being told by Franklin Roosevelt that it had to make tanks instead of cars" (Friedman, page 403). In many ways, Friedman's book captures elements of the CFEL by emphasizing cooperation and shared sacrifice. Friedman's book, discussed recently at BNWW, is among the best for understanding how the country can move forward on this agenda.

With respect to the auto industry, my concern now is not government intervention. My concern now is not ENOUGH government intervention. Our tax dollars should used to provide a solution for Detroit and encourage sustainability. It is necessary to provide clarity and new direction in the market. As mentioned above, this is not just a producer--consumer debate, it is a national security issue. It is also necessary to provide leadership, oversight, accountability, benchmarking tools, and other resources. Intervention is not only justified, it is required at this point in time for economic survival. Fortunately, the CFEL provides a path to follow not just for survival, but for prosperity.