Wall Street versus Main Street: Really?

Over and over, the media reports are comparing the financial industry bailout with the auto industry crisis. Union leaders and media are saying that it's an unfair bias that is belittling blue collar jobs. Is the Federal bailout policy really a smack down between Wall Street and Main Street?

1. The financial industry can survive without the manufacturing sector. Like it or not, the financial industry does not need the manufacturing sector to be a viable industry. Unfortunately, no industry, big business, small business, or consumer can live without a credit-backed monetary system. Money itself is nothing more than a great credit-backed ponzi scheme designed by the federal government (okay, that was a bit harsh, but money is an instrument of debt, where bank notes, or the digital equivalent, are exchanged for a good or service. There's a lot of work that goes into fluffing up the value of those bank notes). Without money, few industries would survive. Niall Ferguson outlines how the financial sector works really nicely in his book, The Ascent of Money: A Financial History of the World.


2. The American auto industry is an important part of the industrial age of America. Unfortunately, we're no longer an industrial economy. Our economy is changing, and it's up to business leaders to see that and encourage the development of industries to match the new global information age that we're in. When the economy shifted from agrarian to industrial in the mid-nineteenth century, the American farmer didn't die out. The agricultural industry became a smaller and smaller part of our economy. We have been going through a similar transition since the 1980's - perhaps even the 1950's, when the number of white collar workers first outnumbered blue collar workers. In the information age, more manufacturing jobs are not the answer. Like the flight of folks from the countryside to industrial centers in the 1800's, we will see a movement of workers from the manufacturing sector to service industries as the information age continues to evolve into the next economic model that is more environmentally and culturally aware. The auto industry will just become a smaller part of our economy.


3. Bankruptcy doesn't mean the end of the American auto industry. I'm not a fan of bankruptcy. Like all systems designed to protect and foster growth, many businesses and individuals abuse it to get out of their obligations. It does, however, provide an opportunity to restructure and protect the most important systems within an organization that would otherwise fail. Former industry leader Delta Airlines emerged from Chapter 11 bankruptcy in 2007 with a stronger balance sheet, revised cost structure, and lower debt. The result was a fresh start from an airline industry giant that did not keep sucking at the federal teat. In the end, Delta is still flying and my dad and his former co-workers are still receiving their pensions. Bankruptcy would force the auto industry to get creative or die.

The decline of the auto industry in American life marks the end of an important era. We cannot cling, however, to lifestyles and dreams of an era that no longer supports the realities of a changing world. The auto industry lagged behind the shifting economy during the past few decades and has lost the brand loyalty and support of an American people with more choices and an eye to a global future. China is the hottest market for all automotive brands right now. Our world is changing. It's time that the auto industry caught up, without constant taxpayer assistance.