The Government Motors scandal deepens

No matter how sympathetic a figure General Motors CEO Mary Barra presents (a woman leading an auto maker!!), the company has been caught deciding that it would be cheaper to let people die in accidents caused by a faulty ignition switch than to correct the problem.  Daniel Howes of the Detroit News explains the smoking gun:

“None of the solutions represents an acceptable business case.” Credit those to a still-anonymous GM engineer, who argued in an internal memo that fixes for a faulty ignition switch blamed for at least 13 deaths and more than 30 accidents could not be done cheaply enough to make it worthwhile for the GM of a decade ago.

The cult movie Fight Club famously explained the logic at work:

A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one.

David Harsanyi, writing at The Federalist, asks some embarrassing questions for the government that bailed out GM:

Before plowing billions of tax dollars into saving the United Automobile Workers, did the Car Czar or any other Obama officials take extra care to review DOT records to insure that taxpayers would not be funding the preventable deaths of American citizens? (snip)

… surely the possibility of this kind of negligence is worth a look. Can anyone with access to the administration ask some of these questions?  Because if you take credit for “saving” a company (actually, an “industry,” as no one would ever driven again if Obama hadn’t saved the day) you also get credit for “saving” the real-life unscrupulous version of the company. “I placed my bet on American workers,” Obama told union workers in 2012. “And I’d make that same bet again any day of the week. And now, three years later that bet is paying off.” Betting $80 billion of someone else’s money to prop up sympathetic labor unions isn’t exactly fraught with political risk. Unless it turns out that your administration was less concerned about the safety defects of the company you owned than the company you disliked. That would be corruption.

The “company you disliked” would be Toyota*, which has been treated far more harshly by the federal government on far less evidence:

In February 2010, the Obama Administration’s Transportation Secretary Ray LaHood told America, without a shred of evidence, that Toyota automobiles were dangerous to drive. LaHood offered the remarks in front of the House Appropriations subcommittee that was investigating reports of unintended-acceleration crashes. “My advice is, if anybody owns one of these vehicles, stop driving it,” he said, sending the company’s stock into a nosedive. (snip)

So Toyota, after recalling millions of cars and changing parts and floor mats even before LaHood’s outburst, and after years of being hounded by the administration, recently agreed to pay a steep fine for its role in the acceleration flap. This, despite the fact that in 2012, Department of Transportation engineers determined that no mechanical failure was present that would cause applying the brakes to initiate acceleration. 

This sort of disparate treatment is repulsive. It reeks of the sort of thing Americans used to rail against when allegedly practiced by Japan, France, and other countries seeking an advantage for their domestic manufacturers over American ones.

*Full disclosure: for several years I served as a consultant to Toyota Motor Sales, the largest US subsidiary of Toyota.

No matter how sympathetic a figure General Motors CEO Mary Barra presents (a woman leading an auto maker!!), the company has been caught deciding that it would be cheaper to let people die in accidents caused by a faulty ignition switch than to correct the problem.  Daniel Howes of the Detroit News explains the smoking gun:

“None of the solutions represents an acceptable business case.” Credit those to a still-anonymous GM engineer, who argued in an internal memo that fixes for a faulty ignition switch blamed for at least 13 deaths and more than 30 accidents could not be done cheaply enough to make it worthwhile for the GM of a decade ago.

The cult movie Fight Club famously explained the logic at work:

A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don't do one.

David Harsanyi, writing at The Federalist, asks some embarrassing questions for the government that bailed out GM:

Before plowing billions of tax dollars into saving the United Automobile Workers, did the Car Czar or any other Obama officials take extra care to review DOT records to insure that taxpayers would not be funding the preventable deaths of American citizens? (snip)

… surely the possibility of this kind of negligence is worth a look. Can anyone with access to the administration ask some of these questions?  Because if you take credit for “saving” a company (actually, an “industry,” as no one would ever driven again if Obama hadn’t saved the day) you also get credit for “saving” the real-life unscrupulous version of the company. “I placed my bet on American workers,” Obama told union workers in 2012. “And I’d make that same bet again any day of the week. And now, three years later that bet is paying off.” Betting $80 billion of someone else’s money to prop up sympathetic labor unions isn’t exactly fraught with political risk. Unless it turns out that your administration was less concerned about the safety defects of the company you owned than the company you disliked. That would be corruption.

The “company you disliked” would be Toyota*, which has been treated far more harshly by the federal government on far less evidence:

In February 2010, the Obama Administration’s Transportation Secretary Ray LaHood told America, without a shred of evidence, that Toyota automobiles were dangerous to drive. LaHood offered the remarks in front of the House Appropriations subcommittee that was investigating reports of unintended-acceleration crashes. “My advice is, if anybody owns one of these vehicles, stop driving it,” he said, sending the company’s stock into a nosedive. (snip)

So Toyota, after recalling millions of cars and changing parts and floor mats even before LaHood’s outburst, and after years of being hounded by the administration, recently agreed to pay a steep fine for its role in the acceleration flap. This, despite the fact that in 2012, Department of Transportation engineers determined that no mechanical failure was present that would cause applying the brakes to initiate acceleration. 

This sort of disparate treatment is repulsive. It reeks of the sort of thing Americans used to rail against when allegedly practiced by Japan, France, and other countries seeking an advantage for their domestic manufacturers over American ones.

*Full disclosure: for several years I served as a consultant to Toyota Motor Sales, the largest US subsidiary of Toyota.

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