Maybe in all of the bluster and fluster surrounding the pleading - nay, begging - from the chief executives of America's automotive manufacturing firms the quid pro quo being proffered will seem reasonable. After all, the symbolism of discarding corporate jets and forgoing high salaries seems like a step in the right direction. But symbols are just that, and they masquerade as a panacea, obscuring the need for real organizational reform that must be undertaken to save America's automotive industry.

It would appear that Ford CEO Alan Mulally pulled the short straw for the role of Detroit's lead beggar. As Speaker Nancy Pelosi sits on her throne in this time when President Bush has no power and President-elect Obama has yet to be crowned, the rush of adrenaline must be sublime. Mulally, a man who actually does things, knows things, risks everything, comes to her Congress, begging for intercession. Her staff must have to conduct a morning wardrobe check and confiscate her tiara and ruffled collars before Madam Speaker enters the public sphere.

The kind of power-mad arrogance we have come to expect from Pelosi is trivial under ordinary circumstances. It provides a lot of wonderful material for political writers to show their comedic chops, but does not translate to having a real effect on public policy. Now, she is truly a gatekeeper and the politics of her party have shaped Ford's plan for revival in ways that will reduce the company's chances for survival.

In the interest of presenting a $9 billion loan request (the lion's share of the combined $34 billion requested by Chrysler, General Motors and Ford) that would get speedy Congressional approval, Mulally has proposed the following:

• Mulally will work for $1 per year (methinks there is fine print therein)
• Cancellation of all management bonuses for 2009
• No merit increases for North American salaried employees in 2009
• Ford will sell all five of its corporate aircraft
• Acceleration of plans for plug-in electric and gas-electric vehicles

In the Democrat vortex that is now our federal government, the forces that govern a capitalist economic system - freedom of choice and the supply-demand curve - are going to begin clashing violently with the forces that govern the Democrat party - the Green cabal and the labor unions.

Capitalist markets operate organically, more like forces of nature than machines, and they do not make special accommodations for special interest politics. 'Green' economics is just another word for higher cost of production, resulting in higher prices. Research and development will eventually produce an affordably-priced vehicle fueled by some alternative source of energy, but mass-producing such technology is still expensive. All costs are passed along to the consumer in one form or another. 'Green' cars cost more, and unless the federal government is going to the next step of banning gasoline-powered automobiles, lower prices will tip the vast majority of buyers toward old-fashioned petro-cars

Given enough time, Detroit will get alternative-fueled cars to market, but it should not be a priority or condition at a time when simply surviving is the first priority.

Still, looking ahead to the probable realization of President-elect Obama's heavy-handed “New Energy for America” plan, Mulally has little choice but to play the hand he has been dealt, if only to buy a little more time. So, toss a promise to build 'green' cars in the plan even though following through will hinder the company's chances. In the current political climate, Ford really has little choice.

Most dangerous, though, are the concessions proposed by Mulally on the issue of employee compensation. Capitalism thrives on the concept of reward for merit, and Mulally intends to place a moratorium on pay increases given for good work? In a company with depressed morale, what will be the driving force to move ahead, to innovate? The effect of removing incentives is what occurs as a result of communism. Work hard, don't work hard; your value will always be the same as your co-worker. More to the point, who wants to stick their neck out and break a sweat if there will be no marginal reward?

In a company that suffers from a lack of innovation and low morale, incentives can provide a useful engine for the creation of new ideas. A company such as Ford should not be doing away with salary increases and bonuses, it should be finding ways to target them to enhance the effort of becoming relevant to consumers again.

But, white-collared workers voted too fervently for Republicans in the past few elections. So, throw them on the fire. Only a worth sacrifice will earn Ford the grace of Congress.

Perhaps more destructive than the salary concessions themselves is the decision to impose these restrictions only on white-collared, non-union jobs. Unions are not being encouraged (or coerced) by representatives of Pelosi's Congress to participate in the life-saving operation of employers of union labor. When labor unions ask their rank and file to strike, members understand the concept of shared sacrifice for the greater good, but not when the Man is the one with whom the burden is being shared.

For more than a decade, jobs have been lost overseas as a result of high labor costs at American auto plants. Union self-interest will eventually kill the host, thus depriving their membership of their livelihood. When that happens, there won't be enough fingers on the hands of union bosses for all the finger-pointing that will ensue.

In the meantime, Ford's white-collared sacrifices, unmatched by comparable offerings from the United Automobile Workers union (gathering today for an emergency meeting), are almost certain to create animosity and resentment between the working classes. Just what a failing company needs - more internal dissension and factional politics.

Even after the political tsunami in November, there are still a few conservatives and pro-business Republicans who either clung to the palms (congratulations to Sen. Saxby Chambliss (R-GA)) and fingers remain crossed for Sen. Norm Coleman (R-MN)) or stand safely on high ground. Now is the time to start performing the role of the opposition party that the Republicans will be for the next two years. Make the case that there are options, not a single way of resolving this, and thereby give Detroit a little political cover to avoid the groupthink that will doom their chances for survival.

Or don't. After all, the economy isn't going to be an issue with voters in the next election. Right?

###

Whether we call this $700 billion plan to preserve the financial system a bailout or a rescue is completely semantic. When the dust settles, we will have a plan that has the Treasury buying billions worth of risky assets with the prospect of reselling them at a profit once the market recovers and the assets regain their value.

Let's revisit that last point, because it will be at the center of what I want you to think about.

The Treasury will be buying assets and reselling them for a profit.

The fact that we, as real conservatives, are resigned to bite down and take this plan is an indication of just exactly the threat posed by the crisis. When the government enters into the financial sector as a buyer, it signals the beginning phases of socialism. In the battle between socialism and capitalism, capitalism is being painted as the flawed system and it is up to champions of the free market to make sure that it is protected from the obvious open door this change in philosophy that this represents.

If the plan is successful, the Treasury will use taxpayer dollars to buy assets low and sell them high. (Sounds a little bit like the kind of actions speculators and market shakers took to exacerbate this crisis.) We have to hope that Congress will be having the SEC remove or modify regulations governing how values of these assets are set once they are bought and sold for lower-than-market prices, or else this bailout could turn out to be a one-two punch on the banks. I mean, I'm sure they've thought of that. Right?

Even if the rescue plan manages to account for all of the booby-traps, set by regulators as though they were guarding Inca gold from Indiana Jones, it has a definite chance of succeeding. The economy will get back on its feet, and by buying assets at forty of fifty cents on the dollar, the Treasury will have a hard time not turning a profit. In the best projections, it could result in a net gain of $200 billion. (Will that be subject to capital gains tax, Senator Obama?) Jumping forward to 2011 or 2012, when the gains are realized, what does Uncle Sam want to do with its windfall? The best predictor of the future behavior is past behavior. We will see the greatest expansion of the federal government since the Johnson administration.

We can look at Social Security - another failing system - as an example of what this bailout could evolve to become.

When the Roosevelt administration devised of the Social Security program, it did not explicitly promised that it would be a fund to itself. We just remember it that way in our collective memory, polarized by so much rhetorical subterfuge. So, there were no stops to prevent politicians - always looking for a way to enlarge their own power - to see a pot of gold overflowing and ask, "Who would notice if I just took a few of these extra coins to do some good?"

Do we really think that the current government has developed restraint? When you and I spend too much the bank manager calls or the cashier tells us that our credit card has been declined. When the Congress overspends they seem to always find a way to avoid paying real consequences by robbing Peter to pay Paul. Democrats aim their cuts at Republican pet programs, Republicans call for slashing items that Democrats need for re-election.

The politicans would have us believe that the Republican taxpayer is Peter and the Democrat taxpayer is Paul. We are so mesmerized that we forget that we are all Peter and Paul and we share the same house. The Republicans and Democrats who are quick to always blame their opposition for tax increases are taking money from everyone when the day is done and nothing improves. Republicans continue finding ways to spend unneccesarily and so do Democrats, and the bill lands on our doorstep. The politicking is just a way of distracting us from the three-card Monty game.

The only way to insure against that possibility is for Congress to legislate a three-pronged set of conditions:

1. The rescue fund must be segregated from all other federal accounts. No intermingling. No "withdrawals" when Congress gets a little hungry from the belt-tightening that is right around the corner.
2. Profits are used to pay down national debt. This cannot be left to verbal promises and assurances. It must be part of the enacting legislation and it must be firm and impossible to circumvent. Congress must be treated as you would any compulsive; the vice must be locked away until the compulsion is dealt with.
3. Congress must agree to scour federal programs for pork to find as much of the $700 billion for the bailout from existing revenues. Tax increases should be as small as possible. The effect of tax increases will be economic contraction and a harsher environment for the struggling American family to find work and make ends meet.

If we don't take these steps, or children will be buried in debt and dealing with a declining economy. We've heard that before, but we fail to listen. Instead of 'paying it backward' it's time to do what is right, even if doing it is hard.

Cross-posted at Unequal Time http://unequal-time.blogspot.com.