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Tuesday, September 18, 2012

Revisiting Romney 2008 Op-Ed: "Let Detroit Go Bankrupt"

Unable to sleep this morning, I watched a recording of the Sept. 9, 2012 episode of Meet the Press, featuring an interview with GOP Presidential candidate Mitt Romney. Host David Gregory asked for Romney’s thoughts on an Obama bumper sticker saying, “Osama Bin Laden is Dead and General Motors Is Alive.” The discussion led to ambiguity over Romney’s intention regarding the preferred path for GM at the height (or depths) of its financial crisis.

I decided to review Romney’s 2008 Op-Ed in the New YorkTimes to see if Romney’s Meet the Press comments jibed with his original thoughts. This blog posting addresses that issue, as well as my varied thoughts on portions of his Op-Ed that caught my eye this time around.

Revisiting "Let Detroit Go Bankrupt"

 (Excerpts from Romney’s article are listed below in bold. My thoughts immediately follow his quotations.)

In reviewing Romney’s original Op-Ed four years after the fact, I am overall impressed with his vision—and frustrated with the confusion that has arisen over the use of the term ‘bankruptcy.’ Romney views (managed) bankruptcy as a tool to spark recovery while many readers — and media — and politicians — view the word in a completely negative context.

Let Detroit Go Bankrupt

These words are not in quotes like the rest of the statements from the Op-Ed I discuss here—and for a good reason. The New York Times was responsible for the title, just as all newspapers typically like to choose the titles for their Op-Eds. I have had more than one Op-Ed published under a title that conveyed an impression I did not feel comfortable with. However, when I submit Op-Eds, the newspaper selects a title; quite often, the title seems designed to solicit page hits and comments from readers who think they have mastered the subject by reading the name of the author and the title. I can suggest a title, but very rarely has my recommended title been used.

I am surprised to discover someone of Romney’s stature apparently has to go through the same process. reveals, “The headline does say ‘Let Detroit Go Bankrupt,’ but Romney didn’t write that headline and those words don’t appear in the text of the article. The line came from a writer at the New York Times…” continues, “When people read the op-ed headline, they might have thought Romney meant ‘Let Detroit Go Belly Up.’… But that was not his point.”


Romney thought of a managed (this adjective is critical) bankruptcy much like a surgeon thinks of amputating a gangrenous limb. The surgery is done to save the life. It makes no sense for the family of a victim to go around screaming, “The doctor is a mad man! He says he wants to save lives, and yet now he’s in favor of cutting of arms… We cannot stand for this!”

“Detroit needs a turnaround, not a check.”

As I read this Op-Ed four years after the fact, I am even more impressed than I was at the time with the boldness of Romney’s statement. When this Op-Ed was published on Nov. 18, 2008, the engines threatening the American economy were just revving up. I have little doubt this piece was carefully planned, and therefore highly scrutinized before its submission. Right or wrong, consistent or not, I admire Romney’s boldness to take a stand with a plan that not many people wanted to hear.

“The huge disadvantage in… [the costs of American cars] relative to foreign brands must be eliminated…. That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product—it has $2,000 more put into it.

This statement somewhat confuses me. Romney states that when all of the costs which go into making cars are lumped together, Americans are handicapped competitively by having $2,000 in additional costs (Romney speaks specifically of labor costs, including retirement benefits). When he writes, “The Avalon feels like a better product—it has $2,000 more put into it,” does he instead mean the Taurus? I am still regaining my cognitive abilities that took a blow after a car accident, so I confess I may have gotten stuck in a logical loop. But on the surface, this looks like a typo. In a New York Times Op-Ed.

From a more substantive perspective, how likely is it those labor unions would come to an agreement that would substantially lower employee wages and benefits? The idea here is solid, and, should the environment and key figures work together in synergy, the implementation of this strategy seems as if it would put the auto industry on more solid footing in the long run.

“Management as is must go. New faces should be recruited from unrelated industries—from companies widely respected for excellence in marketing, innovation, creativity and labor relations.”

The elimination of extant management is a common consulting strategy. There are many reasons behind this particular approach, not the least of which is the notion that those who get a company into a mess are not ideal candidates to get the company out of a mess. This is not always the way to go, but Romney does argue for it here.

I don’t know that I have any serious qualms with that first bit. The leadership being referred to was responsible for actions (and inactions) that bordered on relative incompetency. My question is that Romney seems to suggest that the highest positions should come from totally “unrelated industries.” I understand and can appreciate the benefits that can come from bringing in someone from another field who can look at problems in a completely new way and create new solutions for new times.

But what about the institutional knowledge that is lost? Forget institutional knowledge, what about industry knowledge? Surely there are nuts and bolts in the auto industry that truly effective management would need to be intimately familiar with. How would Romney’s plan address that issue?

Or, would it even need to? For years, I have been amazed as I look at presidential cabinet appointments. How can somebody go from governor, for example, to Secretary of Health and Human Services? My Masters work focused on health care reform, and even after two years of immersing myself in the issue, I was only able to “master” a tiny, tiny slice of the entire health care pie. How can presidential appointees be effective, bureaucratic prowess notwithstanding? Perhaps they aren’t.

“The need for collaboration [between management and labor] will mean accepting sanity in salaries and perks.”

Again, the boldness here cannot be missed. Romney is painting a picture of how he envisions the future of a globally renowned American automobile industry. I tend to agree with his vision, though this is certainly a case where it much easier to say than to do.

As I read this, I also feel a sense of nostalgia for the personality and appropriately unpopular aggressiveness Romney has taken here. The Romney of 2012 seems to be so intent on not turning off voters with unpopular stands that he turns off voters with a lack of clarity. I recognize there have been specifics offered, and I also recognize that Obama campaign attacks claiming Romney lacks specifics reek of disappointing irony.

In political office, Romney has never been as noticeably individualist as the ‘maverick’ John McCain. But like McCain in 2008, Romney looks as if he is trying to be everything to everybody. I suppose that meshes with the math of electoral politics, but it clashes loudly with a widely accepted principle Romney likely utilized as a consultant: those who try to be everything to everyone fail.

“Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options.”

“Invest in truly competitive products and innovative technologies—especially fuel-saving designs—that may not arrive for years. Starving research and development is like eating the seed corn.”

This is macro-level thinking of the sound and impressive variety. The auto industry was astonishingly blind to its own long term financial future, largely ignorant of R&D needs, and for those R&D needs that did receive attention, ineffective in producing effective, affordable, desirable, and financially viable products. The future is changing quickly, and in 2008 the industry was not keeping step with the times.

“Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.”

I had not realized that this was a problem. Assuming it was or is, Romney’s suggestion seems common-sense to me. I would be curious to know what led to the problem in the first place.

“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.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.”

Romney’s vision can be criticized, but it can also be objectively praised for its boldness, ingenuity, and management prowess. It is a masterful 872 words that is everything you would expect form a consultant with Romney’s expertise.

However, we have to remember this is an Op-Ed. These types of articles are horrible venues for discussing specifics of policy. A couple of years ago I attempted to critique a legislative proposal from Sen. Orrin Hatch (R-UT) in an Op-Ed in the Deseret News. The article attracted his attention and he responded. In his response, also in the Deseret News, he ripped apart my argument. It was a masterful rebuttal. I read his response with a very uncomfortable combination of frustration and awe. He manipulated my arguments, but he did so with such masterful skill that I couldn’t help be amazed at how talented he was with winning over an audience in 600 words.

Amazement aside, I expressed my disappointment that he would twist my words and fill in gaps that were made necessary by the word limit of the Op-Ed. I expounded on my arguments. His response was largely platitudinous (e.g., “I believe we agree on this issue more than we disagree”), but he made an interesting statement in responding to my comment that Op-Eds simply do not have room for significant policy discussions — though it was this very experience which taught me that lesson.

He wrote, 

“As you, I have [found] the 600 word restrictions of newspapers to be very confining and not conducive to real policy discourse an[d] solutions. I normally avoid engaging in substantive policy debate through the media. As you pointed out, it does not work and it leads people to take political shortcuts which end up pandering to certain perspectives without adequately weighing both sides of a policy argument.”

In other words, the venue itself was what led him to respond using the very techniques he decries.
Op-Eds have a purpose. Voters can be swayed. Policies can be clarified. But the articles serve at best as skeletons, or, in Romney’s case, as an Executive Summary for a very long and complex business plan for the entire auto industry.

Romney succeeded in putting forth a bold plan. He even included some specifics that were impressively weaved together with his theses.

His lack of specifics left him open to fill in the blanks as events unfolded in real time; who wouldn’t appreciate an advantage like this? This approach enables you to create an overarching vision and then fill in the specifics with actual events and then state those very actions were part of the plan you had in mind.

At the same time, the lack of specifics opened Romney up to criticism. Even with the word limitations that prevented a wonkish breakdown of the issue, Romney could have filled in those gaps in any number of places outside of the New York Times.

But he didn’t.

For that reason, I believe Romney is rightly criticized for lack of specifics. And for all of the reasons I have mentioned previously, I believe Romney is unfairly criticized for his ‘bankruptcy’ comments. Arguments to that effect are based on a faulty or unjustifiably incomplete understanding of Romney’s words. 


As a side note, Meet the Press is apparently not a cure for insomnia.

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