'The Sack of Detroit' Review: America's Car Crash
By: Barbara Spindel (WSJ)
S E E D E D C O N T E N T
Charles E. Wilson, the former General Motors president who served as secretary of defense under Dwight Eisenhower, was asked at his 1953 Senate confirmation hearing how he would handle potential conflicts between the country's interests and the company's. Wilson found such conflicts inconceivable: Surely "what was good for our country was good for General Motors, and vice versa."
So it once seemed. Kenneth Whyte's vigorous, provocative book "The Sack of Detroit: General Motors and the End of American Enterprise" begins with the economic transformation in the decades after Henry Ford introduced his Model T. By 1958, the top 10 companies on the Fortune 500 list were all "car manufacturers or producers of steel or fuel for cars," Mr. Whyte observes. Detroit had become home to the so-called Big Three: Ford, Chrysler and General Motors, or GM. The possibilities for growth appeared limitless.
More recently, however, American car makers have been running on fumes. The industry's decline is usually dated to the 1973 oil embargo, which prompted many drivers to choose small, fuel-efficient imports over gas-guzzling domestic models. But Mr. Whyte, founding editor of Canada's National Post and the author of biographies of Herbert Hoover and William Randolph Hearst, tells another story. He argues that Detroit's troubles began earlier, when consumer advocates prompted the federal government to hit auto makers with onerous regulations. The industry was "sacked in 1966 by a well-educated, well-placed, suit-and-tie-wearing band of crusaders united by a determination to knock automakers and the whole of corporate America down a peg and make them pay," Mr. Whyte declares. "They brought to its knees the greatest industrial enterprise in human history."
For decades, traffic safety was governed by the "Triple-E strategy": educating drivers, enforcing traffic laws and engineering safe roads. According to Mr. Whyte, this approach was successful—but not successful enough: In the 1950s, auto accidents were still claiming more than 30,000 American lives annually. By then, new research suggested that the problem was not the initial impact of a driver crashing a car but a "second collision" of a human body slamming against a dangerous car interior.
This research captured the imagination of Harvard Law student Ralph Nader, who became convinced that car manufacturers were the real culprits. His 1965 bestseller "Unsafe at Any Speed" singled out the rear-engine design of the Chevrolet Corvair, a compact car that GM had introduced to compete with smaller imports and that was the target of a barrage of personal-injury lawsuits.
Mr. Whyte is hard on Mr. Nader, calling him a “secular, twentieth-century Puritan” whose “self-abnegation and ceaseless devotion to his cause were to him and, later, others, proof of his grace.” Mr. Nader’s rhetoric could be overblown, and his claims about the Corvair’s dangers have long been disputed. Mr. Whyte makes a strong case that the car’s design was sound. He also argues persuasively that the industry didn’t get enough credit for its own voluntary safety initiatives, including crash-testing its cars and using dummies to assess the impact of collisions.
None of that mattered once GM, increasingly jittery after its executives performed poorly at a 1965 Senate subcommittee hearing on traffic safety, made what Mr. Whyte calls the “boneheaded” decision to sic private investigators on its nemesis. The detectives didn’t find any dirt on Mr. Nader, but they did manage to blow their cover, resulting in disastrous media attention that made legislation inevitable.
In 1966 Lyndon Johnson signed the National Traffic and Motor Vehicle Safety Act and the Highway Safety Act. Mr. Whyte doesn’t give the federal standards, which required safety upgrades both in vehicles and on highways, much credit. In fact, he blames them for bringing about not just an explosion of regulation but also an era of consumer advocacy of which he is roundly dismissive. He argues that costly regulatory compliance worsened the problem it was intended to solve. “Ralph Nader and the federal government harmed the cause of traffic safety,” he claims. “If, in 1966, Congress had told the driving public to sober up, buckle up, and drive right, rather than scourging Detroit for its failure to protect people from their own recklessness, the fatality rate would have fallen significantly faster and further.”
While it’s true that seat-belt and sobriety laws—all enacted years later—have played the most prominent role in reducing traffic fatalities, it’s less clear that the conditions existed for their passage then. Anti-corporate animus was profound and widespread in the 1960s, even beyond the Naderites and the counterculture, and public opinion supported government intervention. Moreover, while seat-belt laws are taken for granted now, they were, upon their introduction, widely resisted as government intrusion.
“The Sack of Detroit” is compelling, bold and stylishly written. But in his epilogue, Mr. Whyte overplays his hand. He compares the regulation of auto makers to current attempts to hold pharmaceutical companies responsible for the opioid epidemic. “The opioid crisis is a general social failure yet the costs are being attributed to capital in an aggressive, punitive manner,” he writes. We now know that Purdue Pharma aggressively marketed OxyContin despite being aware of its addictive properties and that the Sackler family, Purdue’s owners, were quietly draining the company of huge sums and hiding the money offshore. Would anyone now say that what’s good for America is good for Purdue Pharma, and vice versa?
Ms. Spindel’s book reviews appear in the Christian Science Monitor, the San Francisco Chronicle and elsewhere.
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I'm sure that some might say that, more than anything else, damage to the big three was self-inflicted. A lot went into their downfall.
The Book is
THE SACK OF DETROIT
By Kenneth Whyte
(Knopf, 418 pages
The history of the Big Three is the history of capitalism in America. They built crappy cars, confident that the American people would buy them... because there was no other choice.
Then came the imports. (Interesting sidenote: the "quality management" that was so important to the rise of the Japanese manufacturers was learned from an American, William Edwards Deming .)
It was obvious to any serious observer that the Big Three had to get their sh!t together... or go under. The reaction? The Big Three went, hat in hand, to plea to the government to be saved by... what else?... tariffs! That meant screwing the American consumer , but hey! That's what the government does: protect the wealthy, screw the others.
So the Japanese (and the Germans) built plants in America, employing Americans.
The decline of the Big Three continued. Their top management continued to draw enormous remuneration. But hey! That's American capitalism! Top management gets the biggest bucks, regardless of performance...
The Big Three could have changed course at any time, over fifty years. They did not. Their successive top management teams got very, very rich. Why should anything change?
Didn't Obama hand GM over to the Auto Union as part of the bailout settlement? Yes, yes he did. They did such a wonder job./S
This is what happens when the Government gets involved and thinks that workers can run a company (Or this case the corrupt UAW). Remember who lost out on the GM bankruptcy that the government intervened in? That would be the banks, lenders, and stock holders; making GM unattractive to make future loans to. So the US government became the low interest (read no interest) lender to GM.
PS. Their cars still suck.
Alternatively, some countries - Germany for example - are smart enough to understand that taking labor's opinions in count makes for easier management. The Unions get seats on the Board.
You are correct, Germany has very strong labor unions, has for a long time, and has been kicking American car manufacturers asses for a long time. Labor unions are not the cause of the big threes troubles. It is poor management, a lack of vision, and a refusal to see which way the wind is blowing and adjust course accordingly.
The German manufacturers are fixated on product. They seek to understand what their customers want (prestige is a thing) and to deliver it.
Until they went bust... and I mean right up until the day they went bust... American manufacturers were building whatever they thought consumers should have.
Oh, and... quality......
An they paid Union Wages - that was their big downfall, as foreigners used cheap labor and a mostly spoiled, thoughtless, uncivilized generation to beat them.
Since they were union companies paying union wages would be natural. They also had piss poor management, a captive audience, and they built terrible cars. The Japanese/Germans and others built a more fuel-efficient, less expensive, and longer-lasting auto. Built a better mousetrap and people will buy it.
It sounds like your talking about Americans. What wonderful things to say about your fellow citizens actually the majority of your fellow citizens. [DELETED]
LOL, you seem to feel free to insult a huge portion of US citizens but whimp out when it's pointed out that it was a bigoted, backward asshole thing to do.
Happens every day!
Yeah, the major competitors are Japanese and German companies, they hardly pay low wages to the workers in their country and actually have a lot of plants and employ more than a few Americans. They don’t do anything different from American car makers as far as labor practices are concerned, the wages of the workers is not the source of American manufacturing issues. The Japanese and Germans just built better, cheaper, more efficient cars.
Did they not make crappy cars? Was that not the fundamental problem?
LOL. Goodbye Oldsmobile, goodbye DeSoto, goodbye Pontiac, goodbye Mercury, hello Camry, hello Accord, hello Volvo, hello Volkswagen, hello Hyundai....
Meh, I don’t see the increase in safety standards as being what hurt American auto-manufacturers. I think it is has much more to do with a lot people deciding they don’t want/need a giant inefficient vehicle and buying from foreign companies because American car makers weren’t producing them.
I think that the foreign cars won out because they did not suffer from the intended built-in 3 to 4 year obselesence that made buyers want to or have to trade in every 3 or 4 years.