Last night’s Chrysler ad featuring Clint Eastwood continuesto garner a tremendous amount of attention from political talking heads. The adnot-so-subtly injected a political tone with images of various demonstrations,heating the embers of discord.
Some may not like the ad, others may try to claim itsmessage, but the real missing point in all the election year posturing is thattaxpayers are being fooled by Chrysler for the second time.
This is not the first time Chrysler has claimed a “comeback”from government assistance.
In 1983, Chrysler was bailed out by America’s taxpayers -some of this may sound familiar…
The company’s poor management put it in a poor competitiveposition “forcing” government intervention. The resulting deal did little tostop short-term negative effects of a failing firm: Chrysler lost around half ofits jobs, and cost stockholders and creditors dearly (Source: HeritageFoundation).
But wait! Grand claims were made about a return toprofitability, and a resurgent U.S. automobile industry! Surely it was worthit?
As the Heritage Foundation astutely pointed out at the time,the first Chrysler bailout and subsequent “comeback” relied on smoke andmirrors, and did not set the stage for long-term success.
Short-term savings like massive pay and pension cuts,drastic reductions in investment into future products and equipment, and largetax deductions, created an illusion of profitability that was prominently touted.Sounds like déjà vu all over again…
Of course, we know today that Chrysler was not prepared togo the distance, and faltered into government hands once more in 2009.
So now we're told Chrysler has made a second "comeback" -- yet, just as they did after the first "comeback," taxpayers are left to tally their losses and the damage to the economy as a whole. Let's hope we are not writing the same thing in another 25 years.