Monday, April 06, 2009

Remember the Studebaker?

The man who taught me high school Physics drove a 1958 Studebaker Golden Hawk, like the car in the picture. It sat in the parking lot, a kind of elegant dinosaur, an emblem of the man himself. To his students, the car was the source of both humour and admiration. It couldn't match the Mercedes 300 SL, driven by another teacher, who was independently wealthy. But it did suggest a kind of dated opulence.

I thought of high school physics, and the chariot which carried my teacher to work, when Barack Obama removed Rick Waggoner from the chairmanship of General Motors last week. Like the Golden Hawk of another time, General Motors has become a symbol of dated opulence -- and, in some ways, GM's demise is emblematic of an age of, according to New York Times columnist David Brooks, "greed and stupidity."

Studebaker is just one of many automotive nameplates which have disappeared over the years. Its sister car, the Packard, died before the Studebaker. My youth was littered with automotive eulogies -- for cars like the Nash, the Hudson and the DeSoto. If memory serves, one of the first automatic transmissions arrived on the 1949 DeSoto. That innovation could not save a car which people did not wish to buy.

Most of these cars died because they could not weather various recessions -- and because the luxury they represented was incongruent with the times. As Frank Rich reminded his readers in Sunday's New York Times, as a culture we have been comfortably deluded, driving "self indulgent, wealth depleting gas guzzlers." And the management of GM drank the Kool Aid. But that delusion, like the economic bubble, has burst. "Any citizen or business that overspent or overborrowed in the bubble, subscribed to its reckless culture," Rich wrote. "That culture has crumbled everywhere now, and a new economic order will have to rise from its ruins."

What is truly sad is that the lives of millions of people have been shattered by the hubris and the stupidity of those in charge. Mr. Waggoner will go into retirement with a pension of $23 million. Like Charles Prince and Robert Rubin of Citi Bank, Angelo Mozello of Countrywide Financial, and Stanley O'Neil of Merrill-Lynch, his empire has crumbled. But, also like them, he rides off into the sunset, with more than enough money to pay the bills. That is how trickle down economics works.

And -- what is even more tragic -- this train wreck could have been avoided. Those who crafted the economic models which underpinned this economy were mesmerized by their own creations, assuming that human beings always make rational decisions. A little knowledge of history and the Greek and Roman classics would have relieved them of that notion. But, like the previous American administration, they considered those deposits of wisdom -- like the Geneva Conventions -- "quaint."

That Golden Hawk struck us as quaint, too. We were comfortable in our ignorance.

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