I'm Confused: Isn't Business About Survival of the Fittest?

As the Federal government continues to consider various bailouts, many segments of the American economy are looking for a piece. In the words of Rep. Gary Ackerman (D-NY), "Somebody heard that we're giving out free money in Washington. They're showing up from all over the place. "

Up for heated debate is whether Washington should bail out Detroit's Big 3 automakers: Ford, Chrysler, and General Motors, the latter of which is in the greatest danger of running out of money during the next few months, if not sooner. The ramifications of the American automaking industry failing, almost everyone seems to agree, are enormous: plants and American auto parts makers closing and the attendant unemployment and loss of health coverage, a shortage of parts for vehicles already sold, increased foreign imports, higher prices, lack of great consumer incentives, the list goes on and on.

It almost seems unconscionable not to bail out the Big Three, and yet many experts and politicians, including Mitt Romney, the former Republican Presidential candidate (the one with the economic cred), actually support the alternative, allowing them to file for Chapter 11 bankruptcy, or even fail.

I won't pretend to understand the complexities of the situation. I don't truly understand money, I've never made a lot of money, I'm sure I never will. I wish human beings had never invented money. But there is one thing about the auto bailout that's got me really confused. Isn't business actually supposed to be about the survival of the fittest? Figure out what consumers want---or in some cases, more importantly, what they need---and give it to them, or else fail?

Executives for the Big Three claim they have better cars in the pipeline, such as hybrids, that will help break our ties to foreign oil, and I'm sure they do. But the question is, where was this pipeline when we needed it, when the Big Three were feeding the American fascination with, and addiction to, enormous gas-guzzling SUVs and trucks? The idea that we need to break our "oil addiction" isn't a new one. In 1974 President Richard Nixon said that our country
"should not be dependent on any other country for the energy we need to provide our jobs, to heat our homes, and to keep our transportation moving." Now, American automakers aren't the only bad guys here, but what significant moves have they really made in the intervening 34 years?

Some argue that weaning ourselves off of foreign oil is not only impossible, but actually not desirable (see http://www.motherjones.com/news/feature/2008/05/the-seven-myths-of-energy-independence.html or http://www.counterpunch.org/bryce11212006.html). Alright, let's say that's true. That still doesn't leave American automakers off the hook. Forward-thinking engineers have developed incredibly fuel efficient cars. Here's an article on one, created by WV: http://gas2.org/2008/03/12/the-worlds-most-fuel-efficient-car-285-mpg-not-a-hybrid/.
Here's another, created by two engineers in their spare time: http://video.aol.com/video-detail/230-mpg-car/4197588660.

Note again that these two cars use fuel, not electric or hybrid energy. They have been designed to be more fuel efficient, lighter, and more streamlined. What is the Big Three excuse for not having delved into this sort of experimental car-making before it was too late for them to do so?

The obvious answer is that they have been operating with an outmoded business model, a business model that simply cannot cut it in the 21st century. And now, as they face extinction, they ask the Federal government for an enormous bailout, to the tune of $25 billion dollars (of taxpayer money). They believe they can turn their businesses around.

Those who would allow the Big Three to fail believe that their absence would leave a vacuum that would be filled by forward-thinking companies with an innovative, modern business model. And maybe it would. But this leaves the question: who, in business or government, truly has the expertise to make the call? Who is willing to take that risk, a risk we might all pay for dearly?

Update:
Lawmakers called Big Three execs to the carpet for flying expensive private jets to Washington for bailout talks instead of taking more economical commercial flights. "There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," Rep. Gary Ackerman (D-NY) told them. "It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."

What did the execs have to say about this? They tried to shame lawmakers into thinking they were dwelling on petty matters. "Making a big to-do about this when issues vital to the jobs of millions of Americans are being discussed in Washington is diverting attention away from a critical debate that will determine the future health of the auto industry and the American economy," said GM spokesman Tom Wilkinson in a statement.

Plainly Wilkinson, and the Big Three executives, fail to see the hypocrisy of promising more responsible business practices when they can't even economize on flights to DC. Is the difference in cost between a private flight and a commercial one significant compared to the incredible shortfall the Big Three are facing overall? No, of course not. But economizing here would have a been a simple, and easily accomplished, symbol of their good intentions. So far, the signs are not good.