December 19, 2008
History may ride on reign of 'car czar'
It's a czar-crazed world these days.
In this country, we have had more than one drug czar and a terrorism czar. President-elect Barack Obama apparently considered naming Al Gore as his climate czar, though the Nobel Prize winner does not want the title or the job.
Then there's the biggest, most turbo-charged, flashiest czar of all: the new "car czar." Job description: help fix Detroit's automakers.
Most American czars have not had power to match their regal titles. Think William Simon as President Richard Nixon's energy czar or William Bennett as President George H.W. Bush's drug czar. But the car czar contemplated for Detroit would actually have powers befitting the royal title.
The car czar could say nyet to any expense over $25 million, in one version of the job floated on Capitol Hill. This sovereign of corporate strategy could decide how much loan money each carmaker gets and set repayment terms. The czar could summon executives, labor, banks and others to audiences in his regal chambers, where concessions would be wrung and sworn promises made.
But before we all start subscribing to this great-person theory of corporate recovery, let's not forget the lessons of history. They remind us that the last true czar—Nicholas II of Russia—did not turn out so well.
He went to war against Japan and lost. He got heavily into debt. The masses rejected him. And in the end, his power gone, he was murdered by former subjects.
And all of it happened to a guy with royal title, nearly unfettered power and a well-turned mustache to boot.
Malcolm Salter, professor emeritus at the Harvard Business School who has worked as consultant to Detroit's carmakers, said the title of czar invokes expectations that cannot be met.
" 'Czar' connotes a lot of authority and power and knowledge that isn't there," Salter said. "Czar means you get unilateral decision-making rights. The language is that strong."
Thanks in part to the high-flying title, the car czar will be expected to help Detroit's Not-So-Big-Anymore Three pull through without needing more than the $15 billion expected in the current bailout package. But there's little reason to think the challenges that have vanquished legions of executives, unionists, bankers and others will melt away in the face of czarist authority.
The car czar would need to understand the virtually incomprehensible balance sheet of a global industrial giant well enough to spot a $25 million mistake. At the same time, the czar would need to balance the strategic needs of three financially weak competitors as they zero in on the same shrinking market, while vying against robust, lower-cost rivals from Japan, Germany and Korea.
That and come up with fresh, fuel-efficient car models that will sell even as total sales drop, car loans dry up, and the car builders must pay down huge debts.
Paul Volcker has been mentioned as a possible car czar. But Salter believes former Treasury Secretary Larry Summers might make sense. Summers may have just the right mix of regal bearing, ruthlessness, brilliance and creativity to succeed.
The stakes are a modern corollary for the ones faced by the last czar of Russia. If the car czar can't succeed, the American auto industry as we know it may not survive.
dgreising@tribune.com
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