Historians and economists will decide the success of the $1 trillion-plus financial bailout, but one outcome is abundantly clear -- this is one of the most successful public relations campaigns in history.
These companies persuaded a Republican president, a Democratic nominee who would become President, and many politicians in both parties in Congress to allocate the largest bailout in U.S. history to save their industry, and most of their jobs. With the swiftness of a German blitzkrieg or a Pittsburgh Steelers pass rush, the program was announced, passed and funded.
This was no accident. It was a well-timed and well-executed public relations strategy. The case for the financial industry was presented so effectively, so quickly and with such force it swept up Congress, the media and the public like a tsunami. The justifications for the bailout -- "Too Big to Fail," "Banks are the Lifeblood of the Economy," "Facing the Worst Depression since the 1930s" and "The alternative to NOT funding banks is even worse" were played to perfection. In fact, early media critics later parroted these same lines to defend the bailout.
The bailout may prove successful in rebuilding the American financial structure and averting a deeper recession, and if so, we can all celebrate. That doesn't diminish our study of the public relations strategy, which started with several missteps, many of them perpetrated by Henry Paulson, the Treasury Secretary for Bush and former CEO of Goldman Sachs. Paulson came across as more arrogant than Donald Trump and less popular than "Austin Powers Part III." But despite his failure to explain the bailout to main street America, the package was delivered.
Even the manufacturing industry supported it. "The manufacturers of America are speaking with one voice about this," said NAM (National Association of Manufacturers) President John Engler in a statement in late 2008. "The credit markets are in turmoil. Even healthy companies with solid balance sheets and order backlogs cannot obtain the routine financing they need to meet payroll and expand productive capacity. Congress needs to send this measure to the President's desk. This is not about Wall Street, this is about Main Street."
With the exception of the auto industry, the industrial sector didn't lobby for its own bailout. Why not? Weren't the blue collar jobs of America's manufacturing industry worth fighting for?
The industrial base has been declining for a long time. According to the Congressional budget office, "The manufacturing sector of the U.S. economy has experienced substantial job losses since 2000. During the recession of 2001 and its immediate aftermath, employment in the manufacturing sector fell by about 2.9 million jobs, or 17 percent. Even after overall employment began to improve in 2004, the decline in manufacturing employment persisted. By the end of 2007, with the slowing of economic growth, employment in the sector had edged down further, by half a million jobs. And, as of November 2008, employment in manufacturing had fallen yet again, by slightly more than 600,000 jobs."
The auto industry is a major manufacturing area, but it's not the only one. Food, textiles, apparel, paper, chemicals, metals, machinery, electrical equipment and other industries account for millions of jobs throughout America. Yes, the $100 billion-plus price tag for GM and Chrysler is pretty hefty. But it's a fraction of what the financial services sector received. The case could have been made that the industrial sector, not the financial sector, is the lifeblood of the American economy.
According to the U.S. Department of Commerce, "The manufacturing industry, for example, has a multiplier of 2.26. This means that a $1 increase in manufactured goods production directly and indirectly benefits economic performance by $2.26 ... manufacturing industries, given their many stages of production, provide higher multiplier effects than services industries."
Let me repeat, "Higher multiplier effects than services industries." Couldn't our lobbyists in the manufacturing industry make this case? When a Caterpillar Tractor rolls off the line from a factory in Illinois, workers are paid, houses are purchased, suppliers stay in business, restaurants keep their doors open... you get the picture.
Critics of the financial bailout and this proposed industrial bailout will argue the government shouldn't chip in anything to either industry, let the free market work its magic. That may be a valid argument. But if the financial industry got $1 trillion, and the auto industry received $100 billion, shouldn't the other industries in the manufacturing industry have made their case?
In contrast to the financial sector, most industrial workers are blue collar and work in the heartland of America. They make $40 -80,000 a year, buy Chevy or Ford trucks, eat at Applebee's or McDonald's, and don't trade in financial derivatives. Compare them to white collar workers (overwhelmingly in New York) who wouldn't be caught dead in an American car, regularly pay $200 and more for sushi lunches, and earn more in bonuses than most of us earn in a decade.
This may be an oversimplification, but there's some truth in this portrayal. From a sympathy standpoint, this argument would make a great TV commercial. Unfortunately, we won't get the chance to see it. The industrial sector will probably continue to erode for a variety of economic, social and technological reasons. But the opportunity to fight for some industrial jobs using the same public relations tactics utilized by the financial sector may be over.
Robert Wynne owns Wynne Communications, a public relations agency based in Manhattan Beach, Calif. www.wynnepr.com