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The automobile industry has continuously improved sound suppression in its vehicles to the point where engineers now build mechanisms into cars that purposefully introduce engine noise into the cabin, returning some of the driver’s aural feedback that had been insulated away.

But this post isn’t about that kind of automobile noise. This is about the noise emanating from Detroit in regards to the future of our nation’s decimated auto industry and how we — yes we, the people and our government — will be responsible for keeping the industry afloat.

Thomas Friedman opened an article in the New York Times, called “How to Fix a Flat”, on the subject with this:

Last September, I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?

As usual, Friedman’s ideas were thought-provoking. He received 594 comments on the article before commenting was closed.

Friedman paints a picture where auto executives steered their companies away from any long-term competitiveness toward short-term fixes and Michigan’s legislators shielded the industry from the regulation that would have forced it to compete globally.

And now the industry just isn’t asking for votes in its favor it’s asking for billions in financial support. See the industry’s latest innovation below in a comic by Signe Wilkinson.

Detroit's Latest Plug-In Design

Or Nick Anderson’s comic take:

Catch Detroit

I think it is the gift of a truly talented cartoonist to create comics like these, images that make the viewer laugh out of one side of his mouth while he winces with the other. These comics are painfully entertaining.

Friedman unfortunately chose to close the essay with a tired cliche: that all the auto industries need for redemption is a year of leadership from Apple’s Steve Jobs.

While I have deep respect for Mr. Jobs and his achievements leading Apple to design some of the most popular products of this generation, the problems facing Detroit are larger than any one person can repair.

The fundamental, underlying market mechanisms that steer the behavior of the American auto industry are like, well, a buggy GPS system — they told the industry to turn left in the middle of a bridge and now the industry is through the guardrail and plunging headfirst into the abyss. (For a visual, refer again to Nick Anderson’s comic above.)

Why are the product offerings of the Big (but shrinking) Three so out of line with current consumer demands? Because the companies tuned their product lines to produce the greatest possible short-term profit, without regard to their long-term global competitiveness.

When oil was cheap and carbon even cheaper (aka free), it made economic sense to build the most expensive vehicle a customer would buy, because the pricier the vehicle, the larger the profits. And by the way, this is America, and in America, we like to get a lot for our dollar, so the bigger the vehicle, the better. It’s the same game that restaurants are playing with ever-increasing portion sizes, in a way.

Cheap oil refines into cheap fuel, and cheap fuel does not provide much financial incentive for consumers to purchase fuel-efficient vehicles.

Free carbon (dioxide) means that the emission of greenhouse gases has no cost, and this leads to a similar outcome as cheap fuel, because fuel-efficiency and greenhouse gas emissions are related (inversely).

The problem is that oil isn’t cheap (the falling prices are only temporary) and greenhouse gas emissions aren’t free. Ultimately, greenhouse gas emissions have a cost and the price is paid by the environment in the form of climate change.

So, Detroit has been shielded from economic reality in the US by a curtain of cheap oil and cheap carbon. Suddenly the curtain is pulled back and, uh-oh, Detroit is caught on stage with its pants around its ankles.

It turns out that where Detroit’s competitors live — primarily Japan, Korea, and Europe — fuel is a few times more costly and greenhouse gas emissions are regulated by the Kyoto Protocol. The competitors have been preparing for the automobile market of the future for decades, but the Big Three were thrown into reality over the course of about half a product development cycle, and what a cold shower of reality it was.

Yes, the US has Corporate Average Fuel Economy (CAFE) standards, but I won’t even bother to dive into that controversy. Let us just agree that the regulations haven’t prepared Chevy, Ford, and Chrysler for today’s sudden market reality. After all, it was CAFE that laid the red carpet for the arrival of minivans and SUVs to displace place of wagons. Wagon, as “passenger cars”, were required to have higher fuel economy than minivans and SUVs, as “light trucks”.

In the end, the US was lacking the necessary indicators of cost to influence purchasing behaviors towards sustainable automobile designs. Additionally, the stock market rewarded short-term performance, so the auto companies had no incentive to take responsibility and guarantee their own long-term competitive strength. Since the industry was blind and could not look forward to plan for its own future, we — the US people and our government — are now responsible for taking the industry by the hand and saving it from running into a wall of bankruptcy.

The government may soon step in with financial aid, it looks like we the people might all be proud new owners of auto industry stock. Of course, that stock looks less like a stork carrying a bundle of joy and more like a burning, stinking bag on the doorstep.

Just don’t step on it.