Do You Smell Smoke?

Maybe, maybe not. I think it would be wise to be cautious and first just sort out the facts regarding this:

Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Republicans. What started earlier this week as mainly a rumbling on the Right side of the Blogosphere has gathered some steam today with revelations that among the dealers being shut down are a GOP congressman and closing of competitors to a dealership chain partly owned by former Clinton White House chief of staff Mack McLarty.

The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008?

As Rob pointed out yesterday:

Not particularly remarkable. The dealers on Chrysler's list were mostly small, family-owned businesses. That demographic tends to lean GOP.

Other evidence seems to back that up. It was long ago established though, that the mere appearance of impropriety is the standard that should launch an investigation. If Dick Cheney had sat on the board of Chrysler and people were alleging that Democrats were being targeted you can bet the major news organizations would be on this story like white on rice.

These are the things I think we know at this point:

1. The process that Chrysler used to determine which dealerships would be cut has not been as transparent as advertised.
2. Underperforming dealerships were supposed to be the targets of the cuts. A number of dealers who didn't make the cut are claiming to be profitable and strong performers for Chrysler.
3. At least one chain of dealerships owned by some heavy hitting Democrats is either getting pretty lucky or there's something fishy going on.

This all may be nothing and I hope that it is. If it's not, we're talking some serious corruption here. Not just political corruption, but the corruption of the law and the free enterprise system on possibly a large scale. If I was an editor at a major news organization, I would think that might be worth at least taking a couple of junior reporters away from massaging the latest special interest press release and having them do some real reporting.

I can't leave this topic without adding an "unintended consequences alert. It looks to me that the real beneficiaries of the cut in dealers are the surviving dealers themselves. This will reduce competition and possibly allow them to raise prices in their local markets. The check on that is people can generally still shop other brands, though GM is also reducing dealerships.  Reduced competition is generally not favorable to consumers when it comes to price or service and I wonder what kind of effect that will have in the long run. In the short-term it will make those dealerships more profitable. But long-term I wonder if it will make them sloppy and arrogant, and abusing their local Chrysler monopoly(in some cases).

Competition is healthy for good organizations, it keeps them on their toes and focused on serving the customer. What will happen when it is gone or diminished? I think any number of historical examples can give us the answer, and it may have a bigger effect on Chrysler in the long run than people realize now.