What Chrysler and GM are doing under their new guidance from the federal government - trimming their lists of dealers - is likely to backfire.

If you want to sell more cars, you yank the right to sell them from hundreds of dealers, many of whom have been selling them for decades? Maybe this makes sense to the overseers of the auto industry in the Obama administration. To the rest of the country, it sounds more like a confirmation that the government can't run the car industry any better than the auto executives could.

Congressman Peter DeFazio sees the folly in what has been going on. He has written to Obama's car czar, objecting to "the counter productive demands the administration has put on the American auto industry."

According to DeFazio, "By requiring General Motors and Chrysler to close dealerships and enabling them to outsource manufacturing, the administration is casting aside a vital part of our economy in favor of high paying executive level jobs. This action will cost the middle class thousands of family wage jobs at a time when unemployment is on the rise."

DeFazio understands that cutting dealerships supposedly is meant to lower the dealership overhead "via the efficiencies of bigger dealers and passing those savings on to the auto manufacturers." But, he says, "these projected savings are highly speculative …. Squeezing more out of the dealership profits from new car sales will do little for the auto manufacturers."

Not only that, but DeFazio points out that Chrysler also announced it will move engine production from a plant in Wisconsin to Mexico. The congressman says this will cost 800 American jobs.

Those jobs would be lost anyway if the company goes under. But the choice ought not to be between going under and going abroad. Even so, outsourcing jobs makes more economic sense than closing dealers.

DeFazio says U.S. auto dealers have some

$233 billion invested in their stores and employ about 1 million people earning "decent wages."

That's a big chunk of the economy - an even bigger proportion of local economies across the country - and it's worth fighting to save and restore to health. (hh)