With England’s economy gasping in the mid 1970s due to a combination of nosebleed rates of taxation and a currency in freefall, the fortunes of many of its flagship companies similarly reflected the ailing health of a country in decline. High tax rates and inflation bat 1.000 when it comes to the disappearance of investors, and with Coventry-based carmaker Jaguar in major financial trouble, its executives went to the government for help.

Jaguar was effectively nationalized by the British government in 1975 thanks to skeptical credit markets, and it remained that way until Prime Minister Margaret Thatcher’s privatization program freed it from government control nine years later. Jaguar’s story as a ward of the state looms large as a cautionary tale for future GM and Chrysler buyers, two formerly great U.S. automakers who’ve recently asked for and received government help.

While Jaguar’s sleek styling never disappeared during its nationalized years, the quality of its cars surely did. For anyone who knew Jaguar owners during the ‘70s and early ‘80s, their comments were pretty much uniform: great look and great interior, but the car always needs repairs.

Anecdotally, this writer remembers that Sierra Leasing, a Glendale, CA-based firm that leases luxury automobiles, strongly recommended that its customers avoid Jaguars altogether. With the cars constantly breaking down, it wasn’t worth the hassle and low levels of customer satisfaction for Sierra to secure the automaker’s products for clients.

Jaguar’s demise was easily explainable. Freed from basic market pressures imposed by consumers with regard to quality, Jaguar could foist unreliable cars onto the marketplace without worry. While private companies face bankruptcy if they regularly fail customers, Jaguar’s access to the funds of hapless taxpayers made consumer satisfaction irrelevant.

And though the quality of its cars never fell to the level of East Germany’s Trabant, the auto of “choice” for citizens of the communist bloc of countries, Jaguar’s brand gradually plummeted. Indeed, no advertizing campaign could make up for frequent Jaguar sightings at auto-repair bays wherever the car was sold.

In later years, after Thatcher’s aforementioned privatization program, Jaguar owners would hasten to explain their purchase of same with assurances that they’d purchased their model after the British government had returned the brand to the private sector. And to the extent that models made between 1975-84 remained in working condition, this was frequently thanks to replacement of the original engine with one not produced by Jaguar.

Fast forward to today, over the past few weeks Chrysler has begun a new ad campaign. Spending money presumably provided by America’s similarly hapless taxpayers, Chrysler CEO Bob Nardelli has taken out full-page ads in major U.S. newspapers thanking “America” for “investing in Chrysler.”

Could Nardelli really be this naïve? Indeed, if we ignore the basic truth that many Americans looked askance at the government’s rescue, did it ever occur to him that the very government help that he and GM CEO Richard Wagoner deemed essential was in fact a brand killer?

The regular protest from Wagoner and Nardelli with regard to bankruptcy had to do with what the latter would mean for sales. Supposedly consumers wouldn’t buy the products of a bankrupt firm despite polls suggesting otherwise, not to mention the greater reality that post 9/11, Americans regularly flew bankrupt airlines. Circuit City filed for bankruptcy in the fall, but this didn’t keep it from shelving its existing ad campaign, nor did it keep customers out of its stores.

The question not asked by Messrs. Nardelli and Wagoner had to do with how consumers would view firms explicitly on the federal dole. Wouldn’t this itself kill sales given the many Americans not pleased with the bailout? And to the extent that the bailout doesn’t offend the sensibilities of all potential car buyers, wouldn’t acceptance of federal money on its face signal to consumers that the brands in question aren’t worth the risk?

Most importantly, and with Jaguar’s history in mind, aren’t nationalized entities (think Amtrak, landline telcos in Europe, Aeroflot in Soviet Russia) notorious for offering low-quality products inefficiently? Given the British government’s “successful” oversight of Jaguar’s demise, are Nardelli and Wagoner really so gullible as to believe that U.S. politicians and bureaucrats, not to mention a future car “czar”, will somehow be more effective?

And for the various “green” politicians who see a nationalized U.S. auto industry as the path toward ubiquitous hybrids, their stridency may well be environmentalism’s Vietnam. Whatever the truth about “global warming”, one sure way to turn voters off when it comes to the theory of climate change will be for our nationalized carmakers to produce green cars that constantly need repairs.

So while the bailout of GM and Chrysler was unfortunate for the continued waste of physical, human and financial capital, it can’t be stressed enough that its biggest victims will be its supposed beneficiaries. History, from the Trabant to the Jaguar, reveals the ineffective nature of government control over anything.

And if Americans looked askance at the bailout of firms known at the very least for making passable cars, just wait for the certain outcry that will materialize when the products of our nationalized carmakers come off the assembly line. If Americans are already mad, their anger is a quiet preview of what lies ahead.