Let the Big 3 Make It, or Break It, On Their Own
Everybody wants a piece of the action- the bailout action. Banks, insurance companies, home builders, states, cities, and of course, the automakers.
Why, I ask, should we be bailing out GM, Ford and Chrysler? Should we offer a bailout to every company that manages their business poorly? What about the bakery down the street whose bread prices are too high, or the bookstore chain that can't bring in enough customers? Should we save them too?
I agree with Mitt Romney's op-ed piece in the New York Times the other day. Let the automakers go into bankruptcy rather than simply throw more money at them. We've thrown money at them before and we seem to be right back in the same position- bending over and holding our ankles.
If a company cannot react to changes in the marketplace, then it is not the taxpayers obligation to assist them in continuing in the same damaging practices that got them to the brink in the first place. It is extremely rare that we throw billions of dollars at any corporation in order to save their business, so why should the auto companies be any different?
Congress made the right choice the other day by sending the auto executives away until they came up with a better plan than, "Give us 25 billion dollars." Handing them the bailout money does nothing to cause introspection on their part. It just lets them know that anytime they get between a rock and a hard place, they can run to their favorite Uncle, Sam, for some help. We can only hope the next time these CEO's coming begging for money, that Congress just sends them away.
Bankruptcy might just get them thinking- thinking about what it is going to take to run their companies successfully and profitably. It might get them to understand that they need to know their customers better- react to their needs in a quicker fashion.
But what if they ultimately fail? Then they do. Another company will pick up the slack. Perhaps a new car company will be created that can react to market conditions more quickly and deftly. What about all the lost jobs? That will be painful, but, why not use the 25 billion dollars that the automakers want right now, to provide for unemployment, education and retraining later on? Another car company may see the failure of one of the Big 3 as an opportunity for them to expand their position into the marketplace, which means they will need to make more cars, and therefore, hire more people to make more cars.
Bankruptcy isn't a panacea. It doesn't solve all the problems that the car makers have, but it will put a greater burden and a greater urgency on them to either redefine themselves or remove themselves from the landscape so that other players can fill the gap.
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