General Motors proposes that the public lend it some dozens of billions of dollars more, and Obama seems to think it’s a good idea. Sad to see the new guy pooch a big decision so early.
Detroit is certainly hurting, and the people who live there and near other plants deserve help, perhaps with bus tickets. But these companies have amply demonstrated that their management is pretty good at making twentieth century cars in a protected environment, but profoundly suck at everything since except, well, sucking up taxpayer money and destroying value. Why in the world would one prop up such an enterprise; if it’s a loan, why would one expect it to ever be paid back? We will wind up with a nationalized car manufacturer, and if you like Alitalia, you’ll love US National Motors, a basket case for the ages.
Protecting an enterprise from its deep-seated inability to produce competitively and to engage with the future has never done anything but put off the inevitable, and very expensively. Toyota and Honda (or a competent new team with tough investors), will be happy to recycle the capital of GM into a working car company like their existing US operations. Or into scrap, as reality indicates. The workers need to be taken care of humanely, as their employer has not, trashing their retirement and medical insurance, but they don’t need to be made permanent charity cases, who pretend to create value in a government sheltered workhouse whose every day of operation is a mendacious pretense that the real losses haven’t already occured. They have: US car companies misused and wasted the resources society entrusted them with and what’s left is a negative sum. The recovery will proceed much more successfully if we don’t start by lying to ourselves, never mind wasting money pounding the chests of corpses.
