auto bailout bust

December 15, 2008 ·



so the auto industry bailout didn't get through congress. finally a little restraint from washington. although $14 billion in restraint is really nothing compared to $700 billion in non-restraint. though i would have liked the bill to have failed on lacking fiscal responsibility, i know it was pro-union backers that caused it to fail. the message i wished this sent was letting everyone know that the government is not here for handouts and the populace is not the benefactors of troubled companies.

the one part of the auto bailout that i supported was in saving the hundreds of thousands of direct jobs (and million indirect jobs) from being lost because of a few irresponsible executives. much like the financial bailout, the part of that i supported was not putting people out because of questionable actions by senior management. the many should not have to suffer for the sins of the few and such en masse failings are problematic. i have no problem with people losing their mortgages or jobs in the normal course of things, but when it happens instantaneously in such large quantities, then that impact is more than a ripple in the ocean.

what would have been a better option is not putting money back into businesses with inferior products, faulty decision making and legacy systems/contracts/obligations rather set aside a fund for the employees when the big three eventual file for bankruptcy. in all likelihood, the big three will, in some form, live on post-bankruptcy and those jobs will be available again. the bailout should be to support those unfortunate folks put out by incompetent companies and not prop up those companies.

yes it's socialist and i wouldn't call myself as such, but it's more logical than giving it to bad companies who've shown little responsibility in a storm brewing for decades. the fund would be run by some kind of trust designed to support auto worker families, providing them a stable and reasonable income (ie. not to the excessive levels of union wages) until the company they worked for is back up and running. the key is that in this eventuality, there are guarantees and the companies work toward operations again with the same employees in mind.

i liken the whole situation to a junkie. a bailout is just enabling them further. junkies need to hit rock bottom and staving off death with free money doesn't allow you to hit rock bottom, it's just another hit. junkies won't change until there is no other option and detroit won't change either if they are allowed to continue with their ways.

to me, bankruptcy is the only option. a controlled, assured bankruptcy (if there is one) is the only future that will make real change. this will allow them to shed management who have led these companies to their current state, foster more innovation, collapse the crippling unions, and repair their ailing bank accounts. sure, i make it sound simple, and i know it's not. but drastic measures, that doesn't include the term bailout, is just realism.

will this rejection force the bankruptcy issue or will it spur on a diametric shift in their thinking to turn it around? i don't know, but it needs to be extreme.

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