Auto Bailout on Hold – Good

By | November 20, 2008

Well word has come down.  Any sort of bailout for the automakers is on hold at the moment.

“Until they show us the plan, we cannot show them the money,” House Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol. “Hopefully in another week or two we can see a plan.” – USA Today

That is the part that scares me.  By telling them they must have plan, you are implying that we are just going to hand them the money when we do.  When is this crap going to stop?  Business’s run themselves into the ground, and instead of failing and learning from it like any normal business, we hand them billions and say “do better.”  Where the hell is the incentive for them to do better?

Rob over at Sayanything blog had an excelent post on this issue just yesterday.  Basically Mitt Romney says to let Detriot go backrupt, for a lot of the reasons I mentioned above.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

Will it be bad for all of us in the short term?  I am sure it will.  Jobs will be lost, companies will have to restructure, etc.  Will it force the automakers to kick it into gear and actually make their companies profitable?  Yes.  Bailouts are incentive to continuing the bad behavior that got them there in the first place.  Hopefully our elected leadership will catch onto that.  (Especially since the 700 billion bailout plan isn’t going like they thought it would… though it is going like a few of us feared it would.)

[tags]auto bailout, politics, government[/tags]

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