ubernoir wrote: Mike the Usurper wrote: ubernoir wrote: Mike the Usurper wrote: ubernoir wrote: Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction — with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country’s prosperity.
Here's an answer to the question, and I guarantee it's not the one Brooks is looking for. Given the current stock price of GM, rather than a $50 billion bailout, how about a $3-5 billion hostile takeover? How about saying to Lee Iacoca, "Lee, we've created a new position with you in mind. It's called Undersecretary of Transportation - Governor General Motors. You'll effectively be CEO-GM, and your new "board of directors" is sitting in the big chair at 1600 Pennsylvania Ave. Your country is asking you to come back, for one last service. Are you up to the challenge?" And before anyone reflex responds "omg! Socialism!" it would be best to actually think that one out. This isn't taking a public corp and nationalizing it, it's about forcing a change on one of the most mismanaged companies of the last 50 years because they're too stupid for the Darwinian market forces to work.
British Leyland
This is actually a pretty good case to look at, but there are some issues. BL had problems, turning out iffy cars over a near 20 year period, but how is that any different from what GM has been doing for their past 20 years? The Cavalier? The Astro? There is certainly a historical argument to be made that a prior attempt at this was unsuccessful, but given what GM has been churning out, it's very hard to make a case that the results would be any worse than leaving GM to its own devices. While this sort of shake up by itself may not improve things, active overview could, by itself, weed out the sort of stupidity we've been seeing at AIG over the past month (bailout money paying for "executive retreats" to high priced resorts). Buying GM may not solve the issue, but I'm hard pressed to seeing it be any wose than the current situation. Even if all it does as drag out the collapse of GM from a period of weeks/months to a period of years, that is an improvement because you can spread the transitioning of the GM related workforce into other areas over a much longer period.
if the sole serious rational is how to transition the pain for the workforce then I think there are better ways to do it. $50 billion spent on local regeneration zones, retraining, etc invests in the future and gets a bigger long term jobs bang for your buck.
the problem of nationalised industries proved an enormous problem for the British Left and for the European Left in general. I think you see that there's no reason to believe that government is likely to do a better job of running a company than the market. You can't save the industry in it's present form. It's been in a long decline and needs major restructuring so let it be asset stripped. Where are the Detroit Land Rovers and Jaguars? Save what can be saved certainly but these are decisions best left to the market. Economic pain is an inevitable part of the process and these sorts of commitments turn open ended. So for me there's also a Vietnam question, what's the exit strategy? As with Iraq, where's the pressure to wean Detroit off the American taxpayer teat? Protectionism creates dependency. Let the market work and I think you'll end up saving more of your industry (and save it in American hands) than we Brits managed with our car industry. This is a political albatross that you're about to hang around your necks and a great way to get Republicans elected.
In this case you're talking about 2.5 million people becoming unemployed. I'm also not talking about nationalization, but public interest with a government component a la Chrysler in 1980. The shares can be resold to the public, but in the short term, the company changes direction sharply. Retraining is also a massive interest, but adding that many people to the pool in one swoop fails. Nicorette or the patch has superior results to cold turkey. In a strage way, I'm a conservative. I don't see either any way or reason to long term save GM. They've built garbage cars for 20+ years. In the short-medium term, it's possible to decrease the damage an immediate collapse would cause. That's the idea, and dumping the current upper floors of GM is a good first step. If it turns out the government is successful in building a non-POS car, that's gravy. And if it fails or works, it's doing something which has not happened in close to 30 years. RE: Op-Ed Columnist - Bailout to Nowhere - NYTimes.com |
