Thursday, December 11, 2008

Bailout blues

What the auto industry bailout lacks that it rescues not people or jobs, but stupid business plans. With my money. And so far they are a disaster. The auto industry is ready to take big subsidies to keep on building cars whose basic principle of design (and gas mileage) haven't changed substantially since the 50's.

The problem with both bailouts is they short-circuit the "creative destruction" inherent in capitalism. Usually when well-off CEO's invoke creative destruction, they mean people losing their jobs is good. I think people whose business plans got us here should enjoy a little of the old creative destruction, while protecting working people.

So here's an alternate plan:

1. GM has been described as a health care company that happens to make cars, ~$6B/yr for 1.1 million people, less than half of whom are current employees. The big 3 have substantial liabilities in health care and retirement, which the government should assume and guarantee to assure that peoples' *existing* benefits are not compromised by what is to come.

2. A "job bailout" should be instituted that extends substantial relocation and pay extension to jobless workers. 100% benefits for some number of years capped at $100K/yr.

3. The remaining parts of the company should be sold off at a substantial discount to someone who will present a credible plan to make cars. Maybe not as many cars, but probably not the stupid gas guzzlers they've been making since the Glen Miller era.

Would Tesla motors present a plan to build a million electric family sedans per year in three years with part of the infrastructure, labor and capital freed up? Who knows? I'd like to find out. It boils my blood that the auto industry CEO's have their hands out for welfare for *them* to build more crap.