Thumbs down on the bailout
Dec. 13th, 2008 10:51 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
jducoeurLoathe though I am to agree with the Republicans, on balance I'm coming to the conclusion that they're right about the auto bailout.
It's probably true that going Chapter 11 would cause GM an enormous amount of short-term pain (and Chrysler might well just go under), and it's true that there would be a nasty, sharp contraction as a result. That said, if it was packaged correctly, I suspect that it would correct much more efficiently: it would rip the bandage off, and allow the industry to do the necessary restructuring fast. It would to a substantial degree break the UAW (which, even granting that it does *some* good, is doing too much harm at this point), and probably come out with a GM that was smaller but ready to fight back much more quickly.
And I suspect that much of the PR debacle could be offset if the company, from the start, aggressively painted this as "reorganizing to be stronger". (And, frankly, played the national-pride card hard.) They have to move off the defense publically, changing both their thinking and look into that of a scrappy competitor. Granted, they've shot themselves in the foot on this particular point (over and over and over again in recent weeks), but public attention is fickle, and I'd bet that it could still be turned around.
Chapter 11 and the bailout both have essentially the same medium-term goal: restructuring the auto industry to make more *sense*. The difference is that Chapter 11 would probably be much faster and more efficient, because the legal power to change would be stronger. And really, it would be more honest. The bailout has this image of "saving jobs" and suchlike, but that's nonsense -- the whole *problem* is that GM is ridiculously inefficient, and there's no way to save it in the long run without lots of pain. So the choice is between dragging that pain out over the course of years (the bailout) or getting it out of the way in a horrible shock (Chapter 11). The latter would be much nastier in the short run, but I suspect better a year or so down the line...
It's probably true that going Chapter 11 would cause GM an enormous amount of short-term pain (and Chrysler might well just go under), and it's true that there would be a nasty, sharp contraction as a result. That said, if it was packaged correctly, I suspect that it would correct much more efficiently: it would rip the bandage off, and allow the industry to do the necessary restructuring fast. It would to a substantial degree break the UAW (which, even granting that it does *some* good, is doing too much harm at this point), and probably come out with a GM that was smaller but ready to fight back much more quickly.
And I suspect that much of the PR debacle could be offset if the company, from the start, aggressively painted this as "reorganizing to be stronger". (And, frankly, played the national-pride card hard.) They have to move off the defense publically, changing both their thinking and look into that of a scrappy competitor. Granted, they've shot themselves in the foot on this particular point (over and over and over again in recent weeks), but public attention is fickle, and I'd bet that it could still be turned around.
Chapter 11 and the bailout both have essentially the same medium-term goal: restructuring the auto industry to make more *sense*. The difference is that Chapter 11 would probably be much faster and more efficient, because the legal power to change would be stronger. And really, it would be more honest. The bailout has this image of "saving jobs" and suchlike, but that's nonsense -- the whole *problem* is that GM is ridiculously inefficient, and there's no way to save it in the long run without lots of pain. So the choice is between dragging that pain out over the course of years (the bailout) or getting it out of the way in a horrible shock (Chapter 11). The latter would be much nastier in the short run, but I suspect better a year or so down the line...
(no subject)
Date: 2008-12-13 08:21 pm (UTC)(no subject)
Date: 2008-12-13 08:27 pm (UTC)To your second question, as you phrase it, of course it would be stupid. It might be, however, that your assumptions are not shared.
For one thing, the product is not crappy.
For another, no one should be planning on saving any particular company, but on saving the economy as a whole.
(no subject)
Date: 2008-12-13 08:44 pm (UTC)that aside
i don't think government handouts are the way to save the economy...
(no subject)
Date: 2008-12-13 09:07 pm (UTC)Do keep in mind that this has been shifting. While it's true that the big three still produce a lot of crap, they're producing a lot *less* crap than they were 10-15 years ago. They haven't caught up with Toyota, but it's no longer unusual to see Consumer Reports speaking well of one of their cars, as it used to be. And it looks to me that they've passed a number of European brands in terms of quality.
I prefer to judge companies, like people, as they are rather than as their reputation paints them. At this point, an objective look at the big three seems to say that they're pretty much mid-level: better than some, worse than others.
Mind, I'm still buying Toyota. But that's because that same objective look still puts them at or near the top in terms of quality. (Besides, I just plain like their handling...)
(no subject)
Date: 2008-12-13 09:10 pm (UTC)(no subject)
Date: 2008-12-13 10:42 pm (UTC)What's your plan?
(no subject)
Date: 2008-12-13 10:44 pm (UTC)(no subject)
Date: 2008-12-13 10:54 pm (UTC)(no subject)
Date: 2008-12-13 11:05 pm (UTC)