Wednesday, November 19, 2008

What Would a Statesman Do?

There have been countless queries of what would Jesus, Ghandi, and other do in various ethical situations. I think in this day and age what we need more in Washington is a true "statesman" And by that I mean that we need someone who is willing to rise above the party biases and make moves towards truly creating changes in the economic environment that will benefit everyone. And that is not to say a socialist view will make the cut. In regards to the Big Three automakers, this problem is especially vexing. By allowing them to go bankrupt, the nation risks allowing hundreds, perhaps thousands, of smaller suppliers and their companies to go belly up. Most large corporations have enough hard cash and materials that they can sell their way out of bankruptcy. Not so with small manufacturers, specialty suppliers or mom and pop companies that do contract work. So it's not so easy to simply let the Big Three slide. On the other hand, it is foolish to reward bad business practices to be rewarded. The idea that CEO's, higher administration and corporate boards should still make out like bandits in spite of their failure to achieve is the antithesis of what free enterprise is about. That's the one thing that liberals don't seem to grasp-freedom allows you permission to succeed or fail on your own recognizance. It is also problematic that the domestic auto industry has been plagued by the two pronged attack of expensive union contracts and burdensome legal demands and intervention created by the government. This has almost nationalized the auto industry without papers.

So what do we do?
First, let them go bankrupt. A wise executive would be on the phone to the heads of Nissan, Honda and Toyota talking about the opportunity to buy into the American market with a set American profile. Like it or not, there are still folks who are born into Chevy or Ford families. Create the situation where Congress butts out and allows the market to work. As the value of GM, Ford and Chrysler stock dips, help these other manufacturers to see this as a chance to broaden their market with already recognizable brands. Hopefully both President Bush and PE Obama are currently doing this behind the scenes.
By allowing this bankruptcy to proceed, this would negate overpriced American union contracts that have made American cars too costly for their reliability. When Honda can get higher quality for $42 per hour per employee cost while GM stumbles with $71 per hour per employee cost then there is something wrong with the system. Let this streamline and make American auto manufacturers return to their primary status as car makers. This would also cause some overpaid top brass to move onto other lines of business. A bankrupt company can't provide golden parachutes before they pay bills, so that would solve the bloodletting that some CEO's seem to do before they leave.

There is no good way to do this. Frankly, you shouldn't prop up support for products that aren't in demand. That is what we have been doing with corn via ethanol and with cars via bailouts. While there is not a good solution, someone has to be willing to make the hard decision to allow the markets to work. There's a reason why we don't have many farriers and wheelwrights anymore-their services aren't in demand. So why should taxpayers support companies who are too bloated and overcontrolled to make the moves they need to make in order to be profitable? This won't be popular with unions. It won't be popular on Wall Street, but if this truly is a "global economy" as the pundits claim, then it's time to really let it work. and believe me, I say this as someone who has a husband who is job hunting. This isn't a good situation. But I don't see throwing more money at it as being a win-win either.

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