Third Party Financial Intervention Is What GM Needs

GM needed the tough love that only a third party financial intervention provides.  At least that’s what I think. I’m not talking about creating wealth.  I’m talking about survival here.

You give a drunk a drink and you might shut him up for a while, but you become part of the problem and complicit in his self-destruction. If we bail out the automakers, we become an accomplice to their suicide.

I say this because if we give them another drink (in the form of a multi-billion dollar bailout) we might be giving them just enough rope to hang themselves. What they need instead is a taste of reality.

Hey Detroit, how about making quality cars that people want to drive? Is that so hard to understand?

Hey autoworkers unions, you blackmailed the companies (and country) into paying your members over $70 per hour (including benefits). Foreign automakers pay their workers the equivalent of $47 per hour. Because of this huge cost differential, Detroit can’t compete.

To be sure, the companies themselves have plenty to answer for. They’ve done a great job of digging their own grave. But the unions helped dig that grave just as much. Now, because of the companies’ and the unions’ greed, the companies are going down and the workers are going to be displaced.

Actually, the companies will (hopefully) disappear, but most of the workers will find jobs with the new companies that buy the assets of the dinosaurs (GM, Ford & Chrysler). To be sure, they will not receive the benefits that the old firms promised them – but at least they’ll have sustainable jobs. They may have to attain vocational skills training, but they’ll have valuable skills and jobs. That’s a lot more than they have now.

You don’t give a drunk a drink if you want him to survive. The best thing you can do for a drunk is give him a shot of reality. Make him deal with reality without any intoxicant or plastic phony reality. This is the best chance he has to survive. We should give Detroit the same opportunity by letting them sink or swim without giving them an artificial temporary lifeline.

Ultimately, what continues to make this country great is that we are a land of opportunity. We all have the opportunity to succeed or fail. At the end of the day, we all benefit from this system because the best providers survive and we end up with the lowest cost, highest quality products. This is how wealth is created.

This is how we will remain a great nation.