I am, like many Americans right now, bailout-weary. The $700 billion bailout just given Wall Street combines a sense that our leaders are winging it, changing their minds and making decisions without anything approaching certainty, with a sense that we have no idea if the bailout is even working. We are told that things are not better, but that the bailout prevented things from being even worse. Perhaps that is true, but it cannot be proven. We would have to take that argument on face-value. And the social trust that is needed to accept a face-value argument just doesn't exist at this moment in America's history. So, we all continue to be more than a little suspicious.
Fascinatingly, at this very moment of bailout-weariness, America faces a complex decision regarding its failing auto industry. An impulse I can't shake is, America doesn't need to save its current organizations so much as it needs to create excellent organizations. And by all accounts GM has failed to be an excellent organization. Part of this is the union salaries it is saddled with. And some of it is a lack of innovation on clean cars. Truth is, GM hasn't created valuable products for some time. They've been kept afloat by credit. Well, that credit is dried up. And now they are exposed.
The following article, written by NY Times economics reporter Andrew Ross Sorkin, is the best case I have read for letting GM and the other automakers go bankrupt. He proposes a 'government-supported bankruptcy.' I especially liked this idea:
The automobile industry has argued that bankruptcy will be a disaster for the industry; that people won’t buy vehicles while they’re in bankruptcy for fear that the warranty won’t mean anything. There’s a fix for that too. The government should establish a warranty insurance fund that would insure the warranties of all G.M. and Chrysler vehicles bought while the combined company is still operating under bankruptcy protection. The cost to taxpayers should be next to nothing, assuming the company survives and can takeover the warranty obligations.Cautiously, my position is this: I could be for letting GM file for chapter 11 in the sort of government-supported fashion that Mr. Sorkin proposes, if -- IF -- a massive stimulus package/jobs program is put in place by the federal government. We may not need failed organizations, but we do need more jobs, lots of them.