June 2, 2009


As much as I hate to see an American icon go bankrupt, it needed to be done. The bloating and hemorrhaging could not continue unabated.

That said, I'm not so sure this 'solution' that involves government ownership is the smartest thing to do. In fact, I'm sure it's NOT. GM could not protect itself from it's myopic decisions of the past, and now, it's going to have another layer of not only myopia, but political considerations layered onto it's decision-making process. How does that help? The answer is of course, it doesn't. When the government is involved, particularly one beholden to the UAW, decision making on what, where, when, and how to produce automobiles becomes a political question and not a business decision. How to sell them, how to price them, how to package them, what color to make them all are impacted by the new dynamic of government not only oversight, but direct involvement in the decision-making process.

And if the business decisions were poorly made before, they will be absolutely unfathomable going forward. It makes more sense to let GM die completely than to nurse it back to supposed health for the sake of the UAW. The talent from GM would be better suited to a new domestic automotive venture - one not beholden to dealers, auto workers, pensions, previous bad decisions, and legacy issues or government micro-management.

This bankruptcy so far looks like it will really only solve the dealership problem, and if Chrysler's Dealergate turns out to be an indicator, then the dealership problem looks like it's positioned as too many Republican dealerships 'solution'.

The government also puts itself in a conflict-of-interest position here. By owning a car company and dictating the rules to ALL domestic manufacturers, it risks the viability of the other companies (i.e. Ford, and possibly Chrysler) by being able to stack the deck in favor of GM.

No matter which way you look at the bankruptcy there's nothing good coming out of it. The government will have major control of a failed company. Who does that premise instill with any sort of confidence? If you are one of those who thinks this is a glorious opportunity (like Michael Moore), then you need to consider some of the great government involvements of the past.

Look at what it has managed to do for Hugo Chavez in Venezuela. Look at what it has done for Iran under the regime of Ahmadinejad. Those who think they know best, are often the least prepared for the unintended consequences of their decisions. Why is that? It's because people, especially those most motivated by dogma, are blinded to the realities that surround them - far more so at least, than the free market which manages to supply a demand or fill a void so efficiently. Free markets are a truly wonderful thing and a spectacle to behold. In that light, a GM bankruptcy is not to be viewed as a death of an American icon, but as an opportunity to birth something even better. And in that light, a government managed salvaging of GM, should be viewed as an attempt to keep alive a patient that is already, well...dead.

As much as I argued for bankruptcy, I now find myself arguing for a non-managed bankruptcy, free of politically motivated oversight. This does not bode well for the automobile industry in America. It does not bode well for debt holders of GM, it does not bode well for freedom from government tyranny and it does not bode well for the future of America.

Once again, a crisis is being co-opted for political purposes, and a philosophical bent. How much longer can that trend continue before something gives out for good? And by something, I mean something really big - like capitalism, or the Constitution, or the entire country.

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