My Quick Thoughts On The Automotive Bailout

Topic(s): me,government
2008-11-24 00:59:56 US/Pacific

Bailouts beget bailouts. This did not start in 2008. This started in the 1980s, when the American automotive corporations were in trouble. The government bailed them out. At the time, the bailout appeared successful. The American automotive corporations made a brief comeback.

But the precedent had been set. There was no need to fear failure. Failure meant at worst that the government would bail them out. And so more automotive bailouts arrived. And more. And here were are in 2008.

How we should handle the failing American automotive corporations today is also how we should have handled them in the 1980s. Let the failing companies fail. Had complete failure occurred in the 1980s, the American automotive corporations would not be asking for a bailout in 2008. By extrapolation, if the American automotive companies are bailed out today, what should we reasonably expect from them ten years from now? Would you expect wildly different results? Or would you expect more failure?

I would expect more failure and more begging for bailouts.

I understand that failed American automotive corporations would suck. It would suck because a lot of people would be out of jobs. It would suck because a lot of retirees would lose benefits. So here's what I think we should do.

We should take the $25 billion that the American automotive corporations are asking for, and apply it directly to the current workers and the retirees. That is, bypass the corporations. Let the corporations meet their fate.

The current workers should be retrained and/or reeducated. They should be paid to acquire new skill sets that are more applicable in the 21st century. Perhaps via four-year college, perhaps via trade schools, perhaps via high schools. But it should be provided to the worker at a pro bono rate. I'm guessing half of the $25 billion would cover tuition for thousands and thousands of workers, with billions remaining.

The of other half of the $25 billion should be used to match current benefits of the retirees. I'm not exactly sure what the benefits are. Probably mostly medical benefits. Medical benefits are indeed expensive, but I doubt anywhere near $12.5 billion.

The best part about my plan is that the costs are a one-time financial hit. E.g., the workers eventually find new jobs (and become tax payers). E.g., the retirees eventually no longer require benefits (for whatever reasons), and thus the benefits and their attached costs expire.

Otherwise, you can be certain that the American automotive corporations will beg for bailouts once again circa 2016.

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