United States Motors

The conclusion of an excellent column by David Brooks:

Car Dealer in Chief
[…]
Corporate welfare rarely works when the government invests in rising firms. The odds are really grim when it tries to subsidize fading ones. (In the ’80s, Chrysler already had the successful K-car in the pipeline.)
The most likely outcome, sad to say, is some semiserious restructuring plan, with or without court involvement, to be followed by long-term government intervention and backdoor subsidies forever. That will amount to the world’s most expensive jobs program. It will preserve the overcapacity in the market, create zombie companies and thus hurt Ford. It will raise the protectionist threat as politicians seek to protect the car companies they now run.
It would have been better to keep a distance from G.M. and prepare the region for a structured bankruptcy process. Instead, Obama leapt in. His intentions were good, but getting out with honor will require a ruthless tenacity that is beyond any living politician.

And a NEWS ANALYSIS in the LA Times:

Obama takes step over the line that separates government from private industry
His automaker bailout plan wades into ‘industrial policy,’ in which government officials, not business executives or the free market, decide what products a firm makes and how it charts its future…

By the way, the Auto Task Force’s “Determination of Viability Summary” for GM essentially unplugged the Volt (p. 4):

GM has devoted significant resources to the Chevy Volt. While the Volt holds promise, it is currently projected to be much more expensive than its gasoline-fueled peers and will likely need substantial reductions in manufacturing cost in order to become
commercially viable [as noted here a while ago – MC].

Mark C.

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2 thoughts on “United States Motors

  1. Philanthropist: Remember when Janet Leigh buys a new used car in “Pyscho”? The dealer was quite sincere, as I am sure Obama is. Sincerity is not the relevant issue.
    Mark
    Ottawa

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