Few issues seem to confound ideologues more than bailing out the American automakers. On the left, you've got labor types who are totally in favor of it while the anti-corporate wing wag their fingers and say nuh-uh. On the right, you've got business types paralyzed with fear over a wholesale economic collapse, while market fundamentalists (and anti-union purists) say let them die off. But I don't care what the ideologues say--there are some reality-based questions to consider. Since I am profoundly ignorant about complex relationships in market economics, I'm going to pose them as questions. Maybe some of our insightful, educated readers can clue the rest of us in.
- If the government doesn't bail out the companies, what will actually happen? For example, conventional wisdom holds that if we could go back in time and bail out Lehman Brothers, the collapse in the financial markets might have been averted. Since the entire system seemed structurally unsound, I'm not sure I buy this. So, are we really heading off catastrophe, or throwing good money after bad? And what does catastrophe look like? 1933?
- What kind of strings can Congress attach to a bailout, and should they? I have heard a number of proposals that would force automakers to produce greener, smaller cars, strip executives of bonuses, even make healthcare reform part of the solution. Unions want something in exchange for giveaways, like laws making it easier to organize other sectors. The logic behind attaching strings is straightforward, but how many would it take to hog-tie the companies and doom them to a slow, uncompetitive decline? Or is the hog-tie threat really just a death rattle of free marketeers who refuse to submit to post-collapse realities?
- Is appointing a Car Czar as bad an idea as it seems?
- Is bailing out Detroit the best way to ensure the US has a healthy, competitive automotive sector for the next 2-3 decades, or are GM, Ford, and Chrysler the problem rather than the solution. Should these dinosaurs go extinct?
- Even if letting Detroit die is good in the long run, would the pain be too bad in the short run?
All right brains, do tell.