Monday, November 17, 2008

My Automaker Bailout Proposal

Since the government appears to have got knee-deep in the business of bailing out failed companies (and let me make it clear that I'm against it), then I want to make two suggestions. Before we give taxpayers' money to Detroit automakers and their unions, let's try the following:

(1) Create a voluntary fund. Everyone that thinks that Detroit should be helped would be able to commit by providing cash or signing in as a loan guarantor. No handout through coercive government power. It's a truth-revealing mechanism: whoever thinks that this is the correct way to do it please be the first in line.

(2) If coercion is to be used, then give the money to anyone willing to buy new cars instead of giving it directly to Detroit, let's say, someone like me. After all, I'd not mind having one of these in my garage...

PS: Becker explains why bailing out Detroit is a bad idea (HT Mankiw). See also this comment by Perry (HT Mankiw).

1 comment:

Dick's Auto Group said...

It is funny how we rushed blindly into shelling out $700 billion to companies with few jobs to and are not going to help protect hundreds of thousands of jobs in the mfg. sector which is where the middle class with and without college degrees live and breath. The only reason I can think of for not helping them is that if they file Chapter 11, they can break the back of the union and end their contracts in court as part of reorganization and offer them their jobs back as less pay. My vote is to help them out now. I think $50 or $75 billion is better spent here and than $700 billion was previously. Here is a sample letter I found and a site to locate your representatives as well to support bridge loans to the auto industry. They loaned Chrysler money years ago and they were a strong and growing company until Daimler bought them raped them and they threw them out with little to nothing. Oh, I am sorry that was a merger of equals. Ha.