Auto bailout equals corporate socialism and depressed innovation

As a liberal, socialist, and Democrat, I’m glad to hear the Republican senate has refused to bail out the big three automakers. We do not need a government that will reward poor business practices with corporate welfare. The auto industry, or any industry, should not be a welfare project. Global competition demands business and industry to remain one step ahead at all times. The US auto industry is a classic example of attempting to guide a behemoth industry in following short term gains. The swift changes in a 21st century global market favors smaller businesses that can retool quickly. For corporate behemoths, survival will require diversification or very strategic long term outlooks. Hoping consumers will open their wallets for SUVs, or any poorly designed vehicle out of patriotism, makes for rotten strategic planning. And the alternative vehicle research marketing ploy has not swayed consumer confidence.

Nothing depresses innovation like a rescue package. As I’ve said before, innovation shows the greatest gains in times of need. But for very large corporations, the ship turns slowly and the time to innovate is well ahead of the curve. Detroit had plenty of time to retool for the future.

It will be unfortunate that so many autoworkers will be lose their jobs. If congress wants to make a difference, it will support the autoworkers by hiring them for short-term national infrastructure rebuilding while providing education programs for new skills. And support the creation of truly innovative transportation industries that can hire the workers at competitive (not UAW) salaries.

In fact, I would bring Shai Agassi in to take over GM, fund a total retool of the company, and put the autoworkers to work building a national electric grid infrastructure to support the vehicles. Big Oil would need to shift to alternative energy (including…Gasp! “Nuculear!”… another post on that later). We could become energy independent in four years.

One response

  1. I agree Quyen. Bailouts are bad ideas and it’s sad to see so many people nodding their heads when even the idea of bailouts is suggested for companies which (as you point out) have had YEARS to retool and reinvent themselves, and are still wanting us to get excited about cars and trucks that get 20 MPG. Ridiculous.

    Larry Lessig’s post in mid-December <a href=”””The Mistake in Bailouts” is also on target on this subject. His post yesterday about how some corporations are publicly declaring they will use bailout money to try and oppose organized labor’s advocacy agenda rather than reinvent themselves for a dynamic economic is both upsetting and eye opening.

    Economic disruption is often the catalyst for creativity and innovation. Yes, it’s sad Detroit is full of empty buildings and even more are going to be empty if leadership doesn’t reinvent itself. I think it’s ridiculously duplicitous for GW to have promoted this agenda and people to still buy the argument that he was a fiscal conservative.

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