01 December 2008

Auto Woes

Well it looks like most people are thinking about the auto industry debacle the right way.
If the automakers’ difficulties can be traced to a single, essential failure, it is their belief that they could avoid change. This is evident in their management structure, their labor contracts, and, most consequentially, their cars. For the past thirty years, the Big Three have been promising one hyper-efficient vehicle after another—the electric car, the “super car,” the hydrogen car—only to produce bigger and bigger gas guzzlers. (It was while the carmakers were supposedly working together, and with a billion dollars of federal money, to create a “new generation of vehicles” that G.M. purchased the rights to the Hummer.) The only compelling argument the companies can make at this late date—if a man strapped with explosives can be said to be making an argument—is that they will not suffer alone.

That's from the New Yorker. And the fact that many will suffer if the Big Three go under is not being disputed by anyone. The question is whether or not avoiding that suffering is worth doling out free money to save inefficient firms that are unwilling to change. It's obvious to me that without the proper incentives they will not change their behavior. Let them save themselves or fail, but don't ask for my tax dollars.

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