Auto Industry Bailout
I woke up to more news about GM's possible bankruptcy. Not really knowing what to make of the whole situation, I stumbled across Tom Friedman's op-ed in the Times this morning. I'm not always a fan of Friedman's work - his sometimes uncritical understanding of globalization, for example - but he has been a persistent advocate for retooling the American economy. Of course, the irony of his column is that my favorite comment actually comes from a Wall Street Journal piece from earlier this week. Quoting Paul Ingrassia at length, Friedman writes:
“In return for any direct government aid,” he wrote, “the board and the management [of G.M.] should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp G.M. with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others and downsizing the company ... Giving G.M. a blank check — which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant — would be an enormous mistake.”Leaving aside the issues of fairness with regards to the banking bailout, he makes a valuable argument, and brings up issues about the importance of unions to boot. Much to turn over.