Tuesday, December 9, 2008

Obama plans auto bailout

President-elect Obama is planning a government plan to help automakers:

WASHINGTON — When President-elect Barack Obama talked on Sunday about realigning the American automobile industry he was quick to offer a caution, lest he sound more like the incoming leader of France, or perhaps Japan.

“We don’t want government to run companies,” Mr. Obama told Tom Brokaw on “Meet the Press.” “Generally, government historically hasn’t done that very well.”

But what Mr. Obama went on to describe was a long-term bailout that would be conditioned on federal oversight. It could mean that the government would mandate, or at least heavily influence, what kind of cars companies make, what mileage and environmental standards they must meet and what large investments they are permitted to make — to recreate an industry that Mr. Obama said “actually works, that actually functions.”
It all sounds perilously close to a word that no one in Mr. Obama’s camp wants to be caught uttering: nationalization.

Everything the government does should be focused on fostering a free market. We shouldn't try to force choices on the consumers (like green technology) that aren't being demanded in the market. The government could however make it so that certain fuel efficient cars could be profitable if people want them. They can do this through tax policy.

In addition, it is clear that the workers in these plants are overpaid. Other workers in our country earn less either in salary, benefits or both, yet produce equally good cars. This must change by Detroit workers taking pay cuts. Management should demand it. The government should back them up.

The pensions for current and former workers are unsustainable. The government should take these burdens off the company in the form of a discount rate loan.

In short, the Detroit automakers need to play by normal rules of capitalism and stop capitulating to unions, corporate greed and political correctness.

and the former workers are receiving too many benefits based on the current business model. They were overpromised.

No comments: