Reply #25: I think they shouldn't be bailed out [View All]

[kurt_cagle]

Yes, I'm fully aware of the hundreds of thousands of workers involved, and the cost to national pride and all that, and I think they are important factors.

However, GM (and Ford for that matter) are essentially banks that happen to produce automobiles. Because of the banking situation, what this means is that they really do not care whether the cars they produce are environmentally friendly or get good gas mileage, they are only concerned that they can lure enough suckers into the showrooms to take GMAC financing at make a killing on the interest payments.

What happens if GM goes under? The factories do not go away - they can purchased (and even in this troubled time, there are plenty who would). Perhaps if the unions are so concerned about their future, they should buy up one or more of GM's lines outright, then use that to create new companies - or partner with new technology companies that will. Perhaps the upstream manufacturers and suppliers should purchase lines as well, perhaps in a partnership with those same unions.

The union pension plans are in trouble because they have already been spent, this is why the desire to get out of the obligations of those plans is so high. Losing the high paying factory level jobs will hurt, but frankly, if you're making $70 an hour (about $140K a year) + benefits, then you're probably better positioned than most to invest in new automotive startups. Indeed, I think that perhaps if the people working in the auto industry spent some time looking at the startup model in high tech, they might want to think twice about continuing to work for a dinosaur like GM.

This is a time of great change, but you can either try to keep the change from happening (which is what a bailout of GM does) or you can look to the change to give new opportunities for making smaller, more agile automobile companies. This is essentially what the Japanese did in the 1980s, and its what the US needs to do today.