Saturday, November 15, 2008

Should the U.S. Let GM Fail?

NYTimes | Momentum is building in Washington for a rescue package for the auto industry to head off a possible bankruptcy filing by General Motors, which is rapidly running low on cash.

But not everyone agrees that a Chapter 11 filing by G.M. would be the disaster that many fear. Some experts note that while bankruptcy would be painful, it may be preferable to a government bailout that may only delay, at considerable cost, the wrenching but necessary steps G.M. needs to take to become a stronger, leaner company. David Brooks says we should let the market process work, let GM file for bankruptcy, and then see what restructured auto company rises from the ashes. GM, Ford, and Chrysler are reaping the rewards of bad management, stupid product decisions, and giving away too much to unions.

Democrats in Congress are pushing for a bailout, but this will simply confirm and support the accusations of Republicans - that the Congressional majority represents a new generation of "tax and spend" liberals - while only deferring the inevitable crash of the Big Three U.S. auto companies, and wasting taxpayers' money.

Would Japan let its auto industries fall into ruin? Would Germany? Only in America do you have partisans arguing that letting this happen is good economic policy. Should a modern nation let its productive economic or industrial base collapse on principle?