All the talk about bailouts reminds me of a song first done by Barrett Strong in 1959 and later reissued by a dozen other groups including The Beatles. It was called Gimme Money and went like this:
The best things in life are free, but you can give 'em to the birds and bees. Now gimme money (That's what I want), that's what I want (That's what I want), that's what I want, yeah, that's what I want.
Money don't get everything it's true, but what it don't get I can't use. So gimme money (That's what I want), a little money (That's what I want), that's what I want, yeah, that's what I want.
Yeah, gimme money (That's what I want). A little money (That's what I want), that's what I want (That's what I want). So gimme money (That's what I want), that's what I want, yeah, that's what I want.
And so forth.
I thought of this catchy little tune while watching the automaker execs go before Congress hat in hand asking for a couple of billion dollars of taxpayer money to compensate them for doing such a lousy job of running their industry.
We've heard that the auto industry cannot be allowed to fail, that it's "too big to fail", that millions of people will be out of work if it fails. Well, maybe, but into this maelstrom of claims and counterclaims strides Dan Weil of NewsMax with a refreshingly lucid column titled Ten Reasons Why the Auto Bailout Is a Bad Idea. Here are the first three:
1. A bailout would provide money only for short-term survival. It wouldn't alter car makers' flawed business models. GM is running through cash at the rate of $2 billion a month. So $10 billion from the government would give it only five months' breathing room. Can they turn over their business practices in that period? Please. The temptation would be simply to come back to taxpayers for more.
2. A government handout would allow the Big Three to avoid necessary cost cutting. Because of a strong union, the average GM employee received $70 an hour in combined pay and benefits last year. And it's not just line workers who are making too much. GM chief executive Richard Wagoner garnered about $24 million a year in 2006 and 2007, while leading his company toward oblivion.
3. Bankruptcy isn't all bad. It doesn't mean liquidation. It means taking the painful steps the companies have been unwilling to contemplate to date. The real losers in such a deal are car makers, equity shareholders and creditors. Bankruptcy would give the automakers the chance to throw out existing employee contracts with their onerous health and pension systems. The unions would be forced to temper their demands if they want the car companies to survive. In the case of GM, it could also dump some of its uncompetitive product lines such as Pontiac and Saturn. Discontinuing five of GM's eight domestic brands would save the company $5 billion annually.
You can read the remaining seven reasons at the link. Weil and a lot of others are saying that the auto execs can sing Gimme Money all they want, but it doesn't make it a prudent thing to do. Why should the beleaguered public subsidize poor leadership and exorbitant worker salaries and benefits when the average taxpayer makes less than any of these guys? Management and labor have a right to make whatever they can get on the market or in contract negotiations, of course, but they don't have a right to expect us to open our wallets to compensate them for their avarice and incompetence.
Let them file for bankruptcy, reorganize, and get competitive.
RLC
