“Automakers Must Be Allowed to Fail if They Are to Succeed.”

Michael Giberson

Chris Davis at Discovery News: Powrtalk:

Automakers must be allowed to fail if they are to succeed. To date they’ve been supported just enough to muddle somewhere above the line of failure. But failure at least allows concrete recognition that the current model does not work. Creating the possibility for new models, new incarnations of the existing companies, growing room for the emerging companies.

There are vibrant solutions waiting to be born. The death of the Big Three as we know them could create room for new life …

Or, we can pour oodles and oodles of taxpayer money into the Big Three, and help keep all of that automotive design talent and automaking expertise locked into the industry’s old ways of doing things (for a few more years, anyway).


4 thoughts on ““Automakers Must Be Allowed to Fail if They Are to Succeed.”

  1. These liberal illuminatis in Washington want to provide a bailout for the car companies, but it will only prolong the inevitable if they do–they’ll have to close eventually because they don’t have a plan or any concrete ideas about creating new models. It will be more of the same-old, same old! Flying those expensive jets to D.C. didn’t enhance their position when asking for this money, either!

  2. I would have less of a problem with letting the Big Three go under if the industry wasn’t so concentrated in a few states. What sort of local effect would the loss of tens of thousands of jobs in Michigan have on those communities? Don’t you think a bailout might at least lend itself to a longer demise, allowing workers to be laid off slowly and giving other automakers time to ramp up for this lost production?

  3. So why not a state-driven or regionally-funded bailout?

    Think of it this way – suppose that without a bailout the Michigan economy tanks (and therefore so also private incomes in the state and state tax collections), suppose that a potential bailout policy promises to help the state avoid that dip in private incomes and state tax collections. Since the benefits of the bailout, if successful, will be concentrated, shouldn’t also the costs and risks associated with the bailout policy similarly be focused?

    At least in the case of banks there is a broadly-based “systemic risk” argument flung around as justification for government intervention. Even in the bank case I think the argument is too thin, but I’ll admit it to be outside my field of specialty. I don’t think that there is a case for intervening in the auto industry when prices fall off any more than there is a case for government action when oil prices fall dramatically.

  4. So why not a state-driven or regionally-funded bailout?

    Think of it this way – suppose that without a bailout the Michigan economy tanks (and therefore so also private incomes in the state and state tax collections), suppose that a potential bailout policy promises to help the state avoid that dip in private incomes and state tax collections. Since the benefits of the bailout, if successful, will be concentrated, shouldn’t also the costs and risks associated with the bailout policy similarly be focused?

    At least in the case of banks there is a broadly-based “systemic risk” argument flung around as justification for government intervention. Even in the bank case I think the argument is too thin, but I’ll admit it to be outside my field of specialty. I don’t think that there is a case for intervening in the auto industry when prices fall off any more than there is a case for government action when oil prices fall dramatically.

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