Government intervention in the private problems afflicting General Motors, Chrysler, and the finance business effective reward poor leadership. Leaving executive compensation off the table completely, the government should foster a healthy climate for business, but no more.
General Motors is not too big to fail; it’s too proud to do the right thing. Wise liberals, like Seth Godin, and conservatives, like Mitt Romney, agree that the best thing for the GM, for the American economy, and for the government is to let GM file for bankruptcy protection.
Bankruptcy forces GM to reorganize itself into a viable business, which it currently is not. Bankruptcy forces all of the US car makers and the UAW to restructure union contracts that reflect modern realities instead of childlike nostalgia. Finally, bankruptcy is the only way to ensure that the financial accommodations are sufficient to fix GM’s problems long term.
The same principles apply to Chrysler and, possibly, to Ford. I concentrate on GM because its CEO is the most boisterous in telling us that it our duty to save his job. No dice. Our duty is to help save his company from him.
P.S. Seth Godin hints that the NY Times needs to restructure as certainly as GM does. And don’t miss this sobering commentary in the Financial Times of London (h/t Allahpundit)