Sunday, November 16, 2008

The Big 3 Automakers: Let Capitalism Be Allowed to Work!

Today, I listened to a fascinating discussion on the financial crisis and what to do with the Big 3 Automakers. You can listen to it here (starting at 7:00). Afterwards I sent the host, Sean Leslie, this letter, which he read on-air:
I agreed with every criticism you laid at the feet of the Big 3 Automakers ... until you said that they can't be left to die.

I disagree with that last part and here's why: They are inefficient, unproductive organizations building products that most people don't want. If they were allowed to fall into bankruptcy protection then:

  1. Things eventually would sort themselves out.
  2. The incompetent current management would be sent out to pasture.
  3. Most of the people working directly or indirectly for these companies would find employment with whatever Phoenix rose from the ashes.
  4. These workers would be hired at wages that the market can bare, not overinflated wages that only exist because of dumb management decisions.
Capitalism needs to be allowed to work. When profits are privatized but risk is made public then we have an untenable situation that cannot be sustained.

So not only can the Big 3 be left to suffer the consequence of bankruptcy, they must be forced to do this.


Anonymous said...

OMG! I couldn't agree with you any more if I tried. Capitalism is such a wonderful thing when money is being made. But when the tables turn and the well runs dry, capitalism shows its ugly side. We are such a greedy country. We are the ONLY country to make money on the sick, dying, and dead. The "Big 3" did this to themselves and now it is time to sink or swim.

Pelalusa said...

I wouldn't use the term "ugly side". Capitalism actually provides the most effective way to straighten out or remove those companies that are being run inefficiently or improperly.

One might extend your words to indicate that socialism is the solution. That would be a tragic mistake.