There are many economic reasons not to bail out the the Big Three, General Motors, Ford Motor Co., and Chrysler Corp.: any bailout, no matter how large, will only be temporary; any bailout will only sustain labor contracts that cost the companies $73 per hour, as opposed to Toyotas $47 per hour; any bailout cannot make the American products competitive fast enough to turn the companies around.
Economics aside, any bailout will send this message: what you are producing is, in essence, good. All you need to do is to keep producing this, only more efficiently.
But what the Big Three are producing is, in its essence, not good. Its automobiles are based on fossil fuels, and not very efficiently based on them, at that. An auto industry that says, give us billions so we can keep making vehicles that use fossil fuels is an industry that does not foster energy independence.
If Barack Obama is serious about energy independence, he will tell the auto industry this: Yes, you need to rewrite your contracts; yes, you need to shake out the inefficiencies in your management; but for this alone we cannot give or lend you billions. We can support you only if you use the billions to reorient your entire enterprise, away from autos based on fossil fuels to autos based, at least in part, on other fuels. You need to build hybrid cars, electric cars or cars using still other energies not yet known.
To prop up companies that fail not just because theyve been mismanaged, but because their entire raison detre is wrong, is a waste. Not that we should overlook the dimensions of the mismanagement. General Motors, for example, pays untold dollars to people who have lived on their pensions longer than they worked for the company!
We dont believe the Big Three will radically rewrite their labor contracts no matter how large a bailout they receive, no matter how many strings are attached. Companies which are so large and whose products are, generally, so far behind, cannot be reformed. They must be brought to bankruptcy. No radical restructuring will take place otherwise not to mention, no major reorientation away from fossil-based automobiles. If Barack Obama is serious about energy independence, the crisis in the auto industry presents a golden opportunity.