David Brooks Gets it Right and Obama Needs to Listen
New York Times columnist David Brooks' take on the proposed auto industry bailout is exactly correct. President-Elect Obama should pay careful attention to Brooks' points and turn his back on the incredibly powerful lobbies that represent its constituencies. It's time to let the U.S. auto industry fail into bankruptcy, use the bailout money to cushion the blow for the displaced workers, and rebuild the industry on a more sound basis.
As Brooks puts it, "In short, a bailout will not solve anything — just postpone things. If this goes through, Big Three executives will make decisions knowing that whatever happens, Uncle Sam will bail them out...." These folks have ignored the market for decades. They've come to view innovation as threatening, competition as stifling and responsible planning as an anachronism.
One of my colleagues suggested the other day that if the Big Three went into bankruptcy, many if not most of their assets would be purchased by Japanese and other international auto makers interested in having U.S. production facilities and workers to shorten their plant-to-customer links. Who gets hurt? Those people who should pay the price: auto executives and shareholders, the former for not making good business judgments even when the facts were staring them in the face and the latter for failing to hold their employees accountable for stupidity.
I grew up in Michigan. I know how devastating a shutdown of the Big Three will be. I have friends there who will be displaced, injured economically. Being pro-labor, I'm not excited about the impact on unions either. But the time has come to bite the bullet as we did earlier for the steel industry and other major industry segments that refused to adapt to changing times and calcified. It's a process Brooks calls "creative destruction" and it's become an integral part of American capitalism.
Time to let that destruction take its course. It would take a powerful leader to face down those special interests who will scream bloody murder if a bailout is denied. This will be a good test of President-Elect Obama's intestinal fortitude.
