I offer a modest proposal for dealing with GM and Chrysler: let them fail.
Businesses that can’t borrow money commercially and can’t find a venture capitalist willing to try to fix them, are well past being saved. The are candidates for Chapter 7 Liquidation. In liquidating these companies under the Bankruptcy code, any viable assets (intellectual property, PP&E) can be purchased out of the Bankruptcy estate and put to productive use.
Moreover, talented people, working for a failed enterprise now will have both the opportunity and the need to join or build new businesses. Such a process of “creative destruction” (as the brilliant Austrian economist Joseph Schumpeter called it) is why capitalism works and any other system fails. The decisions of countless consumers force enterprises to become more efficient or close their doors. By any measure, GM and Chrysler have failed.
It is possible that Ford might find a new lease on life from what it could purchase from the GM or Chrysler bankruptcy estates. It is possible that India’s Tata Group or China’s Cherry might use this as an opportunity to manufacture, in the United States, the more affordable, more basic cars that the US economy will demand for the next several years. It is also possible that even the “Worker’s Paradise” called Michigan will enter the 21st (or even the 20th Century) and adopt basic, rational policy such as a Right to Work law, lower taxes and slashing absurd, business-hostile and job-destroying laws and regulations.
To take the tax money of people of modest means to save these inefficient companies, with their insulated management and their job banks, is an insult to all Americans. We simply cannot reinforce failure or to distrust the wisdom of markets.