And while that all may sound like a joke, the second part, at least, isn’t. Some lawmakers recently hoped to bail out Detroit automakers in return for partial ownership in the companies. According to an Associated Press story on Nov. 12, “Congressional Democrats are pushing legislation to send $25 billion in emergency loans to the beleaguered auto industry in exchange for a government ownership stake in the Big Three car companies.”
Washington wouldn’t be the first capitol to pour taxpayer capital into the automotive business. In the 1970s and ’80s, the British government took an ownership stake in British Leyland. Before all was said and done, the government had spent $16.5 billion in inflation-adjusted money on the company, which ended up folding, anyway.
“I’m not telling the U.S. what to do, but the lessons of the British experience is don’t throw good money after bad,” Leon Brittan, an aide to former Prime Minister Margaret Thatcher, told The New York Times. “British Leyland carried on for a few more years, but they’re not there now, are they?”
Under government ownership, British cars were notoriously bad. We could expect the same thing here, once members of Congress are acting as automotive engineers. If you thought federal regulations hampered car makers, wait until the government’s in the room during the design process.
Detroit’s automakers have an opportunity, not a crisis. They should declare bankruptcy, rewrite unaffordable union contracts, and design cars that people want to buy. If they were smart, they’d especially focus on the emerging markets of China and India, where billions of people are going to want to buy cars in the decades ahead.
But there’s no need for a bailout. Government-owned roads are inefficient enough; there’s no reason to try to clog them up with government-built cars.
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