Paul Jacob

I could list a long series of reasons. But consider, instead, the sage words of one congressional skeptic, Rep. Jeff Flake:

My own view is that, if there was ever an industry in need of bankruptcy, it’s the auto industry. It’s the only way they can renegotiate their union contracts and make other changes to be competitive. They might not make it out of bankruptcy, but they certainly can’t survive long term on their own without entering it.

Bracing words. Repeat them: “If there was ever an industry in need of bankruptcy, it’s the auto industry.”

I wish I’d said this myself. “In need of bankruptcy” is not exactly our current era’s marching cry, but perhaps it should be. Bankruptcy is about failure. Understandably, no one wants to fail, and no one wants to praise a process that is “about failure.” But that’s why it’s needed. Bankruptcy is a recognition of failure.

We should not be so afraid of failure that we cannot identify it when it happens, or call it by name.

So take a step back. Take a breath. And then recognize a basic truth: If the Big Three cannot survive the current market climate, then they have failed.

Formal bankruptcy recognizes their failure. And would allow them to “move on.”

And think, for a moment, about those pitiable CEOs and CFOs and COOs. Under a receivership, they don’t get their bonuses, like in our bailed-out mortgage and banking industry. Instead, they are more likely to receive the blessings of responsibility: pink slips.

All contracts get put on hold, many are voided. The business’s receivers take control, and all claims upon the assets of the company get sorted out.

And, inevitably, the failed company’s assets go to new owners.

Some of the Big Three’s divisions are extraordinarily profitable. They get sold or auctioned off to the highest bidders, who then run them (it is hoped) at a profit.

Some of those divisions have been so badly run for so long a time that it would be better to let them die a peaceful death. We don’t weep for Studebaker, today; why weep for just another SUV line?

It would be great if some new owners and managers would take up the promising Volt project from Chevy. There is probably a big future in electric cars. I bet there are investors who would be willing to take it up after receivership.

Or, GM could sell off the line now, staving off bankruptcy.

Or, better yet, GM could sell off other lines, and invest in electric vehicles, where there’s likely a big future.

Unfortunately, before GM, or Ford, or — what’s the third one, again? Iacocca’s once-bailed-out dinosaur? — Chrysler can move forward, they each face a speed bump the size of the Rocky Mountains: the unions.

Representative Flake is right: Getting out from under union contracts is almost a necessity. America’s automobile industry won’t recover as long as it remains weakened by union leechcraft. It’s a wonder that these companies have survived as long as they have, considering how unreasonable union demands have been, and how life-draining union benefits have been to those companies.

And that gets to the heart of why things look so bleak right now. Do we have any reason to believe that president-elect Obama has the insight or the courage to take on the unions? Indeed, he and the congressional Democrats will be sorely tempted to throw billions at Detroit rather than confront one of the more sordid skeletons in their closet: America’s pro-union laws. In fact, our laws may soon be further rigged in favor of unions.

The Democratic Party has played the toady to “organized labor” at least since FDR’s time, and organized labor has played one of the most pernicious political roles, with devastating influence on American policy and culture. The teachers’ unions have consistently held back K-12 schooling in America, and they prevent, at every possible turn, the best attempts to improve education. America’s unions also helped cartelize — and then ruin — the industrial sector. Think steel. Think rust belt. Understand why America is as “post-Industrial” as it is.

Big Three automakers are remnants of the ancien régime, of old school American can-do-it-ness. They’ve been hurting for decades now, struggling to keep up with modern demands.

And now they claim to need government funding.

What to do? Why not fire them all? Fire every CEO, CFO, COO. And fire every worker. And then hire needed workers back at market wages.

Yes, they need bankruptcy . . . because America needs to move on.

But with the party beholden to unions now in control, this is about as likely as . . . financial sanity under the Republicans.

Both parties believe that some enterprises are “too big to fail.” And because of this, they may imperil the biggest enterprise of all: the United States of America itself.


Paul Jacob

Paul Jacob is President of Citizens in Charge Foundation and Citizens in Charge. His daily Common Sense commentary appears on the Web and via e-mail.