I respectfully disagree. The only solution to the problem is to release the competitive energy that made Detroit automakers the standard by which the world measured itself. It most definitely not to pick one's favored social policy and demand that it be achieved irrespective of the market. The old Soviet Union tried to do that and failed. Ultimately, present company excepted, many of the proposals along the lines of the post are rooted in a desire to commandeer others' efforts for our own purposes. It is a very dangerous proposal. (My proposal is more modest: quasi-bankruptcy, elimination of the jobs bank, reform of retiree and current healthcare. Although public perception has not caught up, Detroit makes very good cars. It is just impossible to stay in business when you sell each car at a loss of $1500 - $2000.)

I agree with Arleen. These companies were already on the way to developing the plug-in car - competition from the Prius and (soon to be updated) Insight and Civic hybrid was pushing them to it. Chevy's financial woes are somewhat related to the attempt to develop the Volt. Let them go bankrupt, like every other company, and come out in 3-5 years, debt-free.

Something more on this:

From - http://pajamasmedia.com/rogerkimball/2008/11/23/how-bad-is-it/ -

It sounds good to Detroit, too, I gather. Are we really going to present the taxpayers with a multi-billion-dollar bill to reward these poster children for financial mismanagement? I feel a Cramer moment coming on. When, Oh when, will the folly of Detroit be recognized? Consider:

* They build cars that consumers do not want

* Labor costs for an American-built car from the (formerly) Big Three are twice as much as for an American-built Toyota or Honda (around $70 per hour as compared with $35 per hour).

* Detroit entered into unsustainable pension and health-care obligations that add something on the order of $2000 to the cost of every car.

Here's the thing, though - they'd pretty much have to get out of the oil-burning car business to succeed under my little thought experiment. I realize that's not free-market driven, but I don't really care -- it's national security driven (as well as eco-friendly). If things are as bad as they say they'll finally have the incentive which has thus-far been lacking to drive them to electric. If things aren't so bad, they'll be entering into a liquidation deal...which means that whatever happens it's still bad enough to get them to work.

Does that make sense?

Again, I'm just spitballing so I appreciate feedback and I'm reading anything linked with an open mind.

God Bless,
Ryan

Some questions regarding your plan:
1. What happens to the power grid when 50 million cars plug in?
2. Is the energy on the other end of plug produced in USA or imported?
3. If they produce these cars, will anyone buy them? At what price?

Pointing out Detroit's errors is like shooting fish in a barrel. That said,if the big three go under it will be disaster for this country economically. This is from someone who is very libertarian. The problem is you can't just go "cold turkey" from socialism.

What you see in the auto industry is a microcosm of our country:
Labor pools = welfare state
Retiree problem (legacy costs) = Medicare / Social Security

If I apply your thinking to our country in general I would eliminate social security and medicare in 2010 and tell people to go back to work and live a heathier lifestyle.

People love to throw Detroit under the bus because they can think of it as a scape goat but don't realize it is a product of our nation's move to socialism. I agree with Arleen that more socialism is not the answer but less.

We need about 100 nuclear reactors built asap. Any other "plan" is just trading one polution for another or one source for another. Unless this country wants to embrace coal (that industry Obama would like to bankrupt) there is no other way out. Unless we want to invade Saudi Arabia and take all their oil.

What is the point of the reference to "B. Hussein Obama"? Do you only offer respect to people you agree with? If so, what does that say about you?

Thanks for the links. I really enjoy them. Your commentary, however, often chaps my hide.

Brett,

Long story short, I can respect people with whom I disagree. I cannot respect a man who would willingly (if not eagerly) murder his own grandchild.

As for the chapping, there's a reason I typically only point to others rather than pointing to my own talks -- I'm usually far more abrasive than this. You should have met me before I became Christian! HA!

Tom,

Good point about the power! I hadn't considered that. I'm all for 100 nuclear power plants (did I mention I'm a certified nuclear engineer?), but I'd also agree that our electric infrastructure can't handle it. But heck...if France can do it, so can we.

Regarding cheap cars and socialism, that's part of the plan. Tell the Big 3, "Put a cheap car on the road or you're liquidated. No extensions. No second chances." If they succeed it was just an investment in national security, not a socialist endeavor. If they fail, it's a complete liquidation of assets (and jobs), putting the Big 3 exactly where they're almost in now, and still not a socialist endeavor.

Make sense?

God Bless,
Ryan

Cheers for the response. And thanks again for the files. Brilliant stuff.
-Brett

Ryan,

I appreciate the discussion. I love your blog to. I am very thankful for all your efforts.

If the French can supply 80% of their power by nuclear we certainly can. Solves a lot of our issues.

I am not an economist but I don't think a top down approach will work. The government should provide money for research and development for auto companies. They should also provide tax incentives for the public to buy American electric or hybrid vehicles. If Detroit could ignore the government mandated testing costs it could probably make a cheap hybrid. I don't think we can mandate a cheap car. That would bankrupt the companies too. The system that got Detroit in this situation was mandated by Big Government, Big Union and consumer spending habits. To blame it all on poor management decisions is simply not accurate.

I favor whatever it takes to rebuild the big three into competitive companies but it should be somewhere in the middle of let them go bankrupt or throwing money at them.

I do not work for the big three but have many patients and friends who do. I know them to be extremely intelligent and hard working.

It's interesting to see this discussion turn to energy policy. I agree nuclear is a way to go, but I still can't put a reactor in my car. The reality is that no matter how much money we throw at the problem alternative fuels will not magically appear. We've been trying since at least the Carter Administration. I also find it interesting that the trickle of facts challenging the global warming premise is starting to become a torrent -- 2008 the coldest year in a decade; 1937 (not 1998) the warmest year in the 20th Century. We really need to make sure we have our facts straight. Finally, unsuprisingly, the Catholic Church offers a (actually many) principle for sorting this out -- subsidiarity. At a minimum, I would think putting the bureaucrats whose financial expertise (with more than a dash of political opportunism) gave us this crisis in the first place in charge of running additional core industries is not the way to go.