21 December 2008

Bailing out the US Auto Industry

Friday, President Bush agreed to "loan" the US Auto Industry $17+Billion to stave off sure bankruptcy. No matter whether you are in favor or not of this use of taxpayer money, I've taken several lessons from this debacle and have a suggestion on how better to spend our money.

Here are the four takeaways I learned from what has gone on between the odd bedfellows in Washington and Detrioit.

1. If your product stinks and no one wants to buy it, there is little recourse from the free market other than to fold one's tent. That is unless the government decides that you deserve a few billion of tax payers' money.

2. Just because you pioneered an industry and once were great, does not mean you still are, unless you happen to important enough to the well being of 1/10 of the whole country's population.

3. Politicians are short sighted. They only look to solve the problems they are currently confronted with and have no vision to what the long run holds. And they certainly can't stand short term suffering for the long term value it may create.

4. But, in the long run, we all are dead anyway. So does any of this matter? What's another $17 Billion anyway?

The government has less business being in the auto business than the incompetent fools who have run the big three into the ground. Ultimately, we are moving all too close to a socialist state, where failure is protected by increased taxes on the successful.

I have a new proposal Mr. Bush. How about we take the $17 billion and create a seed capital fund to breed the next generation of great companies. And the US can be a shareholder! So not only will we all as taxpayers benefit from the hundreds of thousands of new high-paying jobs that will result, but we put ourselves in line for VC like returns on our investment. Can you imagine what value might be bred by that influx of risk capital. This certainly is a less risky bet than investing in the three auto companies!

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