What Would Moses Do?

It's time for someone outside the auto industry to take a fresh look at the industry now. Everyone else has failed to solve the problem, so I nominate myself, one of the least qualified people to comment. I do, however, work with entrepreneurs, and know how to scramble. It looks like that's what's required right now.

Last night one of the endless talking heads I watch on TV said we could buy all the shares of GM for $3 billion, less than they are asking for in loans. So why doesn't somebody come out of the woodwork and do that? Warren Buffett, for instance. Or the Gates Foundation? Or Goldman Sachs? Or a private equity fund?

These people aren't dumb, and if they thought GM had a chance, they'd be in there bidding. But clearly, there are some issues in its long term viability. One is the dealers, clinging to their outmoded distribution networks in the day of the Internet and ruining valuable real estate in the middle of cities and suburbs with acres and acres of car lots. The other, of course, is the unions. Both of those have hard-fought
contracts that the manufacturers don't feel can be broken without huge financial penalties. Both of those can be dealt with fairly if the contracts are broken. But they can only be broken by the government, either through the bankruptcy option or the nationalization option.

That's probably why the usual vultures who buy companies are not in there fighting for the carcasses of the Big 3.

So. There is only one way to save the auto industry if the dealers and unions won't cooperate, and that's to nationalize it temporarily while it transforms. Transportation, getting from here to there, should be a utility anyway, or at least a public-private partnership. At least now. Airlines are working poorly, and so is the auto industry, and the only things working decently are mass transit systems. So let's make the auto industry part of mass transit, at least for now.

That would be a good way to transition the "dealers" to service stations, which is what they should be anyway. We can look for cars on the Internet, and if we want to drive them, one central "showroom," like furniture dealers have, would be enough. Soon enough we would lose our habit of driving cars before we buy them and begin looking at cars as merely a means of transportation. We would then accept smaller, less testosterone or brand-driven cars with more actual utility.

We should be selling cars like clothes: big family? You need a big car. Small family? You don't get to drive a Hummer for one person. We don't choose what our buses look like, or our trains. We board the one headed for the direction we are going in.

As the older auto industry became a utility, with all the lack of excitement that accompanies government ownership, entrepreneurs would get into the field. Better systems for cars. Better alternatives to the public system, which would be universally hated. And that's how we re-start a private system.

This helps dealers convert to where they've been headed anyway: extended warranties. And it allows the old car-makers to modernize the way Obama's green mandate demands, preserving the jobs the unions are concerned about.

I envision it as being like when a private equity firm buys any business: own it, take the inefficiencies out, restructure it to raise its value, and then sell it for a profit. Why can't the government do this? Admittedly, they would have to contract out the management: this needs a crack Silicon Valley entrepreneurship team, or a crack Wall
Street turnaround team to manage. Obama can find these, I'm sure.

What are the alternatives? Well, bankruptcy. Or keep pouring our money down the deep hole of the current industry. They don't sound so good, do they?

Should the Government Bail Out the Big Three U.S. Automakers? HuffPost Bloggers Weigh In

Comments

[cylindar]

Too complicated. I suggest just not giving any money and let them rot. Auto workers can then go out and get real jobs that pay lower wages like the rest of us. Auto workers do not deserve any pity or special help. They have been living high off the hog for many years and it's time they got real.

[KillTheMessenger]

I knew it! Moses was a communist!

:-)

[larry278]

The saying is, "Moses proposes; God disposes.".

[DuganS1]

No one will buy the company because paying $3 billion for GM would mean the buyer would inherit $45 billion of debt (and that is old info so it is probably much higher now). I'm scratching my head over this comment...."One is the dealers, clinging to their outmoded distribution networks in the day of the Internet and ruining valuable real estate in the middle of cities and suburbs with acres and acres of car lots." I guess I didn't realize so many people were buying cars over the internet without going to a lot and looking at them first and taking a test drive... I also don't understand the comments about the airlines "working poorly" and the mass transit industry "working well." The airlines have actually done a good job cutting costs and capacity. They faced significant headwinds with the high fuel costs, but are past that now. The govt is notorious for being unable to cut costs and increase efficiency, something the auto industry desperately needs to do, so I'm 100% opposed to govt bureaucrats getting involved in the auto business. As for mass transit running well, I'm not sure about that as I haven't seen the numbers. I do know that Amtrak has been an unmitigated disaster since government took it over in the early 70s.

[kidcreole]

Higher gas prices translates into smaller cars. So tax gas more! We get smaller cars and revenue for green alternatives. If you need a big car the benefit will out weigh the cost.

[francinehardaway]

I like that idea. I don't understand why no one has suggested that. But it doesn't help the existing auto makers survive.

[KillTheMessenger]

It would have helped them if we had done it thirty years ago. And what do you know... it has been suggested and rejected continuously for thirty years.

How do you like those apples?

[carrieanna]

Let's not forget about the way cities and suburbs are built nowadays, too. If I was a city manager and told that the way the contractors were building new developments meant less civic interaction, higher obesity rates, more pollution and a higher dependence on oil, I would have shut those plans down immediately. Not to mention the fad of McMansions built on lots with zero lot line and barely any trees. This naturally feeds into a greater dependence on automobiles for everyday usage. I'd love to use a bike or walk for daily needs and use my car for trips on the weekend.

We need to work at building communities again. Make businesses, restaurants and services within walking distances and with safe crosswalks.

[francinehardaway]

I've always been an advocate for better city planning and mass transit, because I grew up in New York City and as a child it was very liberating to be able to go places without a parent driving me. But I have lived in Phoenix and you are right--lots of driving and very little community.

[DuganS1]

People like to live in McMansions. Do you think you can force people againstl to live in highrises and mixed use developments because you have a problem with people driving SUVs and trucks? No thanks. This is American, not the old Soviet Union or communist China.

[KillTheMessenger]

People don't "like" to live in McMansions. People don't "like" to commute three hours a day. A lot of people were simply trying to escape the housing price pressure in cities by moving to suburbs and McMansions. And by doing so they traded one problem against another one.

[plzchuteme]

I think everyone who drives a great hulking pick-up should be required by law to haul something big, heavy, and preferably really dirty at least 5 times per year. That would get about half off the roads.

[mbaty]

The limitation of size and the desire for style will cause new models to be invented that satisy both requirements. But we wouldn't attach so much importance to cars if we had great public transportation...and there are a lot of benefits to having an efficient easy public transportation system, especially if alchohol is going to continue to be the national drink.

[vim876]

Not driving cars before you buy them is more like buying jeans without trying them on or knowing your pant size than it is like riding public transit. When I was looking at cars a few years ago, I thought that I was going to get a Subaru Forrester. However, I come from a family of big people. I don't mean fat, although some of us have weight problems. I mean that we are all within a couple of inches of six feet and built like Vikings. My dad came with me, and when he sat in the back, he immediately began complaining about the lack of space. I had read every review, and somehow NO ONE had mentioned this. But the last straw was during the test drive, when I turned my head left to look before turning, I HIT MY HEAD on the little ceiling bar. My second choice, the Honda Element, may be slightly less fuel-efficient, but I also won't knock myself out while driving. And yes, I drive an SUV because I regularly drive on dirt roads and semi-regularly even find it necessary to off-road.

[PATina]

Not a bad idea... but I don't think that shopping for cars on the internet is going to translate into people buying smaller cars (unless that's all that was offered). Also... it would be hard to 'force' someone to only buy the car you (or the gov't.) wants them to have. In other words... if that single person has the money and wants to buy a Hummer... no matter how stupid that may seem... I don't see how they could be stopped.

[Francine Hardaway - Huffpost Blogger]

You wouldn't have to force people. Cars would just be much less interesting and people wouldn't care so much which car they buy. Ask yourself what's wrong with us? Why DO we attach so much importance to cars?

[plzchuteme]

Didn't you know? You tell about a man's virility and the size of his manhood by looking at the car he drives.

[MattInVA]

Why do we attach so much importance to where we live? The kinds of clothes we wear? Even the books we read?

While it would be efficient, I don't think we should mandate everyone live in the same house, wear the same clothes, or drive the same cars.

[DuganS1]

Absolutely we attach a lot of importance to cars. A car is a key part to a person's identity. For example, I'm upper middle class and live in a large metro area. People in my demographic don't drive cheap cars or domestic cars. One time on vacation I got a Ford Mustang as a rental car and it was very embarrassing.