THE BLOG
01/04/2009 05:12 am ET Updated Dec 06, 2017

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

Reblog this post [with Zemanta]