Some thoughts on the Bailouts
Sorry about all the politics lately, but I'm catching up and have had a lot of time to think about this stuff.
A whole mess of companies have gotten into trouble lately and Uncle Sam has stepped in to "fix" them. To me, I see a lot of fixes that are worse than the cures. It's like you loan a buddy some gas money so he can get to work but poke a hole in his radiator. His car will operate for a little bit, but it will overheat and you'll be back to driving him around again.
I've heard some folks say that bailed out companies should not be allowed to "waste" money on advertising. I even think that's part of the deals some of these companies have made with the government. Let me tell you a little about advertising, and why companies do it. Companies spend a dollar on advertising because it makes them two dollars. I recently heard that every dollar a bank spends on sports advertising nets TEN dollars. It might be the stupidest idea ever to have the government bail out GM, then force it to not advertise that their products are as good or better than their competitors. What would be the point of attempting to have better quality, better fuel efficiency, better safety, sexier styling, lower cost to buy and operate, if you couldn't tell anybody about it? All the foreign car companies (and banks) will be allowed to advertise (and will be able to do so for less money thanks to lower demand). So the companies we just bailed out would be doomed to fail again.
Another way the government wants to "fix" the bailed out companies is to tinker with their products and services. They may ask car companies to make more fuel efficient cars, for instance. I heard that automobile exhaust is 0.86% (Eighty-Six Thousandths of One Percent) of "greenhouse" gases, you know. We could probably get it down to 0.85% if we try really hard. Or Uncle Sam could have the banks issue low interest loans to under-qualified buyers... again.
The problem is the government isn't very good at delivering goods and services. Think about the Post Office, or the DMV. How about that public school education? Private schools generally spend much less per student and deliver a better education. I won't suggest that GM has been particularly good at predicting which kind of car Americans will want to buy in two or three years, just that as awful at it as they are, they're probably ten times better than Uncle Sam would ever be. I'm picturing a room full of congressional staffers debating what color, exactly, the new Chevrolet Bureaucrat should be.
I can't even begin to tell you how crazy the idea of capping executive pay is. You see, we compete in a global economy. They have banks, insurance companies and auto makers all around the globe. The talent drain would be immense. Let's say you are the next Jack Welsh or Lee Iaccoca. You can make $250,000 working for Bank of America or $5,000,000 working for the bank of Hong Kong. If you think you'd stay for 1/20th the money, I'd say you are deluded.
To make matters more complicated, the next Jack Welsh or Lee Iaccoca is very likely not a white man. What happens when the Bank of India is able to offer more money and a better standard of living to our Ivy League graduates to return home? What happens to this country when instead of importing the best and brightest from around the world, we start exporting the best and brightest?
If you feel the companies that take bailout money should be punished, then I agree. Maybe they shouldn't have been bailed out. The employees could be fired, the pensioners told they should have worked for somebody else or saved their pennies better. Since the decision has already been made to bail these companies out, that bailout needs to come without strings.
A whole mess of companies have gotten into trouble lately and Uncle Sam has stepped in to "fix" them. To me, I see a lot of fixes that are worse than the cures. It's like you loan a buddy some gas money so he can get to work but poke a hole in his radiator. His car will operate for a little bit, but it will overheat and you'll be back to driving him around again.
I've heard some folks say that bailed out companies should not be allowed to "waste" money on advertising. I even think that's part of the deals some of these companies have made with the government. Let me tell you a little about advertising, and why companies do it. Companies spend a dollar on advertising because it makes them two dollars. I recently heard that every dollar a bank spends on sports advertising nets TEN dollars. It might be the stupidest idea ever to have the government bail out GM, then force it to not advertise that their products are as good or better than their competitors. What would be the point of attempting to have better quality, better fuel efficiency, better safety, sexier styling, lower cost to buy and operate, if you couldn't tell anybody about it? All the foreign car companies (and banks) will be allowed to advertise (and will be able to do so for less money thanks to lower demand). So the companies we just bailed out would be doomed to fail again.
Another way the government wants to "fix" the bailed out companies is to tinker with their products and services. They may ask car companies to make more fuel efficient cars, for instance. I heard that automobile exhaust is 0.86% (Eighty-Six Thousandths of One Percent) of "greenhouse" gases, you know. We could probably get it down to 0.85% if we try really hard. Or Uncle Sam could have the banks issue low interest loans to under-qualified buyers... again.
The problem is the government isn't very good at delivering goods and services. Think about the Post Office, or the DMV. How about that public school education? Private schools generally spend much less per student and deliver a better education. I won't suggest that GM has been particularly good at predicting which kind of car Americans will want to buy in two or three years, just that as awful at it as they are, they're probably ten times better than Uncle Sam would ever be. I'm picturing a room full of congressional staffers debating what color, exactly, the new Chevrolet Bureaucrat should be.
I can't even begin to tell you how crazy the idea of capping executive pay is. You see, we compete in a global economy. They have banks, insurance companies and auto makers all around the globe. The talent drain would be immense. Let's say you are the next Jack Welsh or Lee Iaccoca. You can make $250,000 working for Bank of America or $5,000,000 working for the bank of Hong Kong. If you think you'd stay for 1/20th the money, I'd say you are deluded.
To make matters more complicated, the next Jack Welsh or Lee Iaccoca is very likely not a white man. What happens when the Bank of India is able to offer more money and a better standard of living to our Ivy League graduates to return home? What happens to this country when instead of importing the best and brightest from around the world, we start exporting the best and brightest?
If you feel the companies that take bailout money should be punished, then I agree. Maybe they shouldn't have been bailed out. The employees could be fired, the pensioners told they should have worked for somebody else or saved their pennies better. Since the decision has already been made to bail these companies out, that bailout needs to come without strings.
You got to love the socialist govt we live in. Your guns are next, and so is the land to hunt. Ho w about the muslim conversion that will be next!!
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