Saturday, December 6, 2008

Bail out vs. severance pay

"Faced with staggering new unemployment figures, Democratic congressional leaders said Friday they were ready to provide a rescue plan for American automakers . . . "
New York Times Service

Not faced with the economic needs of the companies. Not faced with the economic prospects of the companies. Not faced with the viability of the companies. But, faced with the new unemployment figures.

Does anyone think this is it?

Does anyone think the pigs won't be back at the trough?

Does anyone doubt that all these "bailed-out" entities will continue to require more cash infusions?

The lesson of British industry in the '70's is that bailout leads to nationalisation which leads to slow and steady shut down. Basically, bail outs are simply very very very expensive job maintainance schemes. Not job creation. Not investments. Not investing in the future. Just ways to keep the factory humming and the employees occupied until they retire.

Aren't we at the point in American industry where sizable severance packages (sufficient to help the newly unemployed transition to other careers, jobs or locales) are preferable (and cheaper in the long run) to bail outs of dinosaur industries? New industry and jobs are needed, but you won't get them by paying corporate welfare to the Big Three auto makers.

"Change" should mean thinking outside the box, not '70's-style British industrial policy.