Jack W. Orf Journal

Discussion of important issues of the day without name-calling or meaningless arguments. Unless I'm in a bad mood, in which case body armor is recommended. I welcome your comments! Of late, this blog has gone from being a Critique of Pure Obama, to a Critique of Impure Trump.

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Tuesday, November 18, 2008

Cautions With the Auto Industry Bailout

I strongly support an auto industry bailout. The auto industry is crucial to the American economy and to our national security. However, there are a couple choruses coming from the Democrats that are a bit disturbing.

First, some of the Democrats have made a big deal out of stipulating that there should be no bonuses for people making over 250G's. This is part of the usual whining that top executives make huge salaries for doing nothing.

Unfortunately, that is QUITE incorrect. A highly talented top executive might make 10 million dollars a year, but he can be the difference between a company being in the black or needing a 25 billion dollar bailout.

You are not going to solve the problems of the auto industry by filling the top ranks of management with LOSERS who are working for chicken-feed. Top executives frequently make 10 million dollars a year or more, because they're worth it. They BRING IN far more than the 10 million that they are being paid. Otherwise, a corporation is moronic to hire them.

But to make a blanket statement that there will be no bonuses is MORONIC. That is a GUARANTEE that you are not going to have the best people running the auto industry. Those top managers will simply go to other companies, or even other countries.

We aren't going to solve the problems of the auto industry by staffing those companies with burocratic salarymen who are content not to get bonuses.

The best approach is to directly link bonuses with performance.

The anti-bonus statement really shows the business ignorance of many people in government. Indeed, what do most Senators or Congressmen know about running a business? Nothing. They can't even balance the country's checkbook. Fortunately, they own the printing presses, so they can just print more money. Most businesses can't do that. They either make a profit or die, in normal times. Government people don't understand that.

The second problem is that government people are talking about taking this opportunity to make the car companies "green". This is definitely the WRONG time to be starting a project like that!

The car companies are fighting for their life now. This is not the time to tie a green dumb-bell around their necks and expect them to swim with the sharks.

Nobody is addressing big labor. The biggest problem that American automakers have are high union salaries, benefits and pensions. Foreign auto makers use cheap labor.

But this is definitely not the time to be forcing the auto industry to start meeting draconian emission requirements. And besides, isn't that a little hypocritical when Detroit's competition in Asia is belching smoke into the atmosphere like a dragon in heat? What's the sense of America being so careful when you have 1.6 JILLION Chinese farting exhaust fumes into the atmosphere?

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