A creative solution for the car makers

Here is a wild idea. Rather than bail out the auto makers, the government should buy up all their stock and give it to the employees! Take the companies private and let the employees own the assets. They can then hire whatever management they think will fix the companies. Maybe the union leadership can supply management or at least consultation. This could be accomplished in Chapter 11.

In other words turn the car makers into employee owned corporations. The government can supply the capital in a form of either a loan or, better perhaps, a stake in the companies. The employees can kick out the current management or keep them if they want (or for continuity).

The working principle here is that the employees know better how to run the companies than do the current management. It's a plausible argument. But, perhaps as important, their jobs then depend on their making good decisions. The workers often complain that the companies are in their precarious situations because of bad management. Well, that must mean they know what good management would be. This plan would test that hypothesis! If they do, they keep jobs and rewards from profitability. If they don't then the market will decide the outcome. At the very least it would buy time to give them a chance. It would prevent millions of workers from being laid off in the short term while not rewarding the managers who should go.

If we are determined to throw money (borrowed at that) at problems, let's at least do it with some long-term perspective. It is altogether possible that an employee owned car company could make sweeping changes and start building cars for the new energy and climate realities. It is also possible that they will reflect on their own insistence on encumbering the companies with work rules and benefits that look fair from the perspective of a wage-only employee, but may look very different to someone who is making an income from profitability. At least that is an option they will have if the companies survive for now.

But something like this is not likely to occur to any of the old school who are currently making the decisions about how best to stop the bleeding. They only know one thing: the economy is unhealthy if the GDP is shrinking and the economy is driven by debt-based consumer spending. That mind set will make it nearly impossible to come up with creative solutions that might actually work. Oh well.

Comments

[RBM]

Yes, I say that a lot to myself, especially as it seems the deterioration spreads. And I hear this old tune:

I cant help about the shape Im in
I cant sing, I aint pretty and my legs are thin
But dont ask me what I think of you
I might not give the answer that you want me to

Oh well