In return for any direct government aid, the board and the management should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible.
That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others, and downsizing the company. …
But giving GM a blank check — which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant — would be an enormous mistake. The company would just burn through the money and come back for more. Even more jobs would be wiped out in the end.
With its customary satire, Scrappleface offers its prescription (pretending the solution is coming from Nancy Pelosi):
“Here’s my proposal to rescue U.S. automakers,” said Rep. Pelosi. “Memo to Detroit: Make better cars.”
The Pelosi rescue plan is not limited to company executives, it also includes help for struggling autoworkers.
“You autoworkers think your big union bosses have your best interests at heart,” she said, “and so you march in lockstep to the polls where you vote for union-backed political candidates whose campaigns you funded through your union dues. Those politicians, many of them lawyers, then go to Washington and listen to the siren song of union lobbyists to increase the regulatory burden on U.S. automakers, driving up the cost of production so it’s tougher for your company to compete with foreign car makers.”
“Meanwhile, back in Detroit,” Rep. Pelosi said, “your union negotiators threaten your own companies with economic disaster to get contracts that ignore market forces, and treat the average worker like an ignorant baby who needs lifelong coddling, rather than as a resourceful man or woman who just wants an opportunity to earn what his skill, creativity and hard work deserve. The next time your shop steward brags that the union really stuck it to management to get this new contract, you should punch him in the nose. Then remind him that labor and management both draw their paychecks from the same source.”