A humble proposal for rescuing automakers
A lot of political types, alarmed by huge losses among the Detroit 3, are proposing a monstrous bailout for them. Given the make-up of Congress, this will likely consist of huge payouts, government equity/control of automakers, and increased regulation of the products the make.
More or less, this is the same process by which the British put cars by Triumph, Aston Martin, and Leyland in driveways around the world. Except, of course, they didn’t; they simply made these makers a byword for “junk”.
So I have a slightly different proposal.
1. Shift the burden for road construction from registration, property, and (vehicle) sales taxes to the gas tax. You cut the price of a car by up to 10% or more without depriving the maker of a penny.
2. Let the carmakers go bankrupt and shed their UAW tax. It’s going to happen eventually, so we might as well get it over with.
3. End CAFE standards and other regulations unrelated to safety (generally contrary to safety) that push carmakers to design around regulations instead of designing cars.
4. End subsidies and special treatment for hybrids for the same reason.
In other words, the Detroit 3 have an unsustainable business plan, and the only help they really need from government is to remove the incentives to follow that plan. Bailing them out, as currently planned, would only deepen the trouble.
