Tuesday, February 24, 2009

Detroit as the Prodigal Son: Why is the government rewarding failure?


Last fall, facing bankruptcy, those companies sought and received some $17 billion in federal loans intended to keep them in business. Now they are back asking for more—$16.6 billion for GM and $5 billion for Chrysler.

That doesn't count the $7.7 billion GM wants to improve fuel economy or the $5 billion its financial arm got from the Treasury Department. Nor does it exclude the possibility that they will demand more help in the future.

And what about the automakers that have not run themselves into the ground? They get nothing. Actually, they get worse than nothing: They get the privilege of competing not just against GM and Chrysler but against the federal government, which has unlimited resources and is now in full partnership with the two.

It's not just Ford, Toyota, Honda, Nissan, Volkswagen, and all the other companies that sell (and often build) cars here that are seeing their wisdom and restraint punished. It's also the American people—most of whom voted with their pocketbooks not to support GM and Chrysler but now see their money forcibly diverted to those automakers anyway.

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