Responding to Chrysler comments

As a novice blogger I have been repeatedly surprised and humbled by the thoughtful comments posted on this blog. I want to thank all of you who are contributing to a civil and thoughtful discussion.

At the risk of offending some of you, I am going to push back on some of the comments to yesterday’s Chrysler post, in the way that I would have done so had you been advisors to President Bush and I been in my old job at the White House National Economic Council. I’m putting my “honest broker” hat on, and I want to stress that this pushback is independent of my own policy views.

In yesterday’s post I listed five options. Option A was to withhold all additional taxpayer funds. This is the pure free market option, and also the most popular option among the commenters. I asked you to assume that choosing Option A would mean a 99% chance that Chrysler would liquidate by July 1st, and an additional 10-20% chance that GM would liquidate.

The first two commenters seem to have internalized that and be willing to bear these costs. FogCity wrote “Liquidation of Chrysler sets the stage for renegotiations with the UAW [in the GM talks].” DonH similarly writes, “There is too much car-making capacity in the world.”

Some of the commenters, however, want to have it both ways: choose Option A, but assume that Chrysler will not fail. I strongly support your choice of option A, as long as you accept that this choice means a few hundred thousand people will lose their jobs in the next 2-3 months, and that you will be (unfairly) blamed in public for their job loss. If you choose A, you need to assume that there will not be another buyer for Chrysler, and that the Chapter 11 process will quickly turn to liquidation, with the subsequent job loss. You’re not making a real choice if you assume that A might lead to a happy ending for Chrysler employees.

At the risk of overemphasis, I want to make it clear that I think there is a very strong case you can make for Option A, and several of the commenters are making it. But that case has to be structured as “I’m for option A because _________, even though several hundred thousand people will lose their jobs. The long-term benefits of option A are worth the short-term costs to Chrysler workers […]