The Real Auto Bailout: A Six Point Plan for Regulatory Relief
Here’s what the auto companies really need - a reduction in the regulatory burden placed on them by Congress. These burdens have placed Detroit at a competitive disadvantage because a lot of them are aimed at eliminating the sort of vehicles that Detroit has proved adept at designing and marketing.
1. Repeal the CAFE requirements. They restrict consumer choice by insisting that fuel economy take precedence over safety, and impose restrictions on design that reduce the competitive advantage of Detroit automakers. If reduction in fuel use is a necessary policy goal - and CEI would contend that it is not - there are other policy vehicles to use that would not impose direct costs on the automakers or restrict consumer choice. Moreover, by reducing the weight of vehicles, CAFE removes the single most cost-effective safety design feature there is. It would also remove the ludicrous “two fleet” rule that uniquely hampers US automakers.
2. Reduce the burden of safety legislation. There are too many safety rules on the books that are actually counter-productive, like mandated air bags. Consumers should be free to pick from a “menu of safety options,” taking their own individual circumstances and preferences into account. This should not be taken as a suggestion that automakers should be free to build cars that explode on ignition, but that there is a range of safety considerations that range from safe to extremely safe, and at present we are mandating too many “extremely safe” features while at the same time perversely reducing safety though CAFE (see point 1 above). Again, the Detroit manufacturers feel these more intensely than other manufacturers because of the sort of vehicles they have specialized in.
3. Halt the march of further design regulations. There are plenty of examples here.
4. Remove the artificial barriers to merger represented by too strict interpretations of antitrust law. This will enable GM and Chrysler to merge.
5. Allow automakers and, indeed, all firms to repatriate foreign profits without having to pay a double tax. This will provide a much needed injection of funds. No other country handicaps its manufacturers in this way.
6. Suspend particulate matter regulations emanating from California that prevent the automakers selling high-mileage diesel-powered cars that sell well in Europe and meet all European emissions requirements. This will immediately reduce fuel usage and reduce unnecessary research and design costs.
Taken together, this deregulatory bailout package would restore Detroit’s competitive advantage and obviate the need for taxpayer money. Congress has hurt Detroit with these rules. It should recognize that and remove them, rather than hurting taxpayers as well.
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Or better yet, let them crater because of their rubbish designs, shaddy business practices and inferior products. The American consumers have spoken. Also, revising these laws would in no way help the auto industry, because all car manufacturers are subject to the same provisions, yes, even the Japanese ones. Also, another point relative to this is that these laws were not passed out of thin air, in order to bankrupt idiotic auto businesses like the "Big 3", or shall we call them the "Grovelling 3" (much more suitable), they were created by congress which was acting on the behalf of a majority of American citizens with QUALITY OF LIFE in mind...simple, see? Let them sorth THEMSELVES out with bankruptcy protection, banks are much more stringent than an overseer whom will be in their pocket within weeks. NO BAILOUT, FULL STOP.
I think it is wrong!!! These companies need to restructure. The CEO's are making 20 million a year, the workers are making $73.00 an hour. I think these employees could survive on a lower salary comparbable to Toyota and Honda which pay $45.00 an hour. Nobody is going to bail me out of my mortgage and other obligations. No CEO is worth 20 million a year. I did buy a GMC in 2006 and it is already falling apart. I bought a Toyota and it lasted 17 years. America needs to build quality products and manage their Companies responsible.
Mmmm....
I think putting all of our eggs into one basket is a bad idea, and certainly a merger between the big 3 would make us more vulnerable to economic collapse in that industry.
I am not for a merger.
Same thing goes for the banks.
Mergers are the worst thing for banks, they concentrate vulnerabilities and peoples money into the hands of a very few, very greedy and very dishonest individuals.
The trend to merge banks is very bad, and when the corrupt have thier way, LOTS of people end up getting hurt.
With a non centralized banking system, there is less centralized control, and the corruption can be more easily contained and covered financially by the government.
What Paulson is planning however, if the destruction of the banking system, with complete government control over the entire banking system in this country.
This can only end very badly.
Nice post. I think this will work. But I don't like bailouts. We are paying tax for them to survive while they sell those cars to expensive for us.
Nice post. I think this will work. But I don't like bailouts. We are paying tax for them to survive while they sell those cars to expensive for us.