Just in case you missed it, you might want to check out Holman Jenkins editorial in the WSJ yesterday in which he likens President Obama to a king in pursuit of an unachievable goal. He once again shows why he has the best grasp around of the economics of the car industry.
Here’s a sample:
There’s just one problem: Why on earth would GM’s creditors — who include not just bondholders but the UAW’s health-care trust — want any part of this deal?
They’ve already seen that the rights and privileges of shareholders are not worth diddly when the king is throwing his prerogatives around. He dispensed with the services of GM chief Rick Wagoner, though the king owned not a single share of GM stock at the time. His minions communicated the king’s pleasure that GM consider discontinuing its GMC brand, maker of pickups and SUVs that offendeth the royal eye — though these vehicles earn GM’s fattest profit margins.
His minions haven’t asked GM to give up the Chevy Volt, even after determining it will be a profitless black hole, because of the king’s fondness for green.
No wonder the king’s mediation of 40 years of stalemated labor and business issues in the auto sector isn’t going so well. There’s a reason royal discretion has long been outmoded as a way to run an economy: Things just work better if a realm’s subjects are left to resolve their own disputes and interests through the impersonal mechanism of the markets and the law.
His current bailout strategy amounts to asking thousands of bondholders and GM retirees to buy stock in a GM that the king’s own policies mean they’d be loony to buy. Add the fact that passenger cars and trucks in the U.S. are a trivial source of greenhouse gases in any case — they could all become carbonless and it would be irrelevant in the face of China’s and India’s coal use. King Barack has only been on his throne for three months. His policies already have devolved into savage incoherence.
It’s a tough piece but unfortunately on the mark.