Dave Rave – 6 Reasons Bailouts Don’t Work

autoassembly1108During these times of financial transition and change, the newest twist is that now the government is going to bail out the American auto industry.

I feel very strongly about this because I was raised buying American.  I bought American-made cars only.  My father was a Ford man. And I, from the very first car I’d owned at age 15 have been a Chevy man.  I’d been a Chevy man for decades until I got sick and tired of buying inferior products that didn’t last, and cost way too much.  So I changed a couple years ago and I bough a Honda truck.  And I love it.  It’s been great; 64,000 miles and still going strong.

So I feel very strongly about this whole bailout issue.  It’s a bigger issue than Ford, or GM, or Chrysler in that it is an issue of how we look at life.  So let me respond and give my take on what’s gone wrong with our economy and why bailouts don’t work.

1.    Bailouts never address the core problem. It’s not that we’re not driving cars and that cars aren’t selling.  I love my Honda and everyone else I know who loves a Honda, loves theirs.  People who own Nissans and Toyotas and other types of cars love theirs.  It’s because they just work.  It’s the reason I buy Apple computers.  They just work.  So the bailout in the auto industry is to ignore the core issue: it’s that they don’t build superior products that people can take pride in owning anymore. Ignore the core problem and cover it up only to deal with it at a later date when the price will be much higher.

2.    Bailouts reward suck-y service. One of the delights of owning my Honda truck is the service I get.  My dealership is Darrel Waltrip Honda here in Franklin, Tennessee.  Not only can I take my truck in, I can wait for it to be serviced.  They’ll wash it for me for free. They also provide a place for me to wait that has free Internet service, and coffee.  The service people are actually nice.  They meet me when I drive in.  They don’t just treat me this way; they treat everyone that way.  Shift back to my experience when I owned American-made cars.  I had to wait in line and the service people were rude, angry, and gruff, acting as though I had interrupted them.  They were never on time and always too expensive.  It was a nightmare experience that I hated.  Getting my truck serviced today is a joy.  That’s just the truth.  Bailouts reward suck-y service.

3.    Bailouts prop up products that have served their purpose and need to die. We need better cars, more fuel-efficient cars.  We don’t owe the auto industry anything to buy these big, gas-guzzling behemoths that should have been replaced years ago knowing that this day would surely come.  Bailouts reward bad leadership practices.  At the end of the day it is about leadership and vision, and the courage to change.

4.    Bailouts reward broken systems. The American automotive industry is a broken system.  Here’s what I mean.  Management and labor are locked in a hopelessly adversarial relationship.  When Saturn moved to Tennessee, it was an experiment in change where the unions and the management would work together.  And guess what!  It worked.  It worked great until all the money started coming in and all of a sudden the unions seized the old confrontational conflict, seize-and-conquer control mentality.  And nothing can grow in that kind of environment.

5.    Bailouts discourage innovation. Innovation is always painful and carries with it the risk and reward of failure.  But let’s just build the same old thing and shove it down people’s throats instead of going through the hard work it takes to innovate.

6.    Bailouts cheat the future. The future of the gas-guzzling automobile that lasts 40 – 50,000 miles before needing major over-hauls that sends people into major debt over 5, 6, or even 7 years is dead.  It’s not the future. When any industry tries to hold onto an old paradigm that’s not embraced anymore, it becomes parasitic.  And instead of giving to culture and society, it’s a taker.

Now I’ll be the first to admit this has been harsh, but it’s been a long time in coming.  I loved my Chevrolets.  I’d love to be driving one today.  I’d love to return to that cool, fun, hip-factor that I had in those days when I bought a great product.  But they’re gone.  And the way things are going now, they’re probably gone forever.  Bailouts aren’t just about auto; they are about anything.  Let’s learn our lesson and move on to a bigger, brighter future instead of trying to continue to ride dead horses.

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