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Putting It In Reverse

The once stalwart US auto industry has been brought to its knees. A plethora of problems, including poor management decisions and crippling labor laws, have virtually wiped out shareholder value and corporate profitability, endangering thousands of jobs and retiree pension benefits. The executives of the “Big Three”—Ford, General Motors, and Chrysler —are now asking for taxpayer money to prop them up. The government looks ready to deliver a bailout—but with strings attached.

In exchange for perhaps tens of billions of dollars, the automakers would have to surrender a large degree of their ability to make their own business decisions. For instance, via the office of a “car czar,” the government could mandate that the companies produce vehicles in accordance with certain mileage and environmental standards as well as stipulate limits on executive compensation. And that is just the beginning of the authority the government could have over the companies’ decision-making autonomy.

In capitulating to the authority of a car czar with wide-reaching powers, the companies might be able to borrow enough to survive for a while. But would this be in their long-term interest?

To build and run a corporation the size of Ford or GM requires a huge number of decisions driven by a long-term vision. The astonishing productivity that enabled the Big Three to become automotive giants was made possible by the freedom to build, sell, innovate, and operate as they judged best. Just as the individual’s freedom to think and act independently is the essential requirement of his success in life, so it is with a large company.

When freedom is absent due to government control, production and innovation are stifled. Witness the stagnant and inefficient factories constrained by the rule of Soviet Russia—or the dust bowl that rose from the ashes of American agriculture under FDR’s New Deal. Consequently, the government and its bureaucrats cannot possibly legislate, regulate, or mandate the Big Three back into long-term viability.

By signing their freedom away for a temporary financial reprieve, the auto executives would be giving up any chance of defining and achieving their own vision of long-term success for their companies. Instead of imploring the government to loan out funds confiscated from taxpayers, the automakers should demand the return of the very thing that enabled their ascent in the first place: the freedom to produce. Before the auto executives sell themselves, their employees, their shareholders, and their customers into the slavery of government control, they should ask themselves what they value more: a short-term loan, or freedom itself.

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Ryan Puzycki :