21 Nov Bailout this! Enough already with hat-in-hand fixes
Chicago, Ill. – Malcolm Forbes once said: “Any fool can handle the helm in calm seas.”
In today’s continuing perfect storm of financial implosion, foreclosures, and tightening credit, many of the CEOs – who once bragged about how they were going to drive up profits, make companies more efficient, and create wealth for stockholders – have missed the boat. They should be walking the plank and not looking for a bailout to secure bonuses.
Talk is cheap from the captains of finance and industry. When the first 80-foot wave of financial implosion hit, many didn’t see it coming.
Their economic navigators gave them bad advice. They were told they only hit a minor squall of the subprime mortgage market. They didn’t realize they actually hit the tip of a multi-wave financial tsunami of staggering defaults on car loans, student loans, credit, and residential and commercial real estate implosions.
The next huge wave of diminishing profits hit all these organizations, no thanks to the out-of-touch economic navigators who kept cheering their captains to continue full speed ahead instead of slowing down to figure out a new course.
While they’re now trying to jump on the $700 billion lifeboat that the government has thrown out into the perfect storm, the problem is that there are only so many seats on it and now everyone is trying to secure a position.
Our economy is unsinkable
So many engineers of the economy thought whatever they did or financially designed would hold up even in the strongest adversity. They were wrong. Instead of acknowledging that their ships are stuck in the water and sinking fast, they want to have a complete luxury liner to walk into. This is not how the economy can and should be run.
On the high seas, when your luxury ship goes down, you are very fortunate if you have a lifeboat in which you can survive. It may not have a formal buffet, a rock band, or a 50-inch flat-screen TV, but it’s meant to keep you afloat.
You don’t walk off from a sinking luxury liner expecting that the Queen Mary II is going pull up and bail you out with a platinum stateroom. It doesn’t work that way on the high seas and it shouldn’t work that way on the high seas of finance and capitalism. That means no bonuses, no $400,000 banquets, and no multimillion-dollar salaries.
Transforming organizational Titanics into Starships
There are many manufacturing companies stuck in the Industrial Age. These may not be able to be transformed into post-Information Age organizations. Years (if not decades) of inaction in trying to set a new course and jettisoning obsolete strategies have made the auto industry a potentially huge casualty in this perfect storm.
“Giving them a $25 billion bailout will only prolong the inevitable,” Alabama Sen. Richard Shelby said.
I agree. There needs to be some radical transformation if GM, Ford, and Chrysler are to survive.
Even if Ford or GM receives bailout money, doesn’t anyone realize that consumers aren’t then going to just run out and buy a new Tahoe or an Expedition? Many consumers are still laid off or they have taken a lesser-paying job because their good-paying jobs were outsourced or their former company brought in cheap labor to replace them.
While the abuse of the H-1B visa program is a whole other issue, it has also damaged the hull of the economy by putting holes on it like Swiss cheese.
Cities want billions, too
Now in addition to the automakers, Detroit is looking for $10 billion for itself. Atlanta, Philadelphia, and Phoenix are looking for some bailout as well. Many states (including Wisconsin) have multibillion-dollar deficits. Everyone is trying to find a seat on an already crowded lifeboat.
Just like on the high seas, put too many people in one lifeboat and it will sink under the burden of weight. Another means must be used to bail out all these other ships of state. It’s called handing them lots of buckets, telling them it’s “all hands on deck,” and everyone has to help bail the wastewater off their ship.
Cut spending. Too much bloat won’t keep you afloat. Sink or swim. Cut taxes. Get businesses to want to locate in the state. We should be hearing that echo instead of “bail, bail, bail.”
Carlinism: Cut out the bloat and you might stay afloat.
This article previously appeared in MidwestBusiness.com, and was reprinted with its permission.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC.
WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.