Bailing out Detroit

I'm as terrified as the next person about what would happen were GM to collapse; the domino effect this would have on American industry and labor markets is unpleasant to fathom. But if America decides yet again to use taxpayer money to bail out a company suffering because of its own choices, it should be carried out according to Paul Ingrassia's WSJ proposal:

Let's assume that the powers in Washington -- the Bush team now, the Obama team soon -- deem GM too big to let fail. If so, it's also too big to be entrusted to the same people who have led it to its current, perilous state, and who are too tied to the past to create a different future. In return for any direct government aid, the board and the management should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver -- someone hard-nosed and nonpolitical -- should have broad power to revamp G.M. with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others, and downsizing the company. After all that, the company can float new shares, with taxpayers getting some of the benefits. The same basic rules should apply to Ford and Chrysler.

This analysis is on the money. On top of these conditions, it might be wise to stipulate that any automobile company getting taxpayer money must put forth a viable plan to modify the engines of all its vehicles to hybrid-electric engines with flex-fuel capacity, so that their fleet can also run on cellulosic ethanol.

Thomas Friedman proposes a final condition in today's NY Times. "Someone ought to call Steve Jobs," he writes, "and ask him if he'd like to do national service and run a car company for a year." It wouldn't take him long to "come up with the G.M. iCar."