Stupid is as Stupid does

The argument given to defend the perks given to CEOs and other executives, such as private jets, is the high value of executives' time. This would fly (no pun intended), if the auto execs hadn't ruined the industry through their lack of ability as managers. There are plenty of entrepreneurs and top executives of successful companies who do fly commercial – and make do with less spectacular compensation.

When times are good and the money flows in, few people notice if the auto execs did their jobs poorly. Nonetheless, there have been people over the years that pointed to just how bad these executives were. Almost the entire system seems corrupt and they are still being enabled by the very Boards of Directors assigned to keep them honest. Somehow it is the incompetent, over-paid CEO who goes on to bring his company down and gets a disproportionate amount of media attention.

But that’s not the real problem at hand. The dilemma to be reckoned with is that U.S. automakers are in a mess from which there is no easy way out. They are locked into uncompetitive cost wages and do not seem to have a desire to reform and change, but that is exactly what must be done if they are to turn things around. As it currently stands, Detroit cannot compete with Japanese cars made in the U.S. by American workers. There is good reason to get them to change for the better and a bailout is not necessarily the way but because of the terrible economic conditions of today, letting these companies fail may push the economic burden past the breaking point.

Perhaps, like in the case of AIG, the government should take an 80% equity stake in return for the bailout and then after conditions improve look for an outside buyer.