Bailing out GM doesn’t make sense

We’ll hear a lot in the coming weeks about the 1979 bailout of Chrysler. The punch line will be if we could do it once, why not again. First for GM, to be followed as sure as day follows night by Ford and Chrysler.

But the original Chrysler bailout was for the most part a workout in bankruptcy in all but name. Just ask the creditors, who were paid 30 cents on the dollar. Or the 60,000 workers who lost their jobs.

MY OPINION: THOMAS OLIVER
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More importantly, there’s a good argument to be made — in fact Barry Ritholtz does so in the forthcoming book “Bailout Nation,” according to early reviews — that by saving Chrysler, we allowed the Big Three to avoid adapting to the real world.

Like paying sensible wages and building cars people want to buy.

Georgia State University economist Rajeev Dhawan says Detroit’s problems aren’t the result of the current financial crisis but have been in the making for years.

Would we be here now, bailing out Detroit, had politics not interfered way back then? Will we be back here again, if politics once more dictate the terms by which Detroit will try to compete?

We’ll be told the failure of GM represents a systemic risk to the economy. Or that it would be easier to reorganize the United States than it would be for GM to reorganize under Chapter 11.

Maybe once upon a time. In a land far away. But no longer is what’s good for GM good for America.

Metro Atlanta lost its Detroit connection with this year’s closing of GM’s Doraville plant that followed the closing two years ago of Ford’s Hapeville plant.

But the Southeast has a viable automotive industry without Detroit — with employment growing toward 300,000. More workers than we lost in Hapeville will be toiling in the Kia plant in West Point next year. Honda, Hyundai and Mercedes-Benz have plants in Alabama as does BMW in South Carolina. Volkswagen is building in Chattanooga.

Georgia is home to 306 parts manufacturers and suppliers servicing those plants while employing more than 23,000.

Heidi Green, deputy commissioner for global commerce for Georgia, says right-to-work laws are “a significant draw” for the auto industry here and throughout the South.

Translation: Wages and benefits won’t wreck your business here.

Mercer University economist Roger Tutterow says not all bailouts are the same. The bailout of the financial institutions made more sense, as they are the conduit for the flow of capital and credit to the total economy. The failure of GM would be catastrophic for the Detroit community, but not for us here.

First came the mortgage giants, then the investment banking firms, then the insurance companies and then the commercial banks.

The line is forming to the rear. Behind the dinosaurs from Detroit.

The more you say yes, the harder no becomes.