Romney: Let Detroit Go Bust

Bankruptcy, not bailout, will save the American motor industry
By Jason Farago,  Newser Staff
Posted Nov 19, 2008 7:26 AM CST
Protestor Medea Benjamin, left, is escorted out by a police officer as she waves a banner during a hearing on the automotive industry bailout on Capitol Hill in Washington, Tuesday, Nov. 18, 2008.   (AP Photo/Manuel Balce Ceneta)
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(Newser) – If you want to maintain an automotive industry in the US, writes Mitt Romney, giving the Big Three a bailout is the last thing you should do. In an op-ed for the New York Times, the former Massachusetts governor (and Michigan native) says that GM, Chrysler, and Ford need a managed bankruptcy followed by radical restructuring. A bailout will only encourage the industry's worst excesses, and in a few years "you can kiss the American automotive industry goodbye."

Detroit needs big changes, writes Romney, whose father ran American Motors before becoming Michigan governor. To survive, the industry needs to get its costs to Japanese and European levels; management needs to be booted, replaced by smarter executives from unrelated industries; and investment in cleaner, cheaper technologies needs to start now. As for the shareholders who'll lose out in bankruptcy proceedings, don't pity them too much: "They bet on management and they lost."