Never stuff a dying turkey
Richard L. Hershatter
Contributing Columnist
hershatter@lbknews.com
When a turkey gets too fat,
Put it on a diet;
It may be the one way that
We save its life: let’s try it.
The Thanksgiving season is upon us, and three dying turkeys have descended upon Washington, seeking to gobble up bailout dollars.
One is named Ford, and the other two are known as Chrysler and General Motors. The farmers who tended to them worked diligently and rewarded themselves with bountiful bonuses and salaries and option agreements.
Times were good, and even though the turkeys competed with each other, they prospered and grew fat with the passage of time.
The day came when one of them — Chrysler — fell out of favor in the national barnyard. Ford and General Motors continued to produce colorful plumage, but it looked as though Chrysler would come to an unhappy end.
Fortunately, a farmer by the name of Iacocca, who had formerly taken care of Ford, came to the rescue, secured a temporary loan from the Federal Government and slowly nursed Chrysler back to health.
As so often happens, however, the three turkeys grew complacent, careless and even fatter. Rivals from Germany, Japan and even South Korea invaded the barnyard and displaced each of them in the affections of the public.
What is worse, the farmers in charge of the three ignored the needs and desires of the public and proceeded to enrich themselves further, instead of devoting attention and resources to the benefit and improvement of their charges.
Costs of feed and shelter continued to climb, but demand dried up, and soon there were insufficient assets to continue to maintain Ford, Chrysler or General Motors.
The cry was raised that American turkeys could not be allowed to expire, and the government was asked to stuff them with a massive financial bailout, at taxpayer expense.
Notwithstanding the earlier successful precedent with Chrysler, there are myriad reasons why stuffing a dying turkey would be a mistake.
In the first place, the nation’s economy is in terrible shape, with many frantic demands being made on limited resources to correct an abysmal situation.
Secondly, it is apparent that even if additional taxpayer billions are made available, the new resources would merely be used to pay off old debts, bonuses, pensions and salary obligations. Little, if any, would be left to help make the turkeys leaner, meaner and more able to compete with their foreign counterparts.
What is worse, the same old farmers would remain in charge, devoting more attention to their own greedy interests than to the turkeys. Over the past several decades, the compensation being paid to management has become inordinately exorbitant, draining off assets that should have been put to use in furthering the business at hand.
Proponents have justified such largesse by claiming that it was necessary to attract managerial talent and keep them from going elsewhere, but if all business enterprises adhere to rational rates of compensation, to where would such executives defect?
Innovative managers who actually produce positive results deserve and should obtain adequate monetary recognition, but there is no excuse for increasing compensation and rewarding office-holders when their efforts produce poor results.
This does not mean that Ford, Chrysler and General Motors are doomed to die.
It is for precisely situations of this kind that Chapter Eleven of the Bankruptcy Act was enacted.
Entities going bankrupt under Chapter Eleven are allowed to continue in business under the supervision of the Bankruptcy Court. Committees of creditors and interests representing the business itself meet and work out payment schedules and agreements for payments of something less than the full amount owed.
The court has the authority to renegotiate contracts and supplant inefficient management, maintaining control until the enterprise is again viable and can exit the bankruptcy status.
The system has worked well with the nation’s airlines.
Some of the highest flying have come to grief because of wildly rising costs of jet fuel and union work rules that have become rigid, if not arthritic, with the passage of time.
A few carriers have not survived, but by and large the vast majority has emerged from the process stronger and more able to meet the requirements of the modern age.
What has worked in the air can be equally effective for the struggling auto industry.
Our munificent Congress, ever generous with taxpayers’ money, has already appropriated $25 billion for the auto industry, which claims it is “chicken feed” and has demanded an additional $25 billion.
It’s time to stop throwing dollars at the problem and let the bankruptcy process work its magic.
Richard L. Hershatter is a retired Connecticut lawyer and novelist who writes a column of interest to Floridians. He can be reached at hershatter@lbknews.com.
