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Lincoln’s Advice on the Detroit Bailout

[digg-reddit-me]Think calmly and well, upon this whole subject. Nothing valuable can be lost by taking time. If there be an object to hurry any of you, in hot haste, to a step which you would never take deliberately, that object will be frustrated by taking time; but no good object can be frustrated by it.

From Abraham Lincoln’s first Inagural Address. Brought to mind by George Packer’s invocation of it in his excellent piece in the New Yorker on “The New Liberalism.”

In a time of crisis, sometimes, much can be lost in the time required for due reflection. But not often. And much more often, hasty decisions lead to unanticipated side effects, often worsening the original condition. Our current media environment punishes daily the patience Lincoln counsels – and rewards the patience, if ever, only on occasion. This has been the case at least since Bill Clinton, as every prominent political figure is forced to respond to scandal after scandal – and in the midst of this, the bigger picture was lost. John McCain’s and Hillary Clinton’s campaign got lost amidst their daily attempt to win the media war and quash brewing scandals. Barack Obama managed to stand apart from the daily grind. He kept his campaign’s course amidst the tumult. This wasn’t always to his benefit – as it led him to take too long to address the Reverend Wright scandal for example- but in the end, his response worked more effectively than a day-to-day attempt to distract and quash the story would have.

This patience and deliberation is Obama’s strength. Now, he must maintain it while he manages his transition and in his administration.

I’ve been hearing that the Detroit bailout won’t be able to pass in this lame duck session of Congress. I hope this is true – because I think a smart rescue plan for Detroit will work better than the current proposal for a hasty bailout. We need to ensure that this bill doesn’t succeed just because – as George Will pointed out – it follows “the supreme law of the land…the principle of concentrated benefits and dispersed costs.”

Yet at the same time, I am not quite as cavalier as many others who have suggested we let these companies simply fail. It may be just – but it is not prudent in this financial climate. In a just world, certainly, Lehman Brothers would have failed – but if it were prudently preserved, this financial crisis may not have been precipitated. Can we risk letting these companies fail now? I don’t believe we can, so we need some kind of rescue plan.

But this rescue plan should be crafted to avoid the exact moral hazard that accompanies any help to an ailing industry. The plan should be punitive towards the management of these companies. It should not prop up the companies directly. My thought is that Obama could propose some Tennessee Valley Authority type project for Detroit – in which the government could offer contracts for green industry jobs in the area – specifically attempting to utilize many of the structures and factories and workers in the area. They should allow any company to apply for these contracts – and structure it in such a way that they could attempt to buy up the necessary facilities after applying.

The goal of this legislation should not be to prop up General Motors, Chrysler, and Ford – but to rejuvenate the car industry in the area and to utilize as much of the infrastructure and employees already built in the area.

This legislation will not be able to be crafted and debated in the next week. This will need a new Congress and a new president.

There are many troublesome paths that can be taken here. To choose the least bad will require patience and deliberation. Which is why this matter must wait until after January 20th.

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