Posted by: jcardillo | 2 June, 2009

Creative Destruction

“Failure is the opportunity to begin again, more intelligently.”
-Henry Ford

Hopefully, for the sake of his competitors, the founder of the only Big 3 company not to go into bankruptcy was right. For far too long, the leaders of GM and Chrysler have been trying to deny the reality that you can’t make cars people don’t want, on costs you can’t recoup, and expect to stay in business. Perhaps a managed bankruptcy funded by the US Government (also known as your wallet and my wallet) was not a good idea. Perhaps the best idea was a liquidation, where new companies with new ideas could acquire the necessary assets to begin again building cars that people want at prices they can afford.

Why are we hampering the Fiskers and Teslas of the world for the sake of holding on to the creaking and crotchety old GMs and Chryslers? It is precisely this type of destruction, where those who have failed provide the sustenance for the next generation of successful companies, that drove our rebound from the Tech Bubble bursting (and a half-century of remarkable growth). So why are we so intent on preventing that from happening this time?

Hopefully Mr. Ford was right, and the reformatting of GM and Chrysler through bankruptcy produce viable companies. Hopefully the sales of their unneeded assets can help Tesla and Fisker and Saturn. After all, Mr. Ford’s wisdom flows through to us in other areas than automobiles:

A business that makes nothing but money is a poor business.
-Henry Ford

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