Professor Hopkins: Let GM Go Bankrupt |
The following is an interview by OurBlook on the auto bailout issue with Thomas Hopkins , professor of economics at Rochester Institute of Technology.  General Motors now wants another $16.6 billion in federal assistance. How should the government respond?TH: The government should independently compute the amount of additional financing sufficient to facilitate an orderly bankruptcy proceeding ... it does not seem to me that continuing to fund the existing enterprise holds much promise. GM also wants $6 billion in aid from Germany, Britain, Sweden, Thailand and Canada. How should those countries respond? TH: Similarly. Chrysler wants another $5 billion from the federal government. What should the answer be? TH: Same answer. The U.S. gave GM $13.4 billion in "loans" last fall and Chrysler $4 billion. What did the taxpayers get for their money? TH: Postponement of the inevitable ... and on the bright side, perhaps this will allow for a more orderly bankruptcy process. It may be that both companies receive the additional money. Would it make more sense for the government to simply order $16.6 billion worth of the most fuel-efficient cars from GM and $5 billion worth from Chrysler and give them, say, to members of the military as a new benefit (apportioning some of these orders to Ford to be fair) rather than have GM and Chrysler use the money to shut down more factories and lay off more workers? TH: An intriguing idea ... but would be unfair to Ford, the single firm that to date has managed to avoid appealing for bailouts from Washington. Prof. Hopkins has served as dean of RIT's College of Business and as president of its MBA program at the U.S. Business School in Prague. He held senior management positions in two White House agencies during the Ford, Carter and Reagan administrations; in 1979, President Carter appointed him a charter member of the federal government's Senior Executive Service. In the early 1980s, he served as deputy administrator, Office of Information & Regulatory Affairs, in the Office of Management & Budget. His research on business burdens of government regulation has been sponsored by the Organization for Economic Cooperation & Development (OECD) in Paris and the U.S. Small Business Administration (SBA) in Washington. He has testified on regulatory policy issues before committees of the U.S. Senate and House, and Canada's House of Commons. He co-authored a 2001 SBA report, "The Impact of Regulatory Costs on Small Firms," as well as National Research Council reports on marine transportation, the Exxon Valdez oil spill, and trucking/rail/barge transportation. He previously was on the faculty of American University, University of Maryland and Bowdoin College. He holds a B.A. from Oberlin and a Ph.D. in economics from Yale.
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