Sources: Chrysler Turned Down Government Loan Over Limits on Executive Pay.
I’m not buying what Chrysler is saying. If you have an opportunity to borrow as a lower rate, especially if you are nearing bankruptcy, you are irresponsible if you don’t take it. To say that you don’t need the money right now, but that you are going to borrow from other sources with higher interest rates points straight to the fact that pay limitations are in your future if you borrow from the government.
So what do you do in this situation? Either you effectively hand over control of your company to the government, or you risk bankruptcy. It appears that Chrysler has chosen the lesser of two evils.
I think that it’s a disgrace that a company would agree to pay any employee a “performance bonus” even when the company is in the tank. The current financial status of the company should be considered in the contract as a common sense measure. Sure, the car companies might have been ok if not for the economic downturn, but what kind of plan doesn’t have some kind of contengency just in case the economy doesn’t keep on its track of unsustainable growth?
On the other hand, the government should not be in the business of business in the first place. To hand out my money to a company that’s failing simply does not happen in a true free market economy. Have you realized yet that we don’t have a true free market economy? The government controls so much of business both directly and indirectly in the name of the “common good” that we aren’t even close anymore, albeit closer than most other nations around the world.
Corporate subsidies exist because someone was convinced by a lobbyist that industries could not be allowed to fail, yet they weren’t self-sufficient enough to survive in a free market economy. Amtrak and the airline industry are perfect examples.
Give tax breaks to business. That’s the way to get industry moving, but don’t allow the government to buy into the company and begin dictating business strategy. Look at the mess they’ve made with everything else they’ve tried to run and you will see why.