The Client Side - Government Intervention, Penske, and How Things Should Be

This past week it was announced that Roger Penske's company was buying Saturn. This is what should have happened, but not orchestrated by the government and it should have happened months ago. The recruiting industry is impacted more by overall business conditions than most industries, so this is important stuff for all of us involved.

Back in the fall, Treasury Secretary Henry Paulson and his right hand man Tim Geithner (now Treasury Secretary under Obama) basically told George Bush that the situation was dire and they needed to bail out the banks. Bailing out the auto makers soon followed. Bush's answer should have been no. The government should not get involved in private sector business. What would have happened then? Well, they were supposed to use the TARP money to buy the Troubled Assets off of the banks. But that didn't happen, the bad assets are still there and the banks are still there too. The only difference is the government has shares and is now trying to order them around. What about the autos? Chrysler and GM probably would have gone under. Then investors like Penske would have come in and bought up the valuable parts. You see, Penske is a business man. I don't have anything to do with Penske except that we did some work for their automotive dealership group in the past. Running a racing team is a business. You have to do what it takes to make it profitable. So is running an auto dealership group and so is running a rental company. All things that Penske has done well and done profitably, without government intervention. Oh and by the way, they employ a whole bunch of people and for our purposes they have used recruiting firms to make key hires. There are other smart business people out there who would have swooped in and bought up parts of auto companies and put together new innovative companies producing great new products. Without government intervention this would already be happening and they'd be much further ahead in the process. The UAW probably would have been broken. Let's face it, the UAW has been eating the auto industry alive for at least 50 years. Without the UAW to deal with these new players would have bought plants that are now being shut down. They would have put people to work who are now being laid off, but being paid with our tax dollars to not work because the UAW is still there. What a waste! The auto suppliers who are struggling mightily now to stay alive would be busy and they would be hiring (and using recruiting firms for key hires). And the steel companies and others who supply them would have more business and be hiring and growing.

What do we have instead? Instead we have sunk at least $100 billion into the auto companies that are bankrupt anyway and more money will go into them. Why? To keep the brand name alive and to satisfy the unions and keep them in business. But the industry is broken and shrinking (it didn't have to) and the suppliers and everyone down the line are suffering because the government is trying to direct every move and keep themselves and their friends in power. Smart motivated business people like Penske are still doing what they do, but they have to deal with government directives on what they can build and the crazy unions and all the extra costs involved in that. It's too bad that Penske and others have to be saddled with all the baggage and have all these hurdles put in their way. This is just one industry, it's a big one, but one industry. And this is a perfect example of how government intervention ALWAYS makes things enormously difficult on the private sector. Private sector business is the white knight, the only ones who will drive economic growth and provide a better way of life in this country for all.

I'm seeing some real signs of improvement in business conditions and will continue to run my business the right way. But things could have recovered faster and going forward could be much better than they will be if the government would not intervene. I'm rooting for Penske and the other great business people in this country. Many will succeed despite the efforts of the government, but I sure hope that the people in government get a clue at some point and get out of the way. If not, I hope the voters will replace all of them with people who understand how business works (Democrat, Republican, Green Party, ABC Party I don't care what they call themselves).

Todd Kmiec
Todd Kmiec & Associates

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