Bailouts Are Bad Business

Thanks to a bout with insomnia, I happened upon an interesting BBC America show, Dragon's Den. The premise of the show is that inventors of almost anything make a pitch to 5 multimillionares. These 5 individuals are in their own right accomplished businesspeople in their own fields. These individuals may choose to invest in the inventor's company, if the inventor can convince them of their product's worth.

If only we had our own Dragon's Den for the Big 3 automakers. Alas, we instead have Congress and more's the pity.

Politicians are incredibly poor businesspeople. I considered the way the congressional committees questioned the Big 3 CEO's against how the Dragon's Den 5 questioned the inventors.

Politicians unfortunately play to the camera and to the soundbite. They and their staffs strive to elicit the day's quote or media moment that might propel the politician into the evening news spotlight for a few seconds. Why else do they flock to an open microphone like vultures to a rotting carcass? They know nothing and care not about gross sales figures, net profits, unit production costs or wholesale prices.

Those are just some of the questions the so-called "dragons" posed to the brave inventors who entered their den. Those who were prepared with the information fared better than those who stumbled. The inventors -- few though they may be -- who left with actual investments did so because they proved they had completed their homework.

They had done their market analysis.
They had successfully prototyped and initially marketed a useful or necessary product.
They had done the math, run the numbers, performed critical analysis of projected sales.
They knew their competition and their audience.

Not so with the Big 3, especially Chrysler. Their full page ads in newspapers across the country this week -- thanking America for the bailout -- simply shows how out of touch they are.

Do they think we are so naive as to believe that in 3 months they will do what they have not accomplished in over 3 decades?

Bailouts are inherently anti-capitalistic. In a true free market, capitalist economy, success is rewarded and failure is punished.

In America, we reward failure with bailouts so the company (or individuals) can continue the failure.

We are too stupid to learn from our mistakes so we are forever doomed to repeat them.

We are too complacent with our elected officials so we continue to re-elect them so they can continue to reward failure.

Those who do not learn from history are doomed to repeat it.

Most animals can be trained to perform or avoid behaviors with effective positive or negative reinforcements.

Unfortunately, we are too far evolved for that.