Writing for Reason Magazine, Shikha Dalmia explains that the U.S. government should let the ‘big three’ automakers go broke since they will collapse in the long run regardless of what the government does.

Not only will these automakers cease to exist in the middle to long run, they should have collapsed years ago already. They exist only because the federal government, and other foreign governments, have helped them out time and again.

The ‘big three’ want the U.S. government to bail them out once again because, so they say, their collapse would jeopardize the entire U.S. economy. They compare themselves to the financial institutions the government bailed out weeks ago, arguing that they too are an essential part of the U.S. economy: if they would fall, millions of jobs would disappear, and the economy as a whole would collapse.

Although the argument may make sense to those who work for the three automakers or are dependent on them (lobbyists) in D.D., it does not to virtually everyone else. If the big three would disappear the economy would certainly suffer a bit. Compared to the collapse of the financial institutions in dire need earlier this year, however, automakers can be considered irrelevant. They will cause some pain, but they cannot possibly take the entire economy with them. Simply put, only a few businesses and individuals are dependent on the automakers for their livelihood. If the three would collapse, some businesses would fall with them, but healthy businesses in the autosector will survive, and the rest of the economy will hardly notice the death of the U.S. auto industry at all.

Additionally, the author points out that these companies “will need divine—not government—intervention to survive.”

The math is simple: “General Motors alone burned about $5 billion a month for the last quarter and is expected to completely exhaust its kitty by the end of this year. (The other two will follow suit shortly after.) At that rate of cash burn, the bailout money translates into five more months of life.”

A comeback would rather obviously “be hard to pull off even if these were the best run companies on the planet, rather than ones debilitated by decades of labor intransigence and management incompetence, two characteristics that show few signs of abating.”

If they want to survive in the long run, or even in the middle run, they will have to produce cars now that will convince Americans to get rid of their “Hondas and Toyotas” in order to buy American cars. This requires the big three to “offer something radically—not just marginally—better. They will have to invent irresistibly sexy cars and sell them at super attractive prices—and still turn a profit.”

Since “this will require a degree of new thinking and innovation that their command-and-control corporate cultures haven’t supported in a long time” and they only have five months to do so, the big three, and U.S. Congress, should wake up to reality: these businesses can only survive for a year or two if the government is willing to pump many billions, hundreds of billions even, into them. Even if that would happen, the companies involved would not be able to compete with the Asian ‘tigers’ in the long run, meaning they will disappear in the end no matter what because the government will simply be unable (and unwilling) to continue supporting them.

In addition to the above, Dalmia argues that bailing out businesses time and again will not “encourage them to reinvent themselves—exposing them to the full force of the gales of creative destruction will.”

No, the big three will have to go. The U.S. government should let them fall. When they do, employers and employees in this sector will have to focus on other areas and products, work in sectors that can compete internationally, making the U.S. economy stronger rather than weaker. Creative destruction is not merely a fancy economic theory; it is reality. Bailing out dying businesses weakens the economy as a whole, causing everyone to suffer in the end.

Just ask the Soviets; they perfected the art of keeping dying businesses artificially alive and paid dearly for it.