Chrysler R.I.P. The Dealers Get Railroaded?

In The American Thinker an angry Dodge dealer writes of his frustration. (See this week's Monday Must Read.) While I wholeheartedly agree that the government's involvement in the operations and restructuring of Chrysler is absolutely against everything that makes this nation great, I don't agree with the argument that in a free market society this cannot happen, or should not.

First, if the gentlemen were to check his franchise agreement I would imagine that the contract states something to the effect that Chrysler/Dodge retain ownership of the brand name of the franchise and are leasing it to the dealer. Furthermore, I would also imagine that the agreement spells out certain circumstances and processes by which the automaker can end the contract. If this is true then his outrage at the seizure of his franchise is really just a result of poor contract reading.

Second, even if the contract does not say so our bankruptcy laws currently allow most contractual arrangements to be modified and/or nullified by the court. This modification does hurt some stakeholders, like this unfortunate dealer, but in the long run it is necessary for our economy to be able to clean house and re-tune companies worth saving and liquidate the rest.

Having said these things I think it is outrageous that the government exerted pressure on the bondholders and other parties to accept huge losses in both the GM and Chrysler restructurings. These proceedings should have been allowed to run their natural course without government involvement. The real problem now is that with, the government calling the shots, decisions are made that are not ideal from an economic standpoint.

There is a post on The Lonely Conservative that suggests the closure of dealerships may not be based on economics alone. The post suggests that the Obama administration may be targeting for closure those dealers that donated exclusively to the GOP during this last election cycle. Some of the dealerships supposedly closed for this reason were very profitable! I don't know how much truth there is in this, but if it is true then watch out because this is a window into the true nature of Barrack Obama and Team.

It is truly an outrage to close profitable dealers for political reason, and if the gentleman whose dealership is losing its franchise has been a victim of this then he has every right to be angry. He did not mention in his letter if his dealership is profitable or not....

If it is then perhaps he has a strong case that his dealership should not be closed. If not, then he needs to go take an economics course before complaining that this is against the free market.