May 31, 2009

Recession Specialist: The Hitchhiker's Guide to the Bailout

Some of the most powerful and evocative characters, language, and ideas of the past century and a half have come from works of fantasy: Lord of the Rings, Harry Potter, The Communist Manifesto. Besides enveloping narrative and evocative setting, what sets great fantasy apart from the merely weird or silly is a grounding in issues pertinent to the real world, providing strong social criticism. Getting your story to teach people about the lives they live separates the Redwalls from the Riftwars, the Das Kapitals from the Dark Tower series.

At first glance, USA Today doesn't seem like a piece of fantasy, but upon further inspection, it shares a few remarkable similarities. For one thing, it's designed to reach beyond normal niches to a wide audience. For another, and just as the genre is based on epics and fairy-tales, the newspaper is based on an art form that is no longer relevant to modern life. And look inside USA Today these days, and you'll find some pretty fantastical articles.

Take, for example, Friday's "History Shows Corporations can Survive Bankrupty," which uses the examples of Texaco, Dow Corning, United, and Delta Airlines to prove that GM's bankruptcy does not spell the end for the company. According to the article, GM will succeed because it has a line of financing in place already, as did the above companies, whose products and services (oil, silicone, transportation) are always in demand. The U of C's Randal Picker commented:

"What is distinctive about this situation is that the government is behind GM," said Randal Picker, a professor of commercial law at the University of Chicago Law School. "The government is ready to step up and do that."

GM was hesitant to file for bankruptcy fearing no one would buy its cars, but that appears to have been overcome with the government agreeing to back its warranties, according to Picker.

"'I think we have gotten over the mental hurdle," he said. "They have got a have a business plan for selling cars profitably."

The article describes the plan as involving the closing of factories and dealerships, the sale of European operations, and the benefits of bankruptcy — Chapter 11 affords the afflicted company a reprieve from contracts, employee benefits, and other obligations — and U.S. backing will be a help. But there's a distinction about this situation that Professor Picker didn't mention: There isn't much of a market for cars these days, at least not in the same way that there is for oil, silicone, and transportation.

And people eager to buy GM cars? USA Today isn't doing a very good job; that's less a fantasy and more fiction.