Time Magazine looks into whether GM is worth saving or not, and what the costs of action versus inaction would be.

Basically, GM has us over a barrel. Either tax dollars pay to keep it alive or tax dollars pay to handle the disaster of its failure. But that doesn’t mean we have to hold our noses and give GM whatever it says it needs. Just because a million or more jobs are on the line at GM and its suppliers doesn’t mean we should panic. If the company is too big to fail today, a blind bailout will mean it will still be too big to fail tomorrow. The goal should be making sure GM can never hold us over a barrel again.

Determining the proper solution will take serious debate by numerous experts. But there’s one idea that makes good sense to me. Bust GM up:

[C]ritics like Jim Schrager at the University of Chicago Booth School of Business say the wrong people are in charge: “I think you would only put money in GM if you had a complete change in the board and the current management. They are diligent. They worked very hard, but it just hasn’t worked.” In Schrager’s view, GM is a strategic failure. It can manufacture high-quality cars, but it neither makes the right kind nor markets them effectively. He’d bust the company up into three independent firms: Chevy, Buick-Pontiac-GMC and Cadillac-Saab-Saturn.

I’m sure such a plan would have some negative consequences and I don’t know it would affect the supplier chain or manufacturing infrastructure. But breaking GM into more companies means more competition, more opportunity for dynamic decision making and less chance for one company’s failure to bring down the national economy.

Just look at the failure of Circuit City. That’s a big company too, but it’s being forced to file for Chapter 11 bankruptcy protections rather than being given a government bailout. Why? Because the electronics retail industry has enough diversity and dynamism to prevent one company’s failure from forcing our government to take extreme measures.

What we’d like to ensure for the future are U.S. automakers that, in the event of failure, would be obligated to use the same Chapter 11 rules available to all other failing businesses. Right now, GM’s immense size means we have to give it special treatment. But that treatment shouldn’t be a band-aid. It should be a remedy. We need to make sure GM can never again put our nation in this position.

Business GM Bailout Should Come With Major Changes