Posted by
John LaPlante on Thursday, December 11th 2008
You want a bailout of the UAW and its partners at the Big 3? Then be prepared some more wheeling/dealing.
Minnesota Sen. Norm Coleman is disposed towards this new bailout. According to Minnesota Public Radio, “Coleman spokesman, Leroy Coleman, said before the GOP senator will support an auto-industry bailout package, he needs some assurances.”
Assurances … such as?
Say, that Ford will keep open an ancient manufacturing plant that it has in the city of Saint Paul.
Great. Democrats will want to decide how much the CEO gets and Republicans want to make sure that obsolete facilities in their own states aren’t closed.
This smells-to-high-heaven situation reminds me of the old problem we had with obsolete military bases. It was obvious that the bases should be closed, but each had a political patron, meaning that they never did get closed. Taxpayers can thank ex-representative Dick Armey for pushing through Congress the BRAC, which has saved us all an aircraft carrier full of cash but taking Congress out of the loop.
The way things are going, we’ll need an automotive version of BRAC before long.
Or we could simply let the companies go bankrupt and let their managers sort it all out, and avoid the intervening years of politics.
….
Should taxpayers bail out GM, Ford and Chrysler in exchange for stock?.
No way, no how.
I understand the impulse: If we’re putting money at risk, let’s share the upside. But as bad as it is to flush $25 billion down the toilet to appease the sick side of the auto industry, there’s something far worse: A government bailout will succeed and leave the feds as part owners of these companies.
Do I hate making money? No. But in the unlikely event that this scenario plays out, it would be used as a rationale for other forms of nationalization–and our economy and political system would be fundamentally changed into one in which what matters is now who can build a better car or mouse trap or whatnot, but who can corral the most political power. And when political power is the be-all and end-all, life becomes once again nasty, brutish, and short.
If we insist in offering up $25 billion to the gods of the big 3, just give it to them in cash.
Or better yet, print it out as dollar bills and then incinerate it. At least we could heat some homes this winter with it.
…..
If we make the very stupid decision to nationalize the automotive industry–and I would call government cash, government-installed board members and further regulation of business nationalization–we will have gotten into that sorry mess because of many reasons. One of which is that we did not consider the lesson of the broken window.
Consider the thug who goes about town smashing store windows. You might say “Well hey, that’s not so bad. Actually, it means that the glass company gets some new business, and they can then pay their workers who buy stuff from other people and we’re all better off.”
We would certainly see a lot of economic activity as a result of that vandalism. But what we would not see is more significant. We don’t see the things that people would have spent their money on if it hadn’t been spent on replacing the glass.
In the same way, money spent on a bailout is money diverted from other uses that would have greater benefits. How many new inventions, new businesses, and even new career fields will we NOT see because we insist on focusing on what is obvious (three collapsing companies and their partners) rather than what is important for the future?
Thoughts on the Auto Industry Bailout
You want a bailout of the UAW and its partners at the Big 3? Then be prepared some more wheeling/dealing.
Minnesota Sen. Norm Coleman is disposed towards this new bailout. According to Minnesota Public Radio, “Coleman spokesman, Leroy Coleman, said before the GOP senator will support an auto-industry bailout package, he needs some assurances.”
Assurances … such as?
Say, that Ford will keep open an ancient manufacturing plant that it has in the city of Saint Paul.
Great. Democrats will want to decide how much the CEO gets and Republicans want to make sure that obsolete facilities in their own states aren’t closed.
This smells-to-high-heaven situation reminds me of the old problem we had with obsolete military bases. It was obvious that the bases should be closed, but each had a political patron, meaning that they never did get closed. Taxpayers can thank ex-representative Dick Armey for pushing through Congress the BRAC, which has saved us all an aircraft carrier full of cash but taking Congress out of the loop.
The way things are going, we’ll need an automotive version of BRAC before long.
Or we could simply let the companies go bankrupt and let their managers sort it all out, and avoid the intervening years of politics.
….
Should taxpayers bail out GM, Ford and Chrysler in exchange for stock?.
No way, no how.
I understand the impulse: If we’re putting money at risk, let’s share the upside. But as bad as it is to flush $25 billion down the toilet to appease the sick side of the auto industry, there’s something far worse: A government bailout will succeed and leave the feds as part owners of these companies.
Do I hate making money? No. But in the unlikely event that this scenario plays out, it would be used as a rationale for other forms of nationalization–and our economy and political system would be fundamentally changed into one in which what matters is now who can build a better car or mouse trap or whatnot, but who can corral the most political power. And when political power is the be-all and end-all, life becomes once again nasty, brutish, and short.
If we insist in offering up $25 billion to the gods of the big 3, just give it to them in cash.
Or better yet, print it out as dollar bills and then incinerate it. At least we could heat some homes this winter with it.
…..
If we make the very stupid decision to nationalize the automotive industry–and I would call government cash, government-installed board members and further regulation of business nationalization–we will have gotten into that sorry mess because of many reasons. One of which is that we did not consider the lesson of the broken window.
Consider the thug who goes about town smashing store windows. You might say “Well hey, that’s not so bad. Actually, it means that the glass company gets some new business, and they can then pay their workers who buy stuff from other people and we’re all better off.”
We would certainly see a lot of economic activity as a result of that vandalism. But what we would not see is more significant. We don’t see the things that people would have spent their money on if it hadn’t been spent on replacing the glass.
In the same way, money spent on a bailout is money diverted from other uses that would have greater benefits. How many new inventions, new businesses, and even new career fields will we NOT see because we insist on focusing on what is obvious (three collapsing companies and their partners) rather than what is important for the future?