President Obama’s 5-month reign has been filled with bailouts for banks, bailouts for the war machine in the Middle East, bailouts for Democratic donors, and now the bailouts (and takeover) of Chrysler and GM.
The President’s auto-bailout supporters argue that we can’t let the Big Three go into “uncontrolled bankruptcy;” it’s “too big to fail,” jobs would be lost, and many part suppliers would go out of business like dominoes. Washington, so they say, needs to come to the rescue and “save” Detroit.
Despite the bad economics that goes into the idea of giving an endless supply of taxpayer money to failing businesses, it simply doesn’t work. Matt Welch, in the latest issue of Reason, makes a great point about what happened to his hometown of Long Beach when the government “did nothing” to stop the collapsing of airplane contracting in the early 1990s:
The collapse of the Cold War, and the defense-related contracting that came with it, hammered Southern California, particularly the Long Beach/South Bay Aerospace belt. An estimated 250,000 good jobs went poof.
Everyone seemed to agree that Long Beach would never regain its lost glory; everyone turned out to be wrong. As the market for war making collapsed, the market for peaceful global trade exploded, turning the twin ports of Long Beach and Los Angeles into the largest commercial port complex in the Western Hemisphere.
The absence of government meddling allowed the city to sell off or donate all of the property to private interests who have made more efficient use of the land and the equipment.
This is what should have been done with GM at least a year ago. Let them declare bankruptcy, and let free people in a free and open market economy allocate capital and resources to firms and individuals who actually known how to run a car company. The federal government has been in bed with GM for far too long, from protectionist tariffs that limited their competition and allowed them to get away with making junk, to the UAW parasites that bled them year after year.
Detroit now takes orders from the White House. Pharaoh Obama I is setting contract terms for share holders and creditors, hiring and firing CEOs, giving lectures to the whole industry, and forcing unprofitable top-heavy companies to make unprofitable hybrids.
CEO Obama; the implications of that concept is just scary. Didn’t we used to have a word that described the merger of big business and big government? Well, when Mussolini and Hitler did this, we called it fascism.
Obama’s automotive fascism, yes fascism, is not the iron-fisted versions of Mussolini or Hitler. He’s a soft-tyrant, a diet dictator, fascism with a smile. Obama has more power than any Caesar or King could ever dream of, and he will continue to grab power and seize private property at his will and discretion. I think there’s an old saying somewhere about absolute power corrupting absolutely…
I can’t wait to buy a car from a dealership that has the efficiency of the DMV, the kindness of the IRS and DEA, and the compassion of the Veteran’s Administration (a great example of the disasters of government-run healthcare).