I will never learn. I read E.J. Dionne knowing that his words will vex me--but I hope that I will read them in a spirit of civility and acceptance. By the time I'm finished--I am of course, vexed.
In today's edition of Mr. Dionne's blathering, he points to reports that all three US car-makers are currently profitable as evidence of the auto-bailout's obvious goodness. In Mr. Dionne's well-practiced style, the end--tenuous as it may be--justifies the means. Because the US government pumped $60B into two inefficient and held hostage by labor corporations, Chrysler and GM continue to operate. But Dionne evades several important points in his rush to enshrine neo-socialism as the savior of our economy.
1. Ford did not take government money--yet it is even more profitable than the others.
2. Legitimate senior debt-holders (in the case of GM) were bypassed in favor of repaying a reliable Democratic constituency--the UAW.
3. Don't even get me started on bailing out Chrysler--a ridiculously poorly managed PRIVATE company.
There is of course, inconsistency in my position. I supported TARP when it was being debated, and I believe that it remains the single act of government that has had any real impact on our economy (thank you, George W. Bush). TARP bailed out banks, and it bailed out parts of the Auto Industry. Bailing out the auto industry cannot however, be compared to the likely unraveling of the world financial system that would have followed inaction to shore up credit markets. Put another way, if we hadn't bailed out the banks, it's not like there would have been other banks out there who could have easily stepped in and serviced the market--there wouldn't have BEEN a market. Let GM and Chrysler fail? Ford, Honda, Toyota, BMW et al would have filled the nation's needs for cars and trucks just fine.
"But wait--mean Mr. Republican dude--if GM and Chrysler had failed, a million people would have been put out of work. This would have had repercussions for the broader economy too."
Yes, it would. But in this case, the medicine was worse than the sickness. Two companies that should have failed are now on taxpayer supplied life-support. Friends and favorites of the administration walked away with their palms greased in the process, as the very unions whose shakedowns led to the non-competitive cost structures exploited by foreign competition--now occupy the catbird seat in company management. And so, GM and Chrysler live to see another day, we prop up an aging and inefficient industry, we pour good money after bad--so that in five years, both companies can sink into the lowly state wards that is their destiny.
Creative destruction has a place in capitalism, and this was the place for it.