Sheldon Richman
Governmental Logic
Mitch McConnell, the Republican Senate leader, had this to say in connection with the auto bailout:
We will not let the taxpayers spend their hard-earned money on ailing carmakers unless these companies are forced to reform their bad habits — either inside or outside bankruptcy.
So the way McConnell sees it, we taxpayers want to spend our hard-earned money to save the Big Three, but he is going to stop us — for our own good — if the companies aren’t compelled to reform themselves.I guess that’s Republican paternalism. As a libertarian, I object. If I want to spend my tax money on GM, Chrysler, and Ford, I’m going to do it whether some presumptuous senator from Kentucky wants me to or not. This is a free country!
Comment by Carl Clegg on 11 December 2008:
Yesterday the House passed the first phase of the auto industry bailout packaging approving the first $14 billion of taxpayer monies. The Democrats are largely in favor of this move since not only does it appeases the labor unions but it also sets up a provision for the government to micromanage their operations and turn them into green car makers. Sadly, this move is putting taxpayer money at risk and it’s unlikely that the Big Three will become profitable anytime soon. Their problems began long before the credit crunch and current turmoil. In the past half dozen years GM alone has bled $51 billion. They still don’t get it and continue to make cars people don’t want and fail to make cars people do want.Our first family car was a Ford Taurus wagon, the best-selling car in its day, union-made in Illinois. Sadly, it was in the shop more than it was in our driveway. It was truly a lemon. We only put about 40k miles on it but it had new problems developing on a weekly basis — not to mention myriad recalls. We had patience but finally had to get rid of it. We then bought a late model Chevy van. Maybe it was just Ford that was having quality issues. In a sign of things to come, it died on the first day we owned it. We had to have it towed. Over the ensuing months, it was in and out of the shop for numberless problems. In the end we traded it in for a Japanese car. Although I have six children and we could benefit from a large family wagon, we now drive a Toyota Sienna — which is amazingly efficient in the use of space — and is reliable. My wife refuses to get stranded and will not drive American vehicles anymore. I keep telling her that we still need to try a Chrysler vehicle…but she’s won’t budge. The bottom line is that many Americans won’t buy American cars because of the quailty issues. That’s certainly the case with us. One of the most troubling dimensions of the Big Three bailout is the support its getting from President Bush. Not even a year ago he said that the market needed to work its course and that the government needed to stay out of it. Now in a 180 he has become as big government as Obama and is supporting the bailout. What happened to his principles? Is he trying to get his groove back by being popular? If so, he should look at the latest poll that shows that 61% of Americans think the government should stay out of it.Lastly, the bailout is actually causing more damage than good. Without a bailout GM would have to declare bankruptcy underwhich it could reorganize. It worked for the airlines and it could work for the car companies. They sorely need to rewrite their labor contracts and this they can do under bankruptcy protection. It will be interesting to see how the history books tell the story of the demise of the American car industry. Will they point out the damage caused by collective labor or will they blame it on a bailout that is too small and too late? In any case, it will be the hapless taxpayer that will foot the bill.