Dennis
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 Posted: Tue Nov 18, 2008 8:27 pm Post subject: Adam Smith, dim Dems and the UAW |
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FROM DETROIT NEWS
HEAD: Do Detroit 3 automakers deserve bailout?
SUB-HEAD: Bankruptcy would help restructure ruinous benefit deals without
nationalizing industry
By Charles Krauthammer
Finally, the outlines of a coherent debate on the federal bailout are
emerging. The fault line is the auto industry bailout. The Democrats are
pushing hard for it. Congressional Republicans are resisting.
The Bush administration sees the $700 billion rescue as an emergency measure
to save the financial sector on the grounds that finance is a utility. No
government would let the electric companies go under and leave the country
without power. By the same token, government must save the financial sector
lest credit dry up and strangle the rest of the economy.
Treasury Secretary Henry Paulson is willing to stretch the meaning of "bank"
by extending protection to such entities as American Express. But
fundamentally, he sees government as saving institutions that deal in money,
not other stuff. (Over the weekend, the Bush administration said it would
prefer the aid come from $25 billion Congress already approved for retooling
to deal with higher fuel economy standards).
Democrats have a larger canvas, with government intervening in other sectors
of the economy to prevent the cascade effect of mass unemployment leading to
more mortgage defaults and business failures (as consumer spending
plummets), in turn dragging down more businesses and financial institutions,
producing more unemployment, etc. -- the death spiral of the 1930s.
With almost 5 million workers supported by the auto industry, Democrats are
pressing for a federal rescue. But the problems are obvious.
First, the arbitrariness. Where do you stop? Once you've gone beyond the
financial sector, every struggling industry will make a claim on the federal
treasury. What are the grounds for saying yes or no?
The criteria will inevitably be arbitrary and political. The money will flow
preferentially to industries with lines to Capitol Hill and the White House.
To the companies heavily concentrated in the districts of committee
chairmen. To clout. Is this not the kind of lobby-driven policymaking that
Barack Obama ran against?
Second is the sheer inefficiency. Saving Detroit means saving it from
bankruptcy. As we have seen with the airlines, bankruptcy can allow
operations to continue while helping shed fatally unsupportable obligations.
For Detroit, this means release from ruinous wage deals with their
astronomical benefits (the hourly cost of a Big Three worker: $73 in 2006;
of an American worker for Toyota: $4 , massive pension obligations and
unworkable work rules such as "job banks," a euphemism for paying vast
numbers of employees not to work.
The point of the Democratic bailout is to protect the unions by preventing
this kind of restructuring. Which will guarantee the continued failure of
these companies, but now they will burn tens of billions of taxpayer
dollars. It's the ultimate in lemon socialism.
Democrats are suggesting, however, an even more ambitious reason to
nationalize. Once the government owns Detroit, it can remake it. The
euphemism here is "retool" Detroit to make cars for the coming green
economy.
Liberals have always wanted the auto companies to produce the kind of cars
they insist everyone should drive: small, light, green and cute. Now they
will have the power to do it.
In World War II, government had the auto companies turning out tanks. Now
they would be made to turn out hybrids. The difference is that, in the
middle of a world war, tanks have a buyer. Will hybrids? One of the reasons
Detroit is in such difficulty is that consumers have been resisting the
smaller, less powerful, less safe cars forced on the industry by
fuel-efficiency mandates. Now Detroit would be forced to make even more of
them.
If you think we have economic troubles today, consider the effects of
nationalizing an industry of this size, but now run by bureaucrats issuing
production quotas to fit five-year plans to meet politically mandated
fuel-efficiency standards -- to lift us to the sunny uplands of the coming
green utopia.
Republican minimalism -- saving the credit-issuing utilities -- certainly
risks not doing enough. But the Democratic drift toward massive industrial
policy threatens to grow into the guaranteed inefficiencies of
command-economy maximalism.
In this crisis, we agree to suspend the invisible hand of Adam Smith -- but
not to be crushed by the heavy hand of government.
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Think there are enough people smart enough to learn this lesson? Probably
not....at least not 'round here, eh, Beetle, Eater of Dung.
I predict voter regret within six months of B.O.M.B. (Beee-ooo, the Monkey
Boy) occupying Da Honky Crib in Da Hood (formerly the White House). Check
out left wing-nut blogs...it's already starting, and B.O.M.B (Beee-ooo, the
Monkey Boy), he ain't even done swored on de bible yet.
I grieve for my Republic
Dionysus |
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