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Planet Bailout


Kathryn, that Washington Post poll you linked to is an interesting glimpse of the limits of public sympathy. The original bailout (mid-September model) for the banks was nevertheless framed as a way of helping the little guy - ”keeping people in their homes”, etc.

The auto bailout isn’t getting the same traction. Who are the victims? Are we “keeping people in their cars”? GM sales are doing fine, but it makes no difference because they make a loss on every vehicle. In essence, GM is now a vast retirement home, with a loss-making auto subsidiary. 

So are we “keeping retirees in their Cadillac-level health and pension benefits”? I don’t think most Americans see why those of us with affordable and sustainable pension plans and even those with none at all should subsidize those with unaffordable and unsustainable pensions.

Are we “keeping workers in their jobs”? Not over the long term. This is exactly the same trajectory Britain followed in the Sixties. A malign government-union partnership to protect valuable and lustrous brands – Rover, Triumph, Jaguar, MG, etc – ensured that by the time it collapsed the brands were no longer valuable and lustrous, but fatally tainted by their decades on the government teat. If you like driving Chevys (as I do), you should be in favor of bankruptcy sooner rather than later. If you don’t like driving Chevys, government protection will take care of the problem.

So who are the victims? Us – if we don’t find a way to bailout from the bailout. Both the bank bailout and the auto bailout are responses not to the failures of the market but to the failures of attempts to rig the market, whether through government prevention of normal risk evaluation in bank loans or through the Big Three/UAW agreements that assumed a God-given hammerlock on market share for all eternity. We should oppose the bailout for the same reasons we oppose lifelong welfarism, for the most basic of conservative principles: If you reward bad behavior, you get more of it. 


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