The Corner

Picking Winners Creates Losers

Just one small point I think is getting lost in the mix. Government interventions are never neat and tidy. GM is going through painful downsizing at the behest of its new owner, GM. The goal is to make GM more competitive and keep it alive. We’ll see how that goes. But even if it succeeds, it’s not all win-win. Ford is eschewing government aid, and so it isn’t having it’s sizable debts erased. If GM does manage to rebound, it will only be thanks to an unfair advantage, at least from Ford’s perspective. If GM comes back, the press will hail Obama’s success, liberals will celebrate the genius of public-private partnerships and greet GM like the returning prodigal son. Meanwhile Ford, which has done things the hard but right way, will have to continue to pay its debts and lose market share it otherwise would have gotten fair and square. This isn’t to say that Ford should get on the gravy train too (not having the feds look over its shoulders is an advantage of its own), but the costs of this bailout are more complex than simply the (enormous) tab taxpayers are directly picking up.

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