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Ronald Reagan and Lee Iacocca, Detroit, 1980
The clamor is coming from all sides: extend the bailout to the car companies.
The rationale for doing so is that it is responsible fiscal policy: only by saving automobile manufacturing jobs will we be able to save Michigan. And as Michigan goes, so goes the country.
The holes in this argument are big enough to drive a Hummer through.
In the first place, whatever happened to the jobless recovery of 2003? I thought all the manufacturing jobs were already gone?
In the second place, as I have argued before, bailing out failing industry is a mistake. A firm line must be drawn between what is public capital and what is private capital. We have worshipped in the temple of private capital for two and a half centuries, while the idea of public capital has never been adequately articulated. The agopee of “privitization”, that is making what was public capital private, came with Reagan.
Reagan privitizing a Michigan State Fair T-shirt
The end of that privitization happened when Henry Paulson was handed the keys to the Treasury and used them to write checks to his former pals in the financial industry. “Don’t worry boys — you’ll get your Christmas bonus this year!” The same is about to happen to the Big Three if they get their “bailout”: Executives will get to save their houses, while the workers’ jobs are eliminated and shipped overseas, and their retirement is left to a non-existing public dole. GM will not be able to build giant inefficient machines in the future. The market will not allow it. To prop them up will not save jobs for workers, it will only hold open the fire escape doors long enough for the rich to get out while their house is burning down.
Real fiscal stimulus has to do what the New Deal did: guarantee the future of the Re – Public by funding public capital.
save the dinosaurs!
The Democrat leadership has obviously not gotten the memo on ideological shift. Here is the article from the wires.
Democratic Congressional leaders urged the Bush administration on Saturday to consider using the $700 billion bailout for the financial system to aid distressed American automakers, in a prelude to what may become urgent negotiations over additional economic stimulus measures.
This is a bad idea for so many reasons. First, it sets a bad precedent. Every progressive policy idea of the next four (let’s hope eight) years will be stained by the memory of this capitulation to corporate interests.
Second, it invites an environmental nightmare. What’s next? Bailing out the coal industry because it’s losing jobs to green energy? Bailing out AIG because they’re “too big too fail”? (Oops. Already done.) These guys are going out of business because they thought cheap gas would last forever. They are dinosaurs who deserve to die. Maybe if we’re lucky their carcasses will provide fuel for someone in one hundred million years. They even knew the good times couldn’t last, but they put that nasty thought out of their heads for instant gratification of quick profit. This is how the AP put it:
At Ford Motor Co. they called it “Blue,” a team set up around the year 2000 to design an array of small, fuel-efficient cars to compete with the Japanese. It didn’t get far because no one could figure out how to make money on low-priced compacts with Ford’s high labor costs.
Besides, the automaker was racking up billions in profits by selling pickups and sport utility vehicles. Times were good and gas was cheap.
If the government commits to maintaining failing technologies because people have jobs that depend on them we are never going to get ahead of the energy curve. If Chevron and ExxonMobil get bailouts there will be an insurrection right here in the good old U. S. of A.
Third, it validates the idea that corporations are the equivalent of citizens. It should not need to be said, so why am I saying it? Corporations are not people. They may have a lot of money, but corporations are not citizens. The business of government is citizens, not collections of citizens, or business syndicates, or legal fictions. If the Dems in Congress want to do something for the people who will be laid off if the auto companies die, put money into infrastructure or unemployment benefits. That at least will tide workers over until a true entrepreneur comes along with a better job to give these men and women. When you work in a factory it doesn’t matter if you build SUVs or hybrids — it’s all the same to the assembly worker. But if you bail out GM and Ford, all you will see for the next ten years are more SUVs and Hummers.
culturalcapitol.com 