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Don’t Bail Out the Automakers

November 13, 2008

Bailing out an industry that should’ve been left to fail years ago is a bad enough idea all in itself. But “bailing it out” by forcing it to build cars that are a punishment for consumers and wouldn’t get built by a profit-seeking company when left alone is an even worse idea.

Isn’t it swell that with a record deficit and likely tax increases* your government wants to give your money to zombie companies in order for them to produce products that are so unlikely to be successful that even potential buyers have to be lured with a subsidy?

US carmakers are in trouble for a number of reasons and one of the bigger ones are the high union wages for their employees. We can look forward to more of this thanks to the likely introduction of card check. As Krauthammer puts it, instead of a secret ballot, “[l]arge men will come to your house at night and ask you to sign a card supporting a union. You will sign.”

Also, this episode – should it end in a bailout of the automakers – would set a fine precedent and impregnate the economy with who knows how many train-wrecks-to-happen companies that will demand their tax-payer financed rescue plan at their time.

Whatever happened to Schumpeter’s creative destruction?

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* Yeah, I know, but I will believe those promised tax cuts under an Obama administration only if they’re done and last until after Obama’s successor has been inaugurated.

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