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Remaking America in Chrysler’s Image

May 9, 2009

The French Cowboy can hardly believe that President Obama is getting away with his handling of Chrysler the way he does. Let me summarise what has happened: The president makes himself effectively the CEO of a private company in big financial trouble. He justifies his actions with the huge amount of taxpayer money that has been poured into the company by his predecessor and by himself. Instead of letting the company be handled in accordance with bankruptcy law, the president redistributes ownership, favouring the union at the expense of financial companies. After this has been accomplished he publicly scolds private hedge funds for not accepting a bad deal he has offered them, accusing them of acting irrationally and maliciously. Having imposed rules on what type of products the company has to make and having secured a big share of ownership for the government and Big Labor he allows a bankruptcy court to take over.

If you think that was the bad news let me tell you this: What happened with Chrysler is what can happen to the entire USA. President Obama considers himself entitled to force all of you into a bad social contract that will redistribute wealth from the private household to the government. The government then doles out some of it to politically preferred groups – to bureaucrats, some genuinely poor and some fraudsters through inefficient government programmes; to rich and powerful friends through contracts and ‘gifts’. The winners will be those labeled ‘good guys’ by the left: union bosses, liberal political organisations, selective business persons. The losers will be those labeled ‘bad guys’ by the left: those who are successful through their work rather than through rent-seeking in DC, and of course every individual who is a better judge of what is good for him than is the government. Everyone who will want to make a rational decision, weighing costs and benefits the way the evil hedge fund managers do, and act upon it will make himself the target of government and will be shamed back into line.

Just as Obama wants financial companies to pay for his ‘Returning union bosses’ favours’ project with Chrysler, he wants “the rich” to pay for his unsustainable “Remaking America” agenda. What he doesn’t seem to realise, though, is that his making “the rich” pay for bad investments will make sure that soon there will be no more “rich” around. Obama’s anti-rich policies do more than redistribute wealth. They also destroy incentives and social mobility. When those who are ‘rich’ are punished and everyone else is unrealistically guaranteed perks you used to have to work for – a solar-panelled 2-seater in every garage and a college degree in every pot – you destroy all incentives for people to become achievers and end up without them. Ultimately you will have a ruling class at the top (the well-off who are left over from the ‘rich hunt’ because of their political ties) and the rest of the population depending on alms from the government. With “the rich” cut to size and thus a smaller tax base those sweet entitlements that have been invented will be impossible to pay for. With the ruling class doing just fine and unwilling to share their power they are not interested in seeing anyone climbing up a social ladder, so the ladder will be kicked to the floor. And, voilà, America remade.

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