Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line. It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. . . . It is all a reminder that the biggest threat to a healthy economy is not the socialists of campaign lore. It’s C.E.O.’s. It’s politically powerful crony capitalists who use their influence to create a stagnant corporate welfare state.(HT Instapundit)
Sunday, November 16, 2008
Bailout to Nowhere
David Brooks:
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3 comments:
I agree that any bailout to the auto industry is fraught with risks and unintended consequences.
But I still ask: do we really want the major automakers to fail? Is that a wise strategy given our already fragile economic state?
It's always interesting to me that those who advocate this "creative destruction" are never the ones working in the industry in peril. Perhaps we should suggest that David Brooks' column be terminated...after all, he's been wrong quite a few times these last 8 years, and just tell him it's creative destruction.
Let's see his reaction if he's about to lose his job.
"Do we want the automakers to fail?" If we don't want our economy to become stagnant like Japan's has for the last 10 years, we want them to allow them to fail.
Your analogy to David Brooks column is goofy. No one is singling out the auto industry to fail. They’ve done that to themselves. Detroit no longer makes products attractive to a wide selection of consumers or run their industry in a profitable manner. Why should we reward this ineptitude?
If Brooks' articles become so bad no one wants to read them anymore, he should get canned by the New York Times. That's not the case. But it is certainly analogous to what's going on with Detroit.
In normal times, we may want the automakers to fail.
But these are not normal times. If we allow the auto makers to fail, we risk even greater financial collapse.
Do we want to place even more millions of Americans out of work at this time?
Letting Lehman Brothers fail is now widely regarded as a huge mistake that exacerbated the current financial crisis; do we want worse with letting GM or Ford fail?
When GM goes down, let's watch the financial markets plunge even further and the unemployment rate skyrocket.
This is not an ideal situation; we must choose between imperfect options. It's like when treating someone with cancer...we often bombard their body with poison and radiation...it's not pleasant, but it can be more effective than doing nothing.
In fact, talk to any doctor and they will tell you that when treating serious illness, the treatment often has negative side effects, but that they have no other better options.
My point about columnists like Brooks is that it's easy to dispense advise like letting the auto makers fail when he has no personal stake. Try telling that to the families of the millions of Americans who would lose their jobs.
This is actually an opportunity to bring the stake holders together and try to get them to imagine what the future of the auto industry should look like and to begin anew.
So sure this has its risk; but the alternative is not acceptable.
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