Ron Morley's Freedom Blog

This is the place where I do my little bit to explain the evils of the State.

Yet another Federal "bailout" in the works


The Federal government is about to stage yet another “bail-out” of a business which is “too important to fail.” This time the target will be Detroit's Big Three automakers, beginning with General Motors. We are hearing the now familiar drumbeat of predictions of horrible economic repercussions if any of the U.S.-based automakers are allowed to fail. The American people are being told that millions of jobs are at risk of disappearing and that it is essential to our economy that there be a U.S. automobile industry. Finally, we are being told that allowing these companies to go through the traditional and legal process of seeking chapter eleven bankruptcy protection is inappropriate given the turmoil our economy would supposedly be thrown into should one or more of General Motors, Ford, or Chrysler to go out of business.

President-elect Barak Obama has stated that he is in favor of “loaning” the Detroit automakers at least $25 billion. Nancy Pelosi, the Speaker of the House, is in favor of calling a lame-duck session of Congress specifically to consider just how much more taxpayer money is to be given to yet another set of special interests. President Bush has said that he would consider signing a bill giving the obviously incompetent management of a major industry more money. Michigan Senator Carl Levin is proposing that the Paulson Wall Street bail-out bill be amended in order to allow the automakers access to their share of the $700 billion that was originally intended to go solely to Wall Streeters.. Finally, the leaders of the United Auto Workers is campaigning hard for government assistance in order to save high paid manufacturing jobs, which are supposedly fundamental to our nation's economy.

None of this makes any economic sense, though it makes a lot of sense when one considers the politics of the situation. Once again, a set of special interests is to be allowed to feed at the public trough because they were incompetent and drove their companies into financial ruin. Incompetence, greed, and unwillingness to change are going to be rewarded on a scale that would have been unthinkable prior to September of this year. And, again, the Constitution is to be ignored; apparently it no longer matters what the Constitution says if the “emergency” is grave enough – the power of the State to deal with the situation is to be expanded at all costs, and issues of Constitutionality are simply ignored in the rush to feed Leviathan's ever-increasing appetite for power.

The incompetence is present in management, labor, and government. Management has had over thirty years in which to take steps to manufacture small, high quality, fuel-efficient vehicles, yet it has failed to do so, repeatedly. Likewise, the UAW has done its best to maintain pay rates that are simply unsustainable in the face of more efficient, less costly overseas labor. The Federal government is also not blameless in this as its ever-growing list of regulations governing everything from safety, to fuel efficiency, to the type of materials that may be used in the interior of vehicles has helped drive up Detroit's cost to a level that has made an entire industry uncompetitive on a global scale. Yet, all three of these groups are about to be rewarded for their incompetence and, worse, the bail-out will do no good as it will not address the underlying problems of the industry, though the parties involved will loudly trumpet the minor changes that will be made as major breakthroughs that will save the businesses, and the jobs, and will result in the Statist Utopia that the Federal government has been promising ever since the implementation of the New Deal in the 1930s.

What is going unsaid in all of this is that the bailout is going to be done by the upcoming Obama regime in partial repayment of its political debt to the United Auto Workers for its support during the recent presidential election campaign. It is more important to Barak Obama and the rest of the “Social Justice” wing of the Big State Party, known colloquially as the Democratic Party, to pay their political debt than it is to allow the market to function as it should. Rather than allowing these inefficient companies to go bankrupt and make their assets available to other business that could make better uses of them, yet another large chunk of the American economy will be nationalized. Another sector will be taken over by State bureaucrats who will dictate the details of its operation in a manner reminiscent of the central planning done in the former Soviet Union. The State will gain yet more power over the lives of its subjects and the Constitution will fade further into the background, a document supposedly revered by our political leaders, but, in reality a piece of paper that is increasingly viewed by them as an impediment to the further expansion of Leviathan's power and reach. It is particularly ironic that the Federal takeover will be done almost immediately following Senator Barak Obama swears to “preserve, protect, and defend the Constitution.”