Krauthammer: Automaker Bailout a Lemon
Posted by Bill Dupray
on Nov 14 2008 Filed under Politics.
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We probably don’t need Kraut’s substantial analytical firepower to explain this, but here it is.
With almost 5 million workers supported by the auto industry, Democrats are pressing for a federal rescue. But the problems are obvious.
First, the arbitrariness. Where do you stop? Once you’ve gone beyond the financial sector, every struggling industry will make a claim on the federal treasury. What are the grounds for saying yes or no?
The criteria will inevitably be arbitrary and political. The money will flow preferentially to industries with lines to Capitol Hill and the White House. To the companies heavily concentrated in the districts of committee chairmen. To clout. Is this not precisely the kind of lobby-driven policymaking that Obama ran against?
Second is the sheer inefficiency. Saving Detroit means saving it from bankruptcy. As we have seen with the airlines, bankruptcy can allow operations to continue while helping to shed fatally unsupportable obligations. For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48), massive pension obligations and unworkable work rules such as “job banks,” a euphemism for paying vast numbers of employees not to work.
The point of the Democratic bailout is to protect the unions by preventing this kind of restructuring. Which will guarantee the continued failure of these companies, but now they will burn tens of billions of taxpayer dollars. It’s the ultimate in lemon socialism.
The Democrat takeover will be a disaster, not a lifeline, for the auto industry. Recall that when the British tried to bailout their flagging automakers in the 1970′s, they went out of business. To this day, there are no mass production auto manufacturers in Britain, attributable to exactly the kind of “bailout” the Democrats want for Detroit.
Democrats are suggesting, however, an even more ambitious reason to nationalize. Once the government owns Detroit, it can remake it. The euphemism here is “retool” Detroit to make cars for the coming green economy. . . .
Liberals have always wanted the auto companies to produce the kind of cars they insist everyone should drive: small, light, green and cute. Now they will have the power to do it. . .
If you think we have economic troubles today, consider the effects of nationalizing an industry of this size, but now run by bureaucrats issuing production quotas to fit five-year plans to meet politically mandated fuel-efficiency standards — to lift us to the sunny uplands of the coming green utopia.
Socialists deal in hope, not reality. Unfortunately, you can’t buy a car with hope.
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