Monday, December 8, 2008

The Era of the Little Man Is Over

Congress is getting ready to bail out the Big Three (or at least two of them, G.M. and Chrysler—Ford is apparently healthy enough to survive on its own) automakers, by giving them billions in short-term loans. As part of the deal, the U.S. government would take a substantial stake in the companies, in essence insuring that that the Big Three could never fail, and that the federal government would have a considerable amount of influence over the management of the automakers. The present management of G.M. and Chrysler would probably go, almost certainly to be replaced with new management close to Washington. For a while, at least, the federal government would indirectly control G.M. and Chrysler (and possibly Ford, depending on that company’s health).

Apart from the obvious fact that this action is possibly unconstitutional and probably socialistic, it seems that there are two points to be made.

One: for decades, the Democrats, and to a lesser extent, the Republicans, have claimed to be the allies of the little man, the workers, against the depredations of Big Business. Both parties promised to look out for the proletariat and ensure that corporations didn’t use their wealth and power to unjustly enrich themselves. All Democrats, from Barack Obama on down, have promised to prohibit favoritism towards Big Business.

Yeah, and the Republicans are the party of small government. Obama hasn’t wasted any time promoting policies that are, in essence, taxpayer insurance for foolish CEO’s. When Wall Street fell, it rushed to Washington to get free money to fix its mistakes. The president and Congress fell all over themselves in their haste to give it to them. And Barack Obama plans on continuing this course of action.

Democrats are supposed to be the party of big government and the little man; Republicans are supposed to be the party of small government and big business. Both notions are incorrect. The Democrats are actually the party of big government and big business—and so are the Republicans.

You can’t blame the politicians though—they are only doing what they must to get elected. Voters want lots of government services. They get them. Money wants government cooperation with business. It gets it. Washington does what it does only with our approval—and not only with our approval, but our active endorsement. Don’t blame Harry Reid or Barack Obama or George Bush for the bailout—blame the voters who elected and support them. And between the three, that is practically everybody.

Why aren’t there any politicians who try to break the big government/big business alliance? There are. And there’s a name for them: defeated.

A final point. The federal government plans on taking a management role in the Big Three (or two, depending on Ford’s fate) in order to prevent them from going bankrupt again.

Federal government revenues are, give or take, $2.5 trillion. Federal government debt it, give or take, $10 trillion. Its last budget was well over three trillion, and it just spent seven trillion dollars on the bailout. Does anyone think that the federal government has the financial know-how to keep anything, much less an entity as complicated as an automaker, out of bankruptcy?


At December 9, 2008 at 2:44 PM , Blogger BB-Idaho said...

Well, "Does anyone think that the federal government has the financial know-how to keep anything, much less an entity as complicated as an automaker, out of bankruptcy?" ..hard to say, given that the 'automobile experts' totally screwed up. The proposal interferes with the business model in requiring payback to the taxpayer prior to shareholders and limiting executive compensation. IMO, someone has to do the rate hard goods manufacturing has bled over the last 30 years
(30%GDP down to 12%GDP) We like to buy cheap foreign made goods, including cars. We cannot sustain being a country of consumers without our own industrial base, period. We will no doubt hear more and more of how the shift from manufacturing to 'financial services' has deleteriously affected the know, the sector we gave hundreds of billions to..and they spent it on buyouts and bonuses?

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