Right, the bonds were paid back... as I said.
So maybe every time a company is on the verge of failure, the government should step in and bail them out? (I have quite a few 'dotcom' investments I wish the government would step in and bail out right now....) So why do they bail out one, and not another? It's because some are considered "too big to fail", and that's Industrial Policy... the government picking the winners, and letting those not favored by their use of political contributions - or whatever other reason - fail.
In the long run, Industrial Policy usually WEAKENS a country, not strengthens it. That's because whatever brains are running the country (and making up the Industrial Policy list of the winners and losers) are nowhere near as prescient as the combined brains of the entire world... which makes up the Free Market. (And usually the 'Government Brains' are more influenced by what they can do to win the next election, instead of what's best for the country.)
This is what is known as Adam Smith's "Invisible Hand".
Like I said, Chrysler bonds got paid off (unlike much of the multi-hundred billion S & L mess... an example off of the other side of the coin), but still there were COSTS.
It was the taxpayer's money (yours and mine). If the money had been used in some other endeavor (pre-natal care? fusion energy basic research? Fuel Cell development? Starting the privatizing of that giant money-sucking Ponzi scheme called "Social Security" back when we had enough time for it to matter? Etc., Etc.), or if that money had simply been returned to the taxpayers for THEM to use... would there have been a higher benefit to the country?
Like I speculated, would Ford or GM have been strengthened by not bailing out Chrysler (there is measurably much over-capacity in world-wide automobile production now), and would one of them have wound up taking over Daimler... instead of Daimler taking over Chrysler?
This is what's known in Economics as "Opportunity Cost", the cost of the foregone highest, best use for the same money.
There is always a 'highest best use'; the trouble is in finding it. Usually the Free Markets have a better record of accomplishment in finding the highest best use than the government....
This is something the Republicans used to argue for.
Another example is the Airline bailout. There is over-capacity in the industry... everyone knows it. The Delta attempted merger this summer (which Dubbya nixed on 'anti-trust' grounds) was an attempt to take out some of that over capacity. Even before 9-11, the airline industry was having one of it's worst years ever.
SEVERAL airlines were only months away from filing for bankruptcy. This SHOULD have been allowed to proceed. The assets (planes, landing rights, routes) would have been picked up by stronger airlines at bargain prices. The over-capacity would have been reduced, resulting in a stronger airline industry... not a weak fragmented one, as we will now have by banning mergers and then bailing out the losers.
The government's PROPER role is in providing for the security of our sky's. It is an appropriate role for the US to federalize all airline and airport security (thus providing for uniform standards and public trust). If we so wished, than we could tax the industry (a "user tax") to re-coup the security costs.... The Airline and Automobile industries already receive massive taxpayer subsidies through the federal role in airport and highway construction....
This is Industrial Policy! Would a different policy be more cost effective? Would more support for light rail or other transportation modes result in less congestion. Less pollution, and a more effective linked transportation system?
You tell me... but don't tell me that Industrial Policy doesn't have a cost! |
