The bankrupt company goes on, and their stockholders and creditors foot the bill.
I appreciate that there is disruption and that some people get hurt. There is a school of thought that wants the government to step in and make sure no one ever gets hurt. That school fails to look beyond the immediate round of pain at the consequences of that action. If we make sure that no one who took out a risky home loan loses his house, for example, as some people want, there is a long term cost to that.
I have sympathy for those who would be hurt by an auto manufacturer bankruptcy. But I think we have to look beyond that immediate round of pain at the bigger picture. Should that happen, there will be others who will benefit. For everyone who loses a job, someone who is now jobless may get a job with the new or reorganized company that forms in the place of the old one, a healthier, smarter company.
Like those who took out ridiculous home loans, those hurt by the bankruptcy are not entirely blameless. If you're a employee of or supplier to GM, you've had to know for decades that you need to diversify or come up with some back-up plan because the writing was on the wall. If you haven't reduced your risk, maybe you're not such an innocent victim. Personally, I think that anyone who allowed himself to be dependent on the car industry in any way is a drag on the gene pool. Not that I'm not sympathetic, only that I don't think the victims are particularly innocent. Smart people have been moving out of Detroit for a long time now.
Back to the schools of thought, I suppose you either subscribe to the notion that it's the job of the government to buffer us from such things or you subscribe to the school that there is an ebb and flow in the market place and that ebb and flow, fosters vitality, creativity, wisdom, and in the long run a bigger pot. We have security vs creative destruction. We can't embrace one of the other exclusively. What I'm proposing is that we look past the immediate pain at all the options to find some balance and that we accept that, either way, there will be pain. Reacting to the immediate pain by blocking it, which is understandable because it will be on TV grabbing our sympathies, we may be losing greater opportunity and creating greater deferred pain. I think it's something we need to think through rather than just react with knee-jerk sympathy. |
