Tuesday, November 18, 2008

Poor Me Another

Say No to the Auto Bailout
by Daniel J. Mitchell

This article appeared on CNN.com on November 13, 2008.


Getting access to taxpayer money would be akin to giving an alcoholic the key to a liquor cabinet. It also would be bad for American taxpayers and the American economy. For instance:

A bailout will hurt the overall economy by misallocating resources. When politicians grant special favors to a certain industry or a particular union, such decisions necessarily mean that market forces are being replaced by special-interest deal-making. This type of interference with free markets is why nations such as France, Germany and Japan tend to grow more slowly and enjoy less prosperity.

But if America goes down this same path of government intervention, it is inevitable that we will suffer the same fate of stagnation and higher unemployment.

A bailout will encourage other industries to seek taxpayer handouts. The Wall Street bailout was a disaster in many ways, most notably as measured by the weak stock market and economic volatility. But another negative aspect of the bailout is that other industries have now decided that it is OK to stick their snouts in the public trough, as well.

First Wall Street's high fliers get a bailout. Now the inefficient management and union at the Big Three want a handout. Who will be next in line to pillage taxpayers? Giving handouts in exchange for political support is akin to getting high. Once politicians decide they like the buzz of campaign contributions, they'll turn into junkies with ordinary Americans footing the bill.

A bailout is a perverse transfer from poor taxpayers to rich taxpayers. America's Founding Fathers surely never envisaged that the federal government would take money from one group of Americans and give it to another group. Yet much of the federal budget is devoted to redistribution programs.
Bailouts are a particularly bizarre form of redistribution, however, because the corporate bureaucrats at the Big Three are among the very richest Americans. The UAW bosses make extravagant salaries, as well, and even regular union workers make an average of approximately $70 per hour, far higher than the average American.

The government should not be in the business of giving unearned wealth to any group of citizens, but surely liberals and conservatives both can agree that politicians should not be taking money from middle class taxpayers and giving it to upper-middle class and rich taxpayers.


Doc Bok said...

Hard to argue with that. I supported the initial bailout to keep the game in play and unfreeze the credit market. I do not support any further bailouts; it is just gratuitous to do so and ends up having a negative overall effect. The comparison to France is dead-accurate. We're risking giving away our economic dominance to China and India, and I think that future is upon us. The auto industry needs to die along with its unions that have prevented it from being competitive for the last 30 years. As long as the market is functioning, time for everyone to pay the Piper.

OneEar said...

The only bailout I've supported was the $1B Rusty bailout.
The free market should be left to its course (except for the part where everybody gives money to me for my lack of performance).

Doc Bok said...

Underperformer. I've had it with you.