November 12, 2008

A Modest Proposal

In all ?save the Big Three? articles I read, I?ve yet to encounter the argument that through government patronage, Chrysler, GM, and Ford will suddenly become profitable, or even sustainable, businesses, or that after the bailout they?ll start making cars Americans actually want to buy. When it gets down to it, arguments for saving the Big Three are arguments for saving jobs and helping out the good people who work for these massively unionized and horribly mismanaged companies. Tom Piatak?s recent article is no different. 

Well, if that?s what it?s all about, then instead of spending 50 Billion propping up bad companies, and wasting a good bit of that money, no doubt, in the process, why don?t we do this:

Give every Big Three worker a direct cash handout of $100,000, and then cease all bailouts.

According to Wikipedia, there are around 240,000 people working in the American auto industry, so my welfare plan would come out to somewhere around 25 billion?which is at the low end of what the Big Three are angling for now.

To be honest, I wouldn?t support this ?modest proposal??it?s always seemed to me that people want to save the Big Three for old times sake, and yet this seems no more rational than, say, the government bailing out all those Silicon Valley dot-com companies after Greenspan?s bubble burst. But at least we?d know that the money would go into the hands of the workers, who could perhaps use it as capital to start up small businesses, and not into the pockets of management.   

There?s also another option that strikes me as sensible: If protection of industries is going to be a national priority, then why don?t we pursue good, honest protectionism, that is, install a massive tariff wall on all imported products, and stop picking and choosing this or that company?or rather, this or that failing company?to be rescued. 

This would also save on transaction cost: Why, for instance, should Washington levy taxes on corporations and consumers, centralize the money in Washington, and then have bureaucrats doll it out again to selected folks in corporate management. This is horribly inefficient!

It?s also worth mentioning the problem of ?state capitalism.? Rich Lowry has a point when he writes,

The cost of the government keeping the Big Three afloat would surely be more mandates for politically correct ?green? cars. Holman Jenkins of The Wall Street Journal has pointed out the damage of already-existing mandates: ‘The Detroit Three have been effectively required to build small cars in high-wage, UAW factories, though it means losing money on every car.’ If the Big Three have been inefficient until now, just wait until the Sierra Club is in charge.

I could imagine the government mandating that GM start cranking out a new model called ?Ester, The Post-Feminist Organic Diversity Mobile.? And, to be honest, Washington would have the right to do this is if it?s going to be pulling the auto industry?s chestnuts out of the fire every few years.   


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