The encroaching command economy

azmastablasta

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November 14, 2008 12:00 AM

The Encroaching Command Economy
Dems want you to subsidize an industry made unprofitable by Dem policies.

By Charles Krauthammer

Finally, the outlines of a coherent debate on the federal bailout. This comes as welcome relief from a campaign season that gave us the House Republicans’ know-nothing rejectionism, John McCain’s mindless railing against “greed and corruption” and Barack Obama’s detached enunciation of vacuous bailout “principles” that allowed him to be all things to all people.

Now clarity is emerging. The fault line is the auto-industry bailout. The Democrats are pushing hard for it. The White House is resisting.

Underlying the policy differences is a philosophical divide. The Bush administration sees the $700 billion rescue as an emergency measure to save the financial sector on the grounds that finance is a utility. No government would let the electric companies go under and leave the country without power. By the same token, government must save the financial sector lest credit dry up and strangle the rest of the economy.

Treasury Secretary Henry Paulson is willing to stretch the meaning of “bank” by extending protection to such entities as American Express. But fundamentally, he sees government as saving institutions that deal in money, not other stuff.

Democrats have a larger canvas, with government intervening in other sectors of the economy to prevent the cascade effect of mass unemployment leading to more mortgage defaults and business failures (as consumer spending plummets), in turn dragging down more businesses and financial institutions, producing more unemployment, etc. — the death spiral of the 1930s.

Bush is trying to move the LIBOR or the TED spread, which measure credit flows. The Democrats’ index is the unemployment rate.

With almost 5 million workers supported by the auto industry, Democrats are pressing for a federal rescue. But the problems are obvious.

First, the arbitrariness. Where do you stop? Once you’ve gone beyond the financial sector, every struggling industry will make a claim on the federal treasury. What are the grounds for saying yes or no?

The criteria will inevitably be arbitrary and political. The money will flow preferentially to industries with lines to Capitol Hill and the White House. To the companies heavily concentrated in the districts of committee chairmen. To clout. Is this not precisely the kind of lobby-driven policymaking that Obama ran against?

Second is the sheer inefficiency. Saving Detroit means saving it from bankruptcy. As we have seen with the airlines, bankruptcy can allow operations to continue while helping shed fatally unsupportable obligations. For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48), massive pension obligations, and unworkable work rules such as “job banks,” a euphemism for paying vast numbers of employees not to work.

The point of the Democratic bailout is to protect the unions by preventing this kind of restructuring. Which will guarantee the continued failure of these companies, but now they will burn tens of billions of taxpayer dollars. It’s the ultimate in lemon socialism.

Democrats are suggesting, however, an even more ambitious reason to nationalize. Once the government owns Detroit, it can remake it. The euphemism here is “retool” Detroit to make cars for the coming green economy.

Liberals have always wanted the auto companies to produce the kind of cars they insist everyone should drive: small, light, green and cute. Now they will have the power to do it.

In World War II, government had the auto companies turning out tanks. Now they would be made to turn out hybrids. The difference is that, in the middle of a world war, tanks have a buyer. Will hybrids? One of the reasons Detroit is in such difficulty is that consumers have been resisting the smaller, less powerful, less safe cars forced on the industry by fuel-efficiency mandates. Now Detroit would be forced to make even more of them.

If you think we have economic troubles today, consider the effects of nationalizing an industry of this size, but now run by bureaucrats issuing production quotas to fit five-year plans to meet politically mandated fuel-efficiency standards — to lift us to the sunny uplands of the coming green utopia.

Republican minimalism — saving the credit-issuing utilities — certainly risks not doing enough. But the Democratic drift toward massive industrial policy threatens to grow into the guaranteed inefficiencies of command-economy maximalism.

In this crisis, we agree to suspend the invisible hand of Adam Smith — but not in order to be crushed by the heavy hand of government.

http://article.nationalreview.com/?q=NmY3NGIzZmYyOTljYTBkOWVjOTg1MzBjMDdkZDg2ZmE=
 
I agree with the resoning for not bailing out the auto industry but if they are going to keep tossing money to AIG I can see why people would think the auto makers should get some.

Nate
 
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I agree with the resoning for not bailing out the auto industry but if they are going to keep tossing money to AIG I can see why people would think the auto makers should get some.

Nate


It's a question of profitability. The auto industry was struggling before the bubbles burst, while AIG was prosperous. Propping up the auto industry is throwing good money after bad, while injecting capital into the financial sector is paramount to avoiding a complete economic collapse.
Obama will do it though, because he is a MARXIST POS, who will prop up the union base at the expense of Joe the Plumber, you, and me. The liberals and Marxists are destroying the American Way, right before our very eyes.
 
I'm with you 100% and I agree that we can't let AIG fall but good grief. Enough with these [beeep] retreats already. I also heard something on the news that these bailed out financial giants are still planning on giving something like 7 billion in bonuses this year. How can you get a bonus for taking part in the near complete destruction of the American economy?

Nate
 
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I'm with you 100% and I agree that we can't let AIG fall but good grief. Enough with these [beeep] retreats already. I also heard something on the news that these bailed out financial giants are still planning on giving something like 7 billion in bonuses this year. How can you get a bonus for taking part in the near complete destruction of the American economy?

Nate



I agree with you there.......
 
You can squabble about semantics and take sides in this tragic problem. I can't blame ya.

The fact is that the politicians are scared, ignorant, don't know what to do and have a lot of power to take the right and all the wrong turns. There's not enough thinking and too much giveaway going on. The big problem is not if GM or AIG or Fannie or Freddie should get money. The problem is that the government is downright shafting the honest taxpayer who's got no game in this. Congress and the people living in and moving into 1600 Pennsylvania Ave are selling our country down the river right before our very eyes. If their plan of no plan actually works we might be able to get the boat rocked back to it's rightful posture some time in the future. Otherwise I can foresee some very bad times for American society, government in the future.

I'm angry. I know lots of other people are. I don't want to pay taxes so that some jerk who ran a bad business gets bailed out. It's not the American way. It's not being held accountable and responsible for your business actions. If it was up to me both AIG and GM would be sinking like the Titanic and without any help.
 
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I'm angry. I know lots of other people are. I don't want to pay taxes so that some jerk who ran a bad business gets bailed out. It's not the American way. It's not being held accountable and responsible for your business actions. If it was up to me both AIG and GM would be sinking like the Titanic and without any help.




The part that angers me the most is that, for lack of a better term, these bankers are laughing all the way to the bank. They are still profiting while we suffer.
 
Got to say it's going to be a tough winter this year. Our unemployment rate here in Clearwater County, Idaho has always been high, but winter is just getting started and it's over 12 percent and on the move up. Lots of folks are looking at loosing their homes here over the next few months.

The bail out plan looks to have degenerated into do do.
 
Borderdog I am with ya all the way.

IDBOB things are starting to look scary. Real scary on the economic front. No wonder gun sales are up. I think 2009 will get worse unfortunately. I hope to keep my job.
 
Government intervention in the private sector is INSANITY...
We should NOT be doing that. Let the businesses succeed, or fail.
I do NOT want my tax money funding private industry.
Once you start doing that, you're doomed. Every car company, and every house cleaning service, will come to the Government to bail them out when THEY can't manage their finances properly. Taxpayer should NOT be involved in the mismanagement of private companies!!!!

Don
 
Quote:
The problem is that the government is downright shafting the honest taxpayer who's got no game in this. Congress and the people living in and moving into 1600 Pennsylvania Ave are selling our country down the river right before our very eyes.



The fact is, we are caught between two forces. The greed of the capitalists, and the desire to destroy the American Way by the Marxists. I believe in capitalism as it has done this country well in the last 200 years, while Marxism leads to a totalitarian state (think communist China).

I believe the influx of taxpayer money into the financial sector is a necessity to try save our way of life. Think of it as our economic system's "Dunkirk", in that it is a shameful retreat and concession in the face of the enemy, but absolutely essential to the preservation of the American Way.

America is under attack by Marxists. This is not something new, just under-reported. They seek revolution.

I posted this before, and it had a lot of views but very few comments, which leads me to believe that people didn't actually read it. It outlines the Marxist attack.
XXXX READ THIS: http://www.americanthinker.com/2008/09/barack_obama_and_the_strategy.html

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