Bail This Out!
Enough is enough for this bailout mania. It is about time that instead of asking who needs or would like a bailout someone tacked on the important question "At the expense of whom is this bailout?" Yes, it is true that a bailout or subsidy or government handout will benefit the receiving corporation or party involved, but the other side of the coin requires that the same action be to the detriment or at the expense of somebody else.
Let us imagine that every person in the United States formed a giant circle and that each one of us wrote out a check for $5000. Next, each person placed that check in the pocket of the person to his left. This would mean that I would have received a bailout from the person to my immediate right, but I would have bailed out the person to my left. I have benefited at the expense of the person to my right; however, the person to my left benefited at my expense. Unfortunately, the present bailout mania is not so benign. Let us next imagine that half of the people in the United States were to be facing east and the other half facing west. Each of us would be face-to-face with one other fellow countryman. Now, the half of the people facing east wrote a check for $5000 and handed it to the person facing west. The half of the country facing east has bailed out the half facing west. The people facing west have benefited from a bailout at the expense of the people facing east.
Now let us turn to the issue of the proposed bailouts of Ford, GM, and Chrysler. If The Big Three get the taxpayers' money like they want, then those who would benefit would be the automobile companies themselves, their suppliers, the UAW, the stockholders, etc. In short, the beneficiaries would be anyone who stands to receive money from the continued normal operations of The Big Three including politicians who will benefit from future donations from both the automobile manufacturers and the UAW. Who will be the subsidizer, as we have already established that this money must come from someone. Will Washington immediately send us each a bill so that we all might pay our share forthwith. This is unlikely but more honest as we would all see the immediate cost of the bailout. (If the government were to do this some people might object strenuously.) Predicting actions that will take place in the future can be a little tricky, but it is likely that Washington will somehow manage to borrow this money, add one more big IOU to the already existing monstrous pile of IOUs, print some more money and then pay it back with greatly devalued dollars.
There are of course secondary costs which are more difficult to see as they require the use of imagination to see what might have been. Let us say that Washington acts more responsibly and turns the US automotive manufacturers away to go behave like legitimate for-profit capitalist enterprises. What then? GM restructures and forces the union to renegotiate or GM becomes a non-union shop. As the company is in trouble and needs to cut labor costs it does so across the board. Big CEO salaries must go too. They are for executives whose companies make money hand over fist. GM needs to cut costs and become more efficient. Maybe this means new machinery which will outperform some employees. GM will kill-off underperforming products and cut the dead weight. It will advance where it needs to advance, retreat where it needs to retreat and regroup where it needs to regroup. The bottom line is GM needs to make a profit for its shareholders. If this produces a much smaller GM then so be it. Only a company which produces a profit can and should survive. Even with a bailout there is no guarantee that GM would survive in perpetuity. (A bailout might just encourage GM to not make changes necessary for long-term survival. And when they near insolvency again, viola, another bailout.) As supernumerary and inefficient employees are laid off they provide the human resource necessary for new ventures at which the employees have a chance at being more productive than they were at their old inefficient and only somewhat productive jobs. Thus also will follow Ford and Chrysler.
So who pays for it? At whose expense will the bailout be? It will be at all of our expense. Not just in the immediate future in terms of the unrealized opportunities and continued inefficiencies, but also down the road a little way when the bill comes due. If we allow this to continue then it is to a great degree our own fault. However the Spendocrats in Washington do not simply laden me with this burden. They intend it for our children and grandchildren. They want my children to cut the check and hand it over. Then the CEOs and the union bosses and the politicians will laugh all the way to the bank.
Let us imagine that every person in the United States formed a giant circle and that each one of us wrote out a check for $5000. Next, each person placed that check in the pocket of the person to his left. This would mean that I would have received a bailout from the person to my immediate right, but I would have bailed out the person to my left. I have benefited at the expense of the person to my right; however, the person to my left benefited at my expense. Unfortunately, the present bailout mania is not so benign. Let us next imagine that half of the people in the United States were to be facing east and the other half facing west. Each of us would be face-to-face with one other fellow countryman. Now, the half of the people facing east wrote a check for $5000 and handed it to the person facing west. The half of the country facing east has bailed out the half facing west. The people facing west have benefited from a bailout at the expense of the people facing east.
Now let us turn to the issue of the proposed bailouts of Ford, GM, and Chrysler. If The Big Three get the taxpayers' money like they want, then those who would benefit would be the automobile companies themselves, their suppliers, the UAW, the stockholders, etc. In short, the beneficiaries would be anyone who stands to receive money from the continued normal operations of The Big Three including politicians who will benefit from future donations from both the automobile manufacturers and the UAW. Who will be the subsidizer, as we have already established that this money must come from someone. Will Washington immediately send us each a bill so that we all might pay our share forthwith. This is unlikely but more honest as we would all see the immediate cost of the bailout. (If the government were to do this some people might object strenuously.) Predicting actions that will take place in the future can be a little tricky, but it is likely that Washington will somehow manage to borrow this money, add one more big IOU to the already existing monstrous pile of IOUs, print some more money and then pay it back with greatly devalued dollars.
There are of course secondary costs which are more difficult to see as they require the use of imagination to see what might have been. Let us say that Washington acts more responsibly and turns the US automotive manufacturers away to go behave like legitimate for-profit capitalist enterprises. What then? GM restructures and forces the union to renegotiate or GM becomes a non-union shop. As the company is in trouble and needs to cut labor costs it does so across the board. Big CEO salaries must go too. They are for executives whose companies make money hand over fist. GM needs to cut costs and become more efficient. Maybe this means new machinery which will outperform some employees. GM will kill-off underperforming products and cut the dead weight. It will advance where it needs to advance, retreat where it needs to retreat and regroup where it needs to regroup. The bottom line is GM needs to make a profit for its shareholders. If this produces a much smaller GM then so be it. Only a company which produces a profit can and should survive. Even with a bailout there is no guarantee that GM would survive in perpetuity. (A bailout might just encourage GM to not make changes necessary for long-term survival. And when they near insolvency again, viola, another bailout.) As supernumerary and inefficient employees are laid off they provide the human resource necessary for new ventures at which the employees have a chance at being more productive than they were at their old inefficient and only somewhat productive jobs. Thus also will follow Ford and Chrysler.
So who pays for it? At whose expense will the bailout be? It will be at all of our expense. Not just in the immediate future in terms of the unrealized opportunities and continued inefficiencies, but also down the road a little way when the bill comes due. If we allow this to continue then it is to a great degree our own fault. However the Spendocrats in Washington do not simply laden me with this burden. They intend it for our children and grandchildren. They want my children to cut the check and hand it over. Then the CEOs and the union bosses and the politicians will laugh all the way to the bank.
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