“…the game called BAILOUT has been played over and over again in the rescue of large corporations, domestic banks, and savings-and-loan institutions. The pretense has been that these measures were necessary to protect the public. The result, however, has been just the opposite. The public has been exploited as billions of dollars have been expropriated through taxes and inflation. The money has been used to make up losses that should have been paid by the failing banks and corporations as the penalty for mismanagement and fraud.”
– G. Edward Griffin. Creature From Jekyll Island (Chapter Two – The Name of the Game is Bailout, 2002)
It’s official. Both General Motors and Chrysler Corporation have gone bankrupt. While I didn’t expect this to happen, I considered it a better outcome then multi-billion dollar taxpayer supported bailouts. I said so much in a radio interview on October 2nd, 2008 with WILS AM, radio host Walt Sorg. Then I argued that it was fundamentally wrong to force people to support a business that was going to fail. It was popular to oppose the bailout of Wall Street, but prinipal forced me to oppose the more popular bailout of the automakers for the same reason.
Of course the Democrats and Republicans went ahead with the bailouts anyway. Politicians, CEO’s, and labor leaders argued that these bailouts were essential to prevent bankruptcy. Bankruptcy, it was argued, was an unacceptable outcome…
Billions of dollars later, they are still bankrupt. General Motors has become a government owned corporation, and our President is asking for more. Ford Motor Company didn’t go this route, but how long can they survive in an environment where the government, that writes the rules, is also the primary owner of their largest domestic competitor? Is this a level playing field?
We could have spared ourselves a great deal of misery if we had only abstained from the bailouts, and allowed these businesses to do what they would have to do anyway. Yes they would have gone bankrupt, but the currency would be stronger, and we wouldn’t be witnessing the nationalization of the auto industry.
Furthermore, the money that was spent on these bailouts, would have remained in the hands of consumers, who could have spent their money on products made by successful businesses, who in tern could employ many of the workers who are now out of work.