The Bailouts Just Keep Coming
After securing a $25 billion government loan from Congress before the election, the auto industry is back at the soup line begging for more assistance. And House Speaker Nancy Pelosi wants to give it to them.
GM, Ford and Chrysler say they need another $25 billion to stay afloat and $25 billion more to cover future health care payments. Pelosi argues that, if the funds arenâ€™t granted, the American economy would be severely damaged by the failure of these major corporations.
Forgetting all reasonable arguments in favor of this bailout, let me go prickly conservative for a moment. Is it just me, or has our government decided to keep our nationâ€™s major corporations in a static state, protected from their own failures and monopolizing resources that could be better used by newer, more dynamic companies? With the recent bailout of the giant financial firms and the continued propping up of our moribund auto industry, why donâ€™t we just go ahead and nationalize the major economic movers? At least then we wouldnâ€™t have to hear the constant begging from these organizationâ€™s failed leaders.
The reason we donâ€™t nationalize industries is that doing so removes any incentive for innovation, good management and quality service (would you work harder or better or smarter if your paycheck was guaranteed for a lifetime?). Constantly bailing out poorly run businesses has the same, if somewhat lessoned, effect. Why should Ford, GM or Chrysler ever become truly competitive when they can just turn to Uncle Sam anytime things get dicey? And why should our financial giants ever take proper care of our investments if they know, should they fail, Congress will save them?
O.k. Iâ€™m done. I understand the real-world consequences of not providing government assistance to large, failing businesses. And I understand that providing government loans is a far cry from providing handouts. But I do think weâ€™re setting a less than positive precedent. At some point, donâ€™t we have to let one of these companies fail?
Iâ€™m sure â€œnow is not the time.â€ But we canâ€™t keep authorizing more and more loans. Those companies that still canâ€™t make a buck after this round of bailouts is through shouldnâ€™t get a second chance.