They Must Be Ice Skating In Hell
After reading the opening paragraph of Tom Friedman’s NYTimes column, I’m starting to believe that they’re passing out figure skates in hell. Check this out:
Reading the news that General Motors and Chrysler are now lining up for another $20 billion or so in government aid, on top of the billions they’ve already received or requested, leaves me with the sick feeling that we are subsidizing the losers and for only one reason: because they claim that their funerals would cost more than keeping them on life support. Sorry, friends, but this is not the American way. Bailing out the losers is not how we got rich as a country, and it is not how we’ll get out of this crisis.
I laid out the criteria for whether businesses should be allowed to die over a month ago. Here’s what I said then:
A good rule of thumb in determining whether something should be allowed to die is whether it can’t survive without frequent government assistance payments.
I should’ve included other criteria, specifically whether we’ll miss the company if it dies and whether they’d emerge as a healthier corporation from reorginization bankruptcy. If going through reorganization will make them healthier for the long run, then it’s imperative that we let such companies ‘die’. If we won’t miss the companies when they go out of business, let them die.
I can’t agree with everything from this paragraph from Friedman’s column but I did find something worthwhile in it:
I’ve been traveling all across the country on a book tour, and every evening I return to my hotel with my pockets full of business cards from inventors in clean energy. Our country is still bursting with innovators looking for capital. So, let’s make sure all the losers clamoring for help don’t drown out the potential winners who could lift us out of this. Some of our best companies, such as Intel, were started in recessions, when necessity makes innovators even more inventive and risk-takers even more daring.
Mr. Friedman is right in saying that this “country is still bursting with innovators looking for capital.” I don’t doubt that for a split second. It’s his next statement that bothers me most. Saying that we should “make sure all the losers clamoring for help don’t drown out the potential winners who could lift us out of this” sounds too much like Uncle Same picking winners and losers for my liking.
It’s time we got the toxic assets off the books, established sane levels of banking and lending regulations, then provided tax incentives to spur the next investment movement. If that happened, government wouldn’t have to pick winners and losers. The markets would take care of that.
Technorati Tags: Capitalism, Free Markets, Investment, Banking, TARP II, Uncle Sam, GM, Chrysler, Bailout, Innovators
Cross-posted at LetFreedomRingBlog
February 23rd, 2009 at 8:57 am
In a sense, Uncle Sam picking winners and losers really is what it’s all about: if guvmint stays out of it (except of course for oversight), winners will prosper; if they get involved, only who would be winners are the losers (and that includes consumers).