One big misconception–especially among conservatives–is that being pro-free-market means being pro-business, especially pro-big-business. While I feel somewhat bad for people working at a bad company, I have no vested interest in who makes the cars or food or computers I like, except insofar as I like one product or set of products better than another. If Apple suddenly started making unusable crap and Microsoft suddenly started making intuitive, reliable products, I’d sell my stock in Apple and switch.
But even in the darkest days of Apple’s mismanagement, I never clamored to force my fellow citizens at the point of a gun to subsidize my preferred platform. Of course, Apple couldn’t claim to be “too big to fail” at that point, and therefore there wouldn’t be enough pain from its passing to cause politicians to sense any vote-buying opportunities, I mean, uh, statesman-like behavior for the good of the people…right.
But AIG has now been bailed out not once, but twice. Let’s quit prevaricating around the bush and get to the happytalk:
Edward Liddy, who was installed as AIG chairman and CEO after the government’s September rescue, said in a statement Monday that the new deal establishes “a durable capital structure” for the company.
“Today’s actions send a strong signal to our policyholders, business partners and counterparties that AIG is on the road to recovery.”
Dude, I know you think you’re being clever by convincing investors to stay with you, but two bailouts where men with guns demand money from the aforementioned assembly-line worker to give it to you and buy shares in your company to ensure any losses you have can be made up by future gun-toting raids on some struggling family’s income, but seriously, two bailouts in a row means “AIG is terminal and either it should go into chapter 11 restructuring or, if that’s not legally possible like it isn’t for some financial institutions, its operations should be wound down in an orderly fashion and its assets sold off in a fire sale.”
The reason free market types (as opposed to simple whores for big business) oppose such bailouts is that the worst thing you can do is socialize losses. Socialism is a bad idea only partially because the profit motive is subverted by redistributing profits to people who had no role in their creation. Mainly it’s a bad idea because it ensures that people who had no role in a firm’s losses are made to make up for them. That way inefficient companies *cough*Amtrak*cough* are permitted to continue limping along, sucking away capital from people with much more useful ideas on how to generate wealth, becoming a bigger sink hole as time goes on, and making everybody poorer. Politicians and bureaucrats are no more immune than anyone else to the sunk-cost fallacy–and are perhaps even more prone to it than people with a history of having to make good losses or go out of business.
That’s why market-types often drive True Believers in socialism nuts by calling anything that socializes losses “socialism”. The key failure of corporatism, fascism, socialism, and communism is the socialization of losses. In short, unless businesses are allowed to fail, everybody suffers, not just a few. That’s why it’s a Bad Idea. So to us, the differences among various state-controlled economies are less telling than their similarities.
Next up to the trough is General Motors, who is basically holding its workers hostage to politicians in exchange for men with guns to come collectin’ from you and me to make sure its management and investors don’t suffer more than they already have. The problem is that GM makes cars few if any people want to buy. This problem won’t be solved by shoveling more money down their pit. The Volt seems like a nice idea; I’m betting there are some better-managed companies out there who could do something with it (and come up with a less ugly design).
I’m sorry about the automakers, but I notice they weren’t clamoring to bail out me and mine when the tech bubble burst. You were talking about a similar level of wealth being lost and market declines of about the same amount, yet aside from the easy-credit policies that made the real estate and financial bubbles possible, you didn’t see a lot of political action to save Pets.com. As a result, we have some strong companies like Amazon going nicely, and others even now being allowed to go gently into that good night.
Those auto-making jobs are going to go away for a while. Provide subsistance-level assistance to those families if you want, but they are no more guaranteed to stay in Michigan, et. al. any more than the “Duke of Partnership Data” (real example) jobs were guaranteed to stay in Silicon Valley. Yet the tech sector survives. Smaller than it was, sure, but it’s here and providing jobs. If we keep letting the Big Two-and-a-Half waste everybody else’s money, then eventually lots of other people will be made poorer for the sake of some jobs that could have been replaced (I hear there are other companies making cars in the US who might fill in the gap, so don’t whine about manufacturing jobs being unavailable–if you’re that concerned, get Hopey McChangeypants to give them all $40K of relocation assistance; it’d be cheaper).
But at least GM isn’t telling me their requested bailout means they’re doing Just Grrrrrrrreat!™
Yet.
Sandy Smith 