Pure free-marketers argue that the automakers should be allowed to fail and go bankrupt without any taxpayer aid. I’m predicting this lame duck congress will do nothing, but that as soon as the new president and congress are seated in January, help for the industry will be forthcoming.
As I listen to various opinions this morning arguing both for and against bailout, one thing that everyone seems to accept is that millions of people’s lives are going to be drastically changed. The other consensus is that the big three automakers were arrogant in ignoring the demands for lighter, more gas-efficient cars while they continued building bigger, heavier, more gas-guzzling vehicles than ever. And congress failed to mandate greater gas efficiency saying the free market should dictate not the government (thank you gas and oil lobbyists).
The reality of allowing those huge corporations to fail will have not a ripple but a tsunami effect through our already-devastated and fragile economy. It’s the people I worry about. The taxpayers will be picking up that tab, too. And that will include unemployment benefits, health care, food and housing, all while the government loses significant tax revenue from productive working people.
Arguing for bankruptcy, Mitt Romney advises restructuring with the government’s help. Even Mitt admits that the govenment must have a role in saving these companies. And the reason is, they are so big and the impact on our country so great, we can no longer leave it to the management of these companies alone to make decisions that will affect all of us in the end.
And so my point. The pure capitalistic free market ideas don’t work when we’ve allowed companies to be come so big that failure can actually take all of us down. This is why AIG was bailed out. This is why we are bailing out undeserving banks and reckless home buyers. Those of us who were not reckless are having to pay a big price. Reasonable and prudent regulation should have been applied to protect the public interest before things reached this state. This seems to be an impossible concept for conservatives to grasp. They worship at the altar of capitalism with no strings attached.
Time permitting, I’ll follow up this post with one on my favorite old deregulator himself, Phil Gramm.