Car Companies, Bailouts and the Forgotten Man
Why don’t you invest in America’s car industry? The simple reason, I am sure, is that the American car companies don’t tend to respond to conditions to make the cars that Americans or anyone else in the world want in sufficient numbers to produce competitively. So, American investors, or investors from anywhere else, people who have money to invest, do not want to put their money into these companies–they are seen as a bad investment.
Why is it, then, that Congress thinks that this is a good place to put the money of Americans, some of whom might have been investors and some who don’t have enough money to invest, into these uncompetitive firms? It is the money of the same unwilling investors. What we as individuals were unwilling to invest in, Congress will make sure we invest in. Congressmen are supposed to act as stewards of taxpayer money, but they seem to be failing in that role.
We must not think solely about the jobs lost in Detroit if these companies fail, but also about the failure of firms that taxpayer/investors would have put their money in, had they not been forced to put their money into failing firms.
A recent book by journalist Amity Shlaes, The Forgotten Man: A New History of the Great Depression, makes the point that we need to look beyond the immediate impacts of policies, the benefits of the policy, and look to the impacts on people beyond the intended beneficiaries, to the forgotten (I should point out that Ms. Shlaes unpolitically correct title comes from speeches of FDR–see her book web site). This was the same point that Bastiat made in his famous essay, “What is seen and what is unseen” (also see About Bastiat’s Bastions, and that Norber Michel and I in or original post here at Bastiat’s Bastions, “Break all the Windows”).
One “forgotten man” is the person working at a Nissan or Honda auto plant in the south somewhere, who is being asked, about to be forced, to invest in his competitors. And of course, there are the workers at Honda Dealerships and Nissan parts suppliers.
If the American big three are such great investments, why aren’t the big three’s CEO completely invested in their companies? And why aren’t UAW funds completely invested in these companies? We are being asked to place our money in a place that these executives and the auto union are unwilling to put all of their funds.
If American and foreign investors are unwilling to put their money in these companies, why should American taxpayers be forced to?
Perhaps, in dealing with the current recession, we should think of the wisdom of “Chance” (Peter Sellers) in the movie, “Being There,” who suggested that in the winter (what people took as a metaphor for recessionary times) is a time of retrenchment, where the unviable die out so that there is room that is made for the more viable.
Instead of just listening to those who are grubbing for tax payer backing in Congress, the CEO beggars, we should also listen to Chance, to Bastiat and to the Forgotten Man.
-MC