Detroit Bailout: Conflicted and Confused
After reading the divergent opinions of the professional punditry, after consulting polls of public sentiment, after making a withdrawal from the ideological deposits in our respective brain-banks — many of us remain undecided on the import of the so-called bailout of America’s “Big 3” automobile manufacturers.
We understand and appreciate the various arguments and counterarguments.
We nod when we consider Judge Richard Posner‘s conclusion that “domestic producers should not be allowed to collapse at a time of profound and … worsening economic distress.” But we then flip and give props to Posner’s co-blogger, Nobel Laureate Economist Gary Becker, who argues that bankruptcy is the better option, that it “would strengthen rather than weaken the competitive position of the American automakers.”
We listen carefully when Congressman David Obey describes the larger economic situation as “a massive, massive hole that we are about to fall into unless we do something dramatic.” (Translation: Our government must shed its political shackles and do whatever it takes to keep this ship from, as VP-elect Joe Biden puts it, “absolutely tanking.”) But we also suspect Congressman Jeb Hensarling could be right when he describes the Detroit bailout as “a devastating precedent” … and that he’s darn close to right (sans exaggeration) when he predicts “the federal government will now be pressured to bail out every failing company in America — something that taxpayers and future generations cannot afford.”
In this highly conflicted state of mind, we manage to put on hold our revulsion for President Bush’s past deadly mistakes, and take temporary solace in his description of what sounds like a reasonable, interim compromise, to wit: General Motors and Chrysler would get “$13.4 billion immediately and another $4 billion in February if Congress approves and the companies meet targets for extracting concessions from unions and bondholders.” We are further assured when we hear echoes of Judge Posner’s rationale (see above) in President Bush’s explanation of his decision:
Under ordinary economic circumstances, I would say this is the price that failed companies must pay — and I would not favor intervening to prevent the automakers from going out of business. But these are not ordinary circumstances. In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action.
But later, we are conflicted once again when we read Andrew Sullivan‘s response:
… the Bush gambit is of a piece with the rest of his legacy: a carefully wrapped ticking bomb that will explode over us slowly over the next decade. From Iraq to Afghanistan to Gitmo to the doubling of the national debt: it is a legacy of reckless, stupid governance by an irresponsible president trying to cover his ass on the way out.
At this point, “we-the-unsure” will likely continue our muddling, stranded in a collective state of conflict and confusion until history makes up our minds for us, rending its firm and final verdict on this debate. Meanwhile, the most we can probably do is envy the clarity of vision achieved by Posner, Becker, Obey, Hensarling, Bush, Sullivan, and others like them, a.k.a. “they-the-very-sure.”