I didn’t get to see too much television while I was on vacation. And most of what I saw was programming for children. But I did catch President Obama touting his, and President Bush’s, takeover of a big chunk of the US auto industry. To say I was disgusted puts it mildly. (To all of you lefties out there, I was against Bush bailing out failing auto companies, so STFU!)
For those of you wondering why it wasn’t a good idea to bail out the union-dominated auto industry, look no further than the recent post by James Sherk at NRO.
General Motors and Chrysler are much better off because Bush gave them $24 billion and Obama gave them another $60 billion. Any company would be. Pouring federal dollars into businesses does improve their bottom lines, but that doesn’t mean it helps the overall economy. The real question is: What would have happened to that money if the government had not spent it in Detroit?
The government shouldn’t plan on getting its money back. President Obama concedes that the $24 billion Bush spent — more than NASA’s annual budget — is gone for good. And Obama’s claims to the contrary, the money he spent isn’t coming back, either.
General Motors would have to command a market value of more than $70 billion for the taxpayers’ stake in the company to be worth what Obama paid for it. Since General Motors’ highest-ever market valuation was $52 billion in 2000, at the peak of the dot-com boom and the SUV craze, that seems improbable — especially since Obama’s new miles-per-gallon regulations won’t let them build as many of those highly profitable SUVs. At the end of the day, the government will still have sunk tens of billions of dollars into GM and Chrysler with no hope of recovering it.
The government got that money from investors who bought government bonds. If they hadn’t bought those bonds, most of those investors would have invested their money somewhere else in the economy, creating jobs and spurring hiring. The bailout helped two declining companies at the cost of stifling investment in newer enterprises with brighter futures. The government should not make that tradeoff.
Hey, if it were a good idea – a good business decision – to bail out the failing companies maybe I could have gotten on board. But it wasn’t. It was a crappy idea from the get-go. Now we know just how crappy it was – what kind of imbecile thinks it’s a good idea to invest $70 Billion into a company that’s only worth about $50 billion? (And that was Obama’s idea, by the way. Bush only invested about $24 billion. Not that I’m supporting, or supported Bush’s decision. I only mention it to highlight the fact hat Obama took a bad Bush decision and made it worse. Which he’s been known to do, all the while blaming Bush for everything wrong under the sun.)
No matter who does it, taking money out of the private sector to prop up either government jobs, or government supported jobs is a bad idea. Obama might be touting all of the jobs “saved” but he fails to mention all of the jobs destroyed by these big government policies. It’s a shame, anyone who has taken Economics 101 should know this. Unfortunately, the progressives have had control of education for decades now, so too many Americans have no basic understanding of economics anymore. On the bright side, today I believe we have more people that are self-educated than we do those who received a formal education. Now that’s something I can get on board with.
Oh ye of little faith! The Chevy Dolt is going to revive and save the economies of the Northern hemisphere and points beyond. Having stated that, I will take two of the white pills, three of the blue pills and one of the red and orange pills, courtesy of the good folks at Pfizer.
Adieu.
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