Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction ”” with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country’s prosperity.
But this, apparently, is about to change. Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler and Ford. They have decided to follow an earlier $25 billion loan with a $50 billion bailout, which would inevitably be followed by more billions later, because if these companies are not permitted to go bankrupt now, they never will be.
This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.
Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line.
Best description of the current stupidity roaming Washington, D.C. that I have read.
Best description of bias I have ever read. My buddies’ bailout saved the financial “system” (AKA banks who played around with other people’s money in what should have been considered and Enron-like criminal pattern.) My enemies will save companies who don’t deserve to be saved. I wondered years ago why Brookes was chosen as the conservative whipping boy for the NY times. The answer has made itself abundantly clear in the Hamiltonian two-tonguedness he has spewed since then.
“My enemies . . . two-tonguedness . . . spewed since then.”
Talk about spewing.
I remember “Monkey-ward” and how it faded out. Other stores came in place and moved on. I think it’s time to consider letting other organizations move on and fade into the sunset. High wages and benefits=high priced products. High priced products don’t sell in a global market particulary if there are similar just-as-good products that are lower priced. Plain and simple econoomics. I wonder what we would find if we looked at the point of origin tags stuck on cars owned by union member needing to watch their pennies closely??
Irenaeus, last I remember you compared me to an Islamic fundamentalist for defending free market principles. A day or so later you wrote a nice little letter denouncing the level of vitriol on this site. I don’t understand what you are trying to accomplish. If you are looking for treacly niceness, then lead by example. If you have a greater point to make about why I am wrong in my assessment of Brookes, then make it. You pretend to be superior, but the substance is somewhat lacking. Your patron login id would be ashamed, methinks.
I believe that Brookes is a hypocrite, a conscious hypocrite and a manipulator, for defending republican welfare when it goes to wall street banks, and then turning on Obama when he proposes the same for the automakers.
Also, am I entitled to my opnion or not? If so, by all means criticize the point I am trying to make. But at least expend some effort trying to understand it. You’re a great sneerer for someone who complains about sneering.
[i] Please don’t turn this thread into a comment fight between two. [/i]
The only way I would want my money invested in any of the Big Three would be if the Govenment had a controlling stock interest in them and someone brilliant to call the shots. Not likely to happen. One concern I have about letting them disappear is that our country now lacks the means to provide for its needs from within it’s own borders. If we should be embroiled in an Unpleasant Business (like WW II) we would be seriously crippled. It was our native steel plants, auto plants, etc. that produced our tanks and planes, and our own farms that grew the food to feed our people, (and the war victims too). We need to retain some industrial manufacturing capacity, some agricultural capacity, some mineral resources capacity, as a hedge against the worst. For decades we have become economically enmeshed with the world economy and have slowly become dependent on it for our needs. I’m not advocating protectionism, I simply saying that we have to be able to sustain ourselves and we lack the ability to do so now.
Dumb Sheep.
JustinMartyr: You make a decent point in the last paragraph of #5. If that’s what you meant in #2, it wasn’t obvious to me. In any event, taking issue with “My enemies” [#2] is hardly a call for treacle.
Airlines, like many other firms, have successfully reorganized under chapter 11 of the Bankruptcy Code. Chapter 11 gives a firm relief from its creditors and lets it continue to operate while it comes up with a plan for paying them or converting their claims to stock.
People fly on airlines in chapter 11. Would they really refuse to buy cars from automakers in chapter 11?
[blockquote]People fly on airlines in chapter 11. Would they really refuse to buy cars from automakers in chapter 11? [/blockquote]
The only big issue I see is the ability of the manufacturer and its dealers to honor warranties.
I remember flying PanAm and Eastern back in the 1980s. I would fly with a group of Brazilians and the difference between the Brazilian airline Varig and the American companies was striking and embarrassing. Varig’s service, on-time performance, baggage handling, cleanliness were just miles ahead of PanAm and Eastern. It was no surprise when both when belly-up, and while it was painful for the employees and stockholders, it needed to happen.
The same goes for the Big Three. They need to go into Chapter 11 and either reorganize into something that produces what people want to buy or they need to go away. It will be wrenching, but the alternatives are all worse.
Thanks Irenaeus, and I’m sorry for going off at you.
tipically I am not in favor of govt bailouts – I am not in favor of government ownership of the companies unless its temporay nature is built in (companies only die when controlled by governments). But the Big Three debacle of the last six months is in no small part caused by the financial meltdown – it was their financing arms which made the money. As a nation we cannot afford to let such a huge percentage of our manufacturing base becoms a direct casualty of the collapse of the financial markets – whose origin was rooted in bad government policy – coupled by fraud and greed.