A Vindication of Denial of Further Bailout

It was a treat to find Johnny Venom’s essay this evening and share his thoughts about the necessity of a GM bailout.  My husband had been explaining this situation to me because I was not too happy about another bailout.  I don’t understand why we’re throwing so much money at a big hole instead of tackling the problems that present themselves to us right now.  When does the bailout for public schools begin?  How are we going to maintain the public services that we count on?  The bailout is about like Homeland Security to me–an absorber of resources and a distraction from what’s really going on.

Here are some points that I would make to justify holding off on a bailout.  

Here, beyond the fold.

What would happen if the scenario Johnny presents is played out?  It could very easily.  Adam Smith’s economic design was not intended for a global market.  The regionalization on a global scale of manufacturing and industry and the components involved was something he didn’t foresee.  He didn’t think nations would buy foreign goods on such a scale.  Once upon a time, there was a lame attempt to bring the countries of the Americas together in economic cooperation, a partial solution, possibly, that hasn’t made as much difference to We the People as the regulation of travel between countries has.  Maybe the good folks at Wharton can come up with a solution to the crisis.

The automobile industry is due for renovation, one of many industries that really ought to take this opportunity to get green. Henry Ford figured out a way to make the automobile affordable for everyone.  We could use some of that innovative thinking about vehicular design and marketing now.  The industrialists have the resources they need to fund innovation.  Many everyday people are having to face the future with only the resources they have in the bank.  Let the corporate and industrial heads show us some of that entrepreneurship they consider their contribution to the world.  Make us a safe, affordable, green car that runs on air, and we’ll buy it.  We’ll work for you, too.  And our unions will continue to represent us just to keep you honest.  

We could have universal health care pretty soon.  Teddy Kennedy wants to introduce a health care plan to the new session of Congress as his legacy, and I love Teddy for that.  No one should have to forego health care when they need it.  It’s time for a solution to the problem of high health care and insurance costs that affects more people than the automobile industry failure will take down.

If money was put into the accounts of people who lost theirs in the failure of the industry, especially those funds that belong to retirement accounts, and compensation made, perhaps even education benefits, to the workers and families who are affected by the failure of the industry, would it cost as much as the proposed bailout?  I don’t know enough to know, but let’s look into that.

I don’t disagree with anything Johnny Venom had to say.  And he filled in a lot of the big picture with his explanation of the effect on communities of a GM bankruptcy.  If you haven’t read his essay, please do to get the other side of this conversation in detail. Soon, we will learn what magic our new President and our Democratic congress will work to save the American dream while we learn what community means in the coming struggle to get back on our feet and in our game.  In the end, I hope we don’t forget the lesson this time.  I hope we don’t ever again allow appeals to our selfishness to blind us to our duty to the greater good.  We can’t afford it.  

And I am still not happy about another bailout.

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  1. …but I don’t think you give an accurate measure of Smith (who was writing about international trade only in reference to his main subject, which was the evils of mercantilism – trade theory didn’t begin until several years later with Ricardo), and universal health care has really little to do with GM’s problems.  The health care costs which GM cannot afford are with elderly retirees – who are already covered by Medicare.  The UAW has benefits for retirees much higher than the basics provided by Medicare.  So, the only way that universal health care would replace those costs would be if the government enacted a ban on any additional health care plans (such as there is in Canada) and one has to presume that the UAW would not seek some other form of payment from GM after giving up their tony health benefits.

    • jessical on November 13, 2008 at 11:46 am

    …I guess…they are so completely in no clue territory, and the pile of greedy piglets eager for rescue so large and strange, that even a noneconomist type like myself has to sit back and go “huh”.

    …but…I’d way rather tax dollars were invested in society than in the middle class per se.  Health care, yes, green energy, sure to a point, but I think we should keep a focus on minimizing the rate at which people completely fall through the bottom, which always gets worse in bad times…I mean, it’s not one or the other, I do know that…but everytime I hear a variation on bailing out homeowners…or addressing pension loss directly…I mean, the poor paid in too…

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