Category Archives: bailout

A Recommendation and a Promise

     There’s a great blog that I want to recommend to you.  It is called Evolving Content.  It is written by ptola.  There are already some very interesting posts about music and about politics, particularly about political participation.  Ptola is a good thinker and a good writer. 

     I want to promise all my blogger friends that I will visit your sites this weekend.  I have been very busy, which has cut into my time for writing my own blog or engaging with commenters here.  However, I know that I’m missing some good things on other blogs, so that is one thing I will get done this weekend.  I can hardly wait.

Moving Onto the Plantation?

     Star Parker writes that:

Americans can accept Barack Obama’s invitation to move onto the plantation. Or they can choose personal responsibility and freedom.

     Which do you choose? It will not surprise my regular readers that I choose the latter. However, I’m not sure how much longer any of us will have a choice.

Back on Uncle Sam’s Plantation by Star Parker

Capping Salaries

     President Obama announced that salaries for executives in the firms that have received “extraordinary help” from the national government will be capped at $500,000.

     On the one hand, I have been just as disgusted as anyone else to read about the huge salaries and bonuses, fancy private jets, and luxurious retreats that these nearly bankrupt companies have paid for.  On the other hand, I never thought that I would see the day that the government would determine what the leaders of private businesses would earn.  So much for a free market–not that there has been one in America since at least 1913.

     Then again, whoever pays the piper calls the tune, and the government is the one paying these pipers.  Because of the money that the national government has poured into these failed companies, they have a right to determine how their money is spent, among other managerial decisions.

     I thought that President Obama’s phrase “extraordinary help” was significant.  He admits that giving financial aid to private companies is “extraordinary.”  Of course, he implied that some businesses get only ordinary help, and that seems pretty bizarre to start with.  In a free country no privately owned business would receive any help from the government–ordinary or extraordinary.

     I hope that the President and his advisers can live with the consequences of this decision.  Those CEO’s who can find jobs that pay more than $500,000 (and all of them can) will quit.  People willing to run the major lending institutions at only $500,000 a year will probably not be able to run them well.  I’m not saying that the current leaders deserve the salaries or the bonuses that they have gotten, under the circumstances.  I’m only saying that their salaries are not outrageous in light of what they do.  Professional athletes and movie stars make as much money and even more in some cases.

Republicans I Can Admire

     Some members of the Republican National Committee have signed a resolution that attacks the bailouts of major industries.  The resolution rightly calls the use of bailouts and the nationalizing of industries socialism, or at least another step toward it.  I’m glad.

     I would like to see the Republican Party return to a platform of fiscal conservatism and support of free enterprise.  The idea that the bailouts were undesirable but necessary is like saying that a person should max out his credit cards to get cash for playing craps in the hopes of raising money to pay off a hospital bill.  It might be a huge temptation, but it’s a very bad idea.

     May the resolution pass!  May the Republican Party return to the principles that made it dominant in the 1980′s!

Failure Is Always an Option

     As you were growing up, did your parents and teachers ever promise you that you would never fail?  Mine didn’t.  In fact, I remember the standard introduction to college that I received:  “Look at the person on your right and the person on your left.  Only one of you will graduate.”  I’m thankful that I was the one.

     I was amused by this headline at Barron’s:  Failure Is an Option as Senate Kills Auto Bailout.  Talk about an obvious statement.  Failure is always an option in business.  Or, I should say, it’s always a possibility. 

     In most cases, bailouts aren’t even available.  I expect that businesses close or go bankrupt every day of the year.  Most of them don’t have connections to union bosses and to leading politicians; therefore, they can’t even apply for help to the Congress.  They just face their problems the best that they can.  That’s life, as my parents would say. 

     I’m sorry for all of the people that will be hurt by the failure of these businesses.  I’m extremely sad that Americans cannot make and sell cars efficiently enough to make a profit.  But I completely oppose any bailout by the government.

     I have a great idea.  Since its such a good idea to bail these companies out, why don’t George Soros, Oprah Winfrey, Bill Gates, and Ted Turner invest their money in them.  If it’s a good investment, they’ll be glad that they did.  If it’s not a good investment, then why should America’s money be thrown away on it?

     I for one don’t want to support the bloated salaries and benefits of the union workers.  I for one don’t want to pay twice for a vehicle–once when I purchase it and again when I am taxed by the national government.  I for one don’t want to have money confiscated from citizens and invested against all good judgment in businesses that cannot succeed.

     How about you?

Where Have All the Car Makers Gone?

     Have you heard of these automobile manufacturers:  Pierce Arrow, DuPont, Studebaker, and Packer?  Where are they today?  They did what all unsuccessful businesses do.  They closed.  Hundreds of other car makers have come and gone.

     Should the government have bailed them out?  Should the government bail out every business that is struggling and about to fold?  Can the government do so without going broke?

     I think that a lot of people are looking at our economic problems in a way that is not helpful.  Instead of asking whether this or that company should be rescued, I think we should first ask whether it is the job of the national government ever to rescue any private company.  Some things to consider:

1.  How would members of Congress ever choose which companies are worthy of saving and which ones are not?  Are they blessed with some special grace that allows them to make such decisions inerrantly?

2.  Wouldn’t the members of Congress act on such matters based on how they could win the most votes?  Nobody’s naive enough to doubt that they would, I hope.  Isn’t that a form of bribery, and wouldn’t we usually refer to it as corruption?

3.  Is there enough money in the national treasury to bail out every business that faces bankruptcy?  (HINT:  Our country is currently in debt–huge debt.)

4.  Is it what the people want?  You do remember that we are a government “of the people, by the people, and for the people,” don’t you?  Do the majority of Americans want our hard-earned money confiscated in order to prop up businesses that are already selling us products of questionable quality at inflated prices?  In other words, do we want to pay for our loans, our cars, our insurance, our airline tickets, or anything else, two times (once when we buy them and once when we are taxed to support their purveyors)?

5.  If a certain company closes, isn’t that good news for other companies in the idustry that are doing a better job?  Won’t that help  consumers in the long run, because the other companies will have to win over new customers with higher quality and/or lower prices?

What’s Good for the Goose

     Apparently what’s good for the goose isn’t good for the gander.

     When Fannie Mae, Freddie Mac, and a host of lending institution asked for a bailout, the Congress approved giving out $700 billion with no specific plan for how these companies would be repaired.  When the major automobile manufacturers asked for a mere $25 billion, they were sent packing.  Why?  Memebers of Congress are saying that it’s because they didn’t have a specific plan for restructuring.

     Think about what’s different.  The election is over.  The Democratic candidate won the presidency.  There is no longer a need to pander.  Of course, this decision could bite them you-know-where when a lot of workers are laid off and Congressional elections come around in two years.

     I’m not for bailing out any private (or even semi-private) corporations.  However, I’m also against the bailing out of favored corporations and the rejection of others.  Why do the banks deserve free money but the car makers don’t?  Why do rich Congressmen with a financial stake in the matter get to decide?  Why aren’t Americans outraged?