December 13, 2008

Socialists to the Left of Me, Socialists to the Right (Updated, Bumped)

I've tried to avoid the bailout subject, but I just can't any more. There is one, and only one, proper response to Detroit's woes: It's none of my business, and it's none of yours. That means you Washington. And that means you readers.

Keep your damn hands out of my pocket. That last thing we need is for redistribution of wealth to failed businesses.

The response from some corners of the Right are even more disappointing than that from the Left given our alleged commitment to free markets. Washington will give Detroit my money if unions will just make some concessions, some leading pundits and politicians tell me.

Screw that. Who put the Republican party in charge of labor contract negotiations? A contract is a contract. It is none of Washington's business if that contract leads to bankruptcy.

That's how free markets work: businesses that do stupid things fail.

Trying to screw union members over as a condition of helping out a failed business is more than a little irritating, it's the same kind of socialism offered by the Left.

What the Democrats and some Republicans are wrangling over now is how private businesses should be run. The Democrats are trying to force these businesses to make cars that the free market does not demand at the current offering price -- green cars -- and some Republicans are trying to legislate the terms of a private labor contract. In either case the government is getting involved in the day to day operations of a private business.

It's as if Washington thinks of itself as a super-board of directors. Each time I hear a Congressman or pundit some offer advice I want to scream. If you people are so damn business savvy why the hell are you drawing a Congressional salary?

To an old fashioned libertarian like myself, this is completely unacceptable. It's not the Republican party's job to take sides with management when there is a labor dispute any more than it is the Democratic party's job to take side with labor. Private organizations -- corporations and unions -- are fully capable of handling disputes without the government coming in an legislating a solution.

Then again, sometimes they don't solve the problem. Which is the beauty of the free market and of capitalism: when private organizations fail the failure remains private. In fact, failure in the market is no failure at all: it is the solution. Failed business teach other businesses the hard consequences of irresponsible action.

When governments fail the consequences are far more severe. That is why bailout fever is so troubling. When businesses backed by government fail, we're all on the hook. And unfortunately, there's no evidence that politicians ever learn the hard lessons that the market teaches.

UPDATE: A couple of comments that I think merit responses. burtnoternie.com claims that no one likes the bailout.

But fewer yet would want to see the resulting job losses -- 15% national unemployment by some estimates -- and economic hardship -- potentially lasting decades -- that would result from letting it sink.

Also, any one that thinks bankruptcy means that a company ceases to exist and all employees lose their jobs doesn't understand what bankruptcy is. Bankruptcy is simply a way of shielding oneself from creditors. That's it. Nothing more. When you go bankrupt you don't cease to exist. Well, neither does a company. Many companies successfully emerge from bankruptcy.

It's the last part of burtnoternie.com's comments, though, that are so troubling:

let's give them the cash, replace the leadership and set specific quarterly progress benchmarks. If they're not met, than the government can take control of these businesses and divest as they see fit. If the UAW wants to screw themselves in the process, let them.