Battle4Liberty

I’ve received some interesting water cooler and email comments after my recent blog post and appearances with Andrew Wilkow on his radio (Sirius) and TV (The Blaze) shows. I do my best to be fair to those with different points of view, so I will address the 3 best arguments I got about the GM situation:

1. “Nobody likes the bailout, but it was better than letting GM go under.” This statement is both false and a bit deceptive. GM would not have gone under without a government bailout (or “bridge loan” as the administration likes to call it). The company would have entered a standard bankruptcy that would have enabled its managers to renegotiate terms with labor and suppliers. This might be a bitter pill for some to swallow, but it was (and still is) the only way that GM can survive on its own over the long term. The government has lost billions, GM hasn’t recovered, and there’s a good chance that the company will find itself in the same predicament in the next few years.

2. “We would have lost a million jobs without the bailout.” The number here changes depending on who’s making the claim, but auto manufacturing employs less than 800,000 in the U.S. (according the the BLS). The assumption here is that IF GM CLOSED (not true, see #1) the U.S. economy would lose the sales of all GM vehicles. This is simply untrue. Would-be Chevy purchasers would still need a car if Chevys were no longer available, so other manufacturers would pick up the slack. It is true that some jobs would be lost, but the actual number depends on how you do the math and it would be nowhere close to a million. Besides, if the US incurs a $50 billion loss on the bailout and 100,000 jobs were saved, the cost per job would be $500K. It’s difficult to defend this even with Keynesian logic.

3. “Other countries subsidize their carmakers, so why can’t we?” It is certainly true that countries like China subsidize many of their own manufacturers, but why should we mimic our socialist competitors?Every dollar spent propping up an industry must come from private sector sooner or later. Besides, the Obama Administration recently filed suit against China in the WTO claiming that its government unfairly subsidizes Chinese carmakers. Such a suit implies that the President opposes the notion of subsidies, yet he vigorously defends the government’s bailout and ongoing control of GM.

I’ve discovered that many who disagree with my posts tend to communicate by email or other means instead of sharing their views on the blog. If you’d like to defend the GM bailout, post your comments here. I’m still waiting for a sound argument.