Henry Hazlitt and I on the Auto Bailout

Hazlitt

“Dying industries absorb labor and capital that should be released for the growing industries.  It is only the much vilified price system that solves the enormously complicated problem of deciding precisely how much of tens of thousands of different commodities and services should be produced in relation to each other.  These otherwise bewildering equations are solved quasi-automatically by the system of prices, profits and costs.  They are solved by this system incomparably better than any group of bureaucrats could solve them.  For they are solved by a system under which each consumer makes his own demand and casts a fresh vote, or a dozen fresh votes, every day; whereas bureaucrats would try to solve it by having made for the consumers not what the consumers themselves wanted, but what the bureaucrats decided was good for them.  Yet, though the bureaucrats do not understand the quasi-automatic system of the market, they are always disturbed by it.  They are always trying to improve it or correct it, usually in the interests of some wailing pressure group.” – Henry Hazlitt, Economics in One Lesson, 1946

My beefs with the bailout:

  • It rewards failure (through “loans”) at the expense of success (through taxes).
  • The excuses are lame.  A few loosely-quoted examples:  “People won’t buy our cars because they think we might go bankrupt.”  More likely: they won’t pay for your inferior product.  People know that bankruptcy does not equal death, as I am sure all of your sales associates have told their customers.  Lame.  “Foreign companies are receiving good incentives to open new factories, but we have to use our old ones.”  More likely: the unions have you by the balls.  Lame.  “Foreign companies are getting assistance from their governments, which is why we need assistance from ours.”  Not sure if either of the claims made in this excuse are true, but lame nonetheless.  If other governments want to misplace investments, that’s their business.  Their economies will become weaker for it, and our overall economy will be relatively more productive than theirs, regardless of what happens to the automakers.
  • I live in Tennessee.  The auto industry in Tennessee is doing relatively well.  Why should Tennessee be punished for Michigan’s business failures?  For the taxpaying laborer at a Tennessee factory, there can be no sufficient reason.  It is stealing from the Tennessean.  It is immoral.
  • It is unconstitutional (see part 2 of Jefferson’s argument and replace “bank” with “auto loan,” then become disgusted by the monstrous parasite that is your federal government).
  • It will not save the automakers.  The beggars will be back to Congress, palms upturned, and because the government will have already invested in their success, it will be much more difficult to turn them away.
  • The government cannot “save” one industry without adversely affecting another, or–what is more likely the case–many others, through opportunity costs and/or taxation.
  • I prefer Honda, Toyota, and Nissan to GM, Ford, and Chrysler, mainly because, when the Japanese automakers take my money, they give me a car for it–not a promise to try to pay it back A.S.A.P.
  • The United States government is in a fiscal abyss, and one unfortunate generation will eventually have to fit the bill.  This is what I call generational slavery, because one or more generations has decided, rather than extinguishing its own debts, to pass them on to posterity, guaranteeing “confiscatory” income taxation (as if there were any other kind) in the future, and thus robbing future generations of their own labor.
  • As poorly as the executives at GM, Ford, and Chrysler have managed their businesses, the federal government (or “car czar”) would do the job even worse–much worse, I believe.

If this bailout passes, the Lions will go 0-16 this season.  Sorry Detroit, karma’s a bitch, but I’m sure one more quarter of Ford’s failing operations is preferable to one win at Ford Field.  Go Colts!

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4 Responses

  1. Ah, brilliant once again, Rider.

  2. [...] Taxes, US economy, Welfare-Warfare by detainthis on December 11th, 2008 By Rideronthet ∙ Fear Is Tyranny ∙ December 11, [...]

  3. “I prefer Honda, Toyota, and Nissan to GM, Ford, and Chrysler, mainly because, when the Japanese automakers take my money, they give me a car for it–not a promise to try to pay it back A.S.A.P.”

    Yeah, those are free. LOL.

    I agree with Pat Buchanan who calls these types misguided Tpyota Repubilcans.

    http://buchanan.org/blog/2008/12/pjb-the-toyota-republicans/

    http://buchanan.org/blog/2008/11/pjb-who-killed-detroit/

  4. “I prefer Honda, Toyota, and Nissan to GM, Ford, and Chrysler, mainly because, when the Japanese automakers take my money, they give me a car for it–not a promise to try to pay it back A.S.A.P.”

    ^Too good.

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