Auto Bailout: "redistributing wealth from the successful to the failed, an implausible formula for prosperity."
Washington Post columnist George Will nails the proposed Federal bailout of the Big 2.5 today:
"Nothing," said a General Motors spokesman last week, "has changed relative to the GM board's support for the GM management team during this historically difficult economic period for the U.S. auto industry." Nothing? Not even the evaporation of almost all shareholder value?
GM's statement comes as the mendicant company is threatening to collapse and make a mess unless Washington, which has already voted $25 billion for GM, Ford and Chrysler, provides up to $50 billion more—the last subsidy until the next one. The statement uses the 11 words after "team" to suggest that the company's parlous condition has been caused by events since mid-September. That is as ludicrous as the mantra that GM is "too big to fail." It has failed; the question is what to do about that.
The answer? Do nothing that will delay bankrupt companies from filing for bankruptcy protection, so that improvident labor contracts can be unraveled, allowing the companies to try to devise plausible business models. Instead, advocates of a "rescue" propose extending to Detroit the government's business model for the nation—redistributing wealth from the successful to the failed, an implausible formula for prosperity. (emphasis added)
And it only gets better. Read the whole column here.