Reason Writers Around Town: Matt Welch Debates Dean Baker About the Auto Bailout at the L.A. Times

For the remainder of the week, Reason Editor in Chief Matt Welch will be arguing Detroit bailouts with lefty economist Dean Baker. Today Baker contends that events have left President Obama "little choice" but to exert control over carmakers, because "the economic crisis caused by the collapse of the housing bubble has devastated the automobile industry." To which Welch responds: Oh really?

Read the whole exchange here.

Comments

[Anonymous]

Bailout? Plain, vanilla socialism is as boring as meat pies. Let's talk about fabulous fascism!

[Fist of Etiquette]

Thank goodness the framers had the prescience of mind to empower the Executive to nationalize an industry. Otherwise, the U.S. Constitution would be blocking such a move. Right? Right???

[Kolohe]

From Dean Baker:
President Obama probably didn't anticipate that oversight of two of the Big Three domestic auto manufacturers would be one of his responsibilities when he was elected last November

Yeah, whocudanode that the Big 3 were in trouble and would ask for federal help

Nov 14, 2006

After months of talking about it, the heads of the Big Three automakers will get their chance to sit down today with President Bush and lay out their concerns for the future.

[Mike Laursen]

A Time story on the decline of Detroit from ... the year Obama was born. (OK, they may have been a tad early getting out the decline story considering it was three years before the Mustang.)

[Mike Laursen]

Oops, forgot the link:
http://www.time.com/time/magazine/article/0,9171,873465,00.html

[Rhywun]

I guess the American Dream is still non-negotiable.

[PapayaSF]

One reason Obama is likely to fail here is that he probably doesn't understand that past government meddling is a huge portion of the problem. The companies have to contend with gigantic amounts of regulations. The unions work for their own (short-term) benefit at the expense of the companies, including insisting on rigid, outdated work rules that create inefficiencies that have the force of federal law. The intentions may have been good, but the result is a hugely expensive, inflexible industry.

"Progressives" rarely see that their regulations and pro-union laws can easily lead to the ossification and death of unionized industries.

[John C. Randolph]

I'm a bit surprised that you found anyone outside of DC or Detroit who would argue in favor of keeping Chrysler and GM alive at taxpayer expense.

lefty economist Dean Baker

Oh, that explains it. BTW, "lefty economist" is an oxymoron. Lefties who pretend to be economists are actually in the business of inventing fanciful rationalizations for power-grabbing.

-jcr

[Kreel Sarloo]

From the Time linked above:

Its problems run so deep that they can be solved only by the effort of labor, management, -'government and citizenry-working in a spirit that once made Detroit the symbol of economic dynamism.

Yep, worked so well the first time, we'll do it over and over.

Interested how well the history of Detroit tracks the auto industry as well.

[Suki]

Anonymous,

Any word on the new administration changing to snappy uniforms?

[High Every Body]

Snappy uniforms? Nice touch.

In that case, I hope these guys truly are fascists rather than comunists, for the sake of fashion.

[MlR]

"Lefties who pretend to be economists are actually in the business of inventing fanciful rationalizations for power-grabbing."

Few people, academics, politicians, voters, who aren't in that business nowadays.

[Blue]

If it wasn't for the turmoil of the real estate market and the financial markets, people all around the world would be buying Denalis and Suburbans and even the lovely Aztec. 4 to garage.

I can't wait until the US Army has to buy 20,000 Aztecs for combat operations in Afghanistan. Priceless

[High Every Body]

Blue,

But if our enemies are still using Mustangs (see any Afghan war parade pre 9-11) won't that put us at a disadvantage?

[SugarFree]

But if our enemies are still using Mustangs (see any Afghan war parade pre 9-11) won't that put us at a disadvantage?

Not when you take in account the Aztec's new roomy interior and rear-seat DVD player.

[High Every Body]

Not when you take in account the Aztec's new roomy interior and rear-seat DVD player.

Is that going to be a cost-plus add on or in the fixed firm price of the buy?

Better hire some GS-15s and SES' to make sure this stays on track, for the troops.

[Anonymous]

Suki,

It's not called fabulous for nothing, girlfriend.

[P Brooks]

The economic crisis caused by the collapse of the housing bubble has devastated the automobile industry. The Big Three, and General Motors and Chrysler in particular, lacked the cash reserves that will allow stronger manufacturers to get through the downturn.

False.

This is why I generally avoid anything by Dean Baker.

[R C Dean]

Strikes me as being reasonably accurate, P., if somewhat partial. The economic crisis triggered by the housing bubble popping was definitely exacerbated by all the OTC derivatives, true, and the Big 3 were in a death spiral anyway, but I don't think you can really argue that the current economic unpleasantness accelerated their pending demise.

[P Brooks]

It's the "partial" part that gets me. GM can't make money building and selling vehicles; the recession just makes that harder to ignore.

There's an old joke in motor racing circles: "An 'electrical failure' put us out of the race."
(An electrical failure caused when the connecting rod broke, puched through the side of the block, and knocked the alternator off.)