Economics

Bailout Mentality 101

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L.A. Times business/finance columnist Michael Hiltzik, last seen using his twice-a-week space to cold lie about the California budget, demonstrates today how you don't need to fawn over Barack Obama (or his predecessor) to thoughtlessly endorse the latest bailout emanating from Washington. All you need is a bucket of false choices, argumentative hyperbole, selected historical nuggets, and the bedrock conviction that Something Must Be Done.

[T]he question boils down to this: How much is it worth to save the U.S. economy? The answer may well make the GM deal look like a bargain, for the choice may be between the nation's making this investment now and facing a future with a hollowed-out industrial midsection bereft of factories, commercial strips and households.

Certified pre-owned loser

Whether the government's novel venture into industrial ownership will save the economy, or whether it's even a necessary component of an economic recovery, are questions certain to be widely debated in the coming months while GM hares its way through an expedited bankruptcy reorganization.

Some will say the government has no place meddling in a company's destiny under any circumstances. One argument is that it lacks the mind-set to succeed in the private sector.

Some people are uneasy about compromising the traditional independence granted private enterprise in the U.S.A. This isn't that much of a "tradition," though, when you consider the long history of federal lifelines thrown to drowning industries. The government bailed out the airlines after 9/11, gave loan guarantees to Lockheed Aircraft Co. and Chrysler Corp. in the '70s, and propped up banks, railroads and industrial firms of all descriptions during the Depression.

It's just one bad column, but it's symbolic of both a mindset and a working style that are grossly overrepresented in the halls of serious journalism: Act or Die. Let historians or partisans argue over such minor details as whether stuff like this works. And proceed with all speed from cold analysis involving credible numbers to the evocative language of unanalytical dystopia.

Try to factor in the incalculable economic cost of a GM collapse, including the direct loss of tens of thousands of jobs. […]

The indirect impacts would ripple and build: scores of suppliers thrown into bankruptcy and thousands of dealerships put out of business. Whole communities that had been dependent on GM and its commercial tendrils impoverished. Towns and cities with a vibrant past but no future. The nation's manufacturing infrastructure decimated; once an enterprise the size of GM is liquidated, it can't be replaced for years, if ever. In terms of politics as well as policy, this is a choice that President Obama could not make.

Love how quickly we travel from "incalculable" to "nation's manufacturing infrastructure decimated."

Too bad there hasn't been a massive industrial collapse in Hiltzik's own back yard, one that somehow failed to decimate the tendrils and impoverish the future. Oh wait.