Over at The Atlantic, Megan McArdle dismantles the notion that taxpayers should consider the carmaker's return to profitability as vindication for the bailout. Read the whole link-rich piece for reasons why; here is a conclusiony chunk:
What lesson, exactly, are we supposed to learn from this "success"? What question did it answer? "Can the government keep companies operating if it is willing to give them a virtually interest free loan of $50 billion, and a tax-free gift of $20 billion or so?" I don't think that this was really in dispute. When all is said and done, we will probably have given them a sum equal to its 2007 market cap and roughly four times GM's 2008 market capitalization.
No, the question was not whether GM could make a profit after a bankruptcy that stiffed most of its creditors and shed the most grotesque burdens of its legacy costs, nor whether giving companies money will make them more profitable. The question is whether it was worth it to the taxpayer to burn $10-20 billion in order to give the company another shot at life. To put that in perspective, GM had about 75,000 hourly workers before the bankruptcy. We could have given each of them a cool $250,000 and still come out well ahead compared to the ultimate cost of the bailout including the tax breaks–and over $100,000 a piece if we just wanted to break even against our losses on the common stock.
And if we'd done that, we'd have saved ourselves in other ways. We would have reduced some of the overcapacity that plagues the global industry. We would not have seen the government throwing its weight into a bankruptcy proceeding in order to redistribute money from creditors to pensioners, which isn't a good precedent.
But even if you still think that the bailout was a good idea, there's something you should consider before we start celebrating the administration's Solomonic wisdom: the Obama administration's rush to dispose of its GM stake before the 2012 election is probably costing us billions. No one I interviewed for my piece on GM was exactly enthusiastic about an early IPO; doing it so quickly meant that the company had very little to show in the way of earnings and stability. Now the government may rush to sell all its remaining shares this summer even though this means locking in a substantial loss.
Whole thing worth a read.
A chronological sampling of Reason's tracking of premature Government Motors triumphalism:
* Just How Much Will the GM Bailout Cost Taxpayers?, Nick Gillespie, June 30, 2009
* Gov't Panel: GM/Chrysler Bailout a Loser Before It Leaves The Showroom Edit, Nick Gillespie, Sept. 9, 2009
* GM's Phony Bailout Payback, Shikha Dalmia, April 27, 2010
* How The Hell Did GM Pay Back Its Loans "in Full And Ahead of Schedule"? Well, It Didn't, by ReasonTV, April 30, 2010
* GM's Bailout Payback Claims: Untrue at Any Speed!, Nick Gillespie, May 4, 2010
* Obama Motors' Ill-Timed IPO, Shikha Dalmia, Sept. 7, 2010
* Think Twice About Buying GM Stock as a Private Citizen! (Or as a Taxpayer!), Nick Gillespie, Nov. 18, 2010
And heeeeeeeeerrrrre's Nick!