Not Everything Can Be “Saved”

Roger Cohen writes in defense of dynamic capitalism:

Pan Am, which had been a leading U.S. international airline since the 1930s, collapsed in 1991. Like other great U.S. companies, it died in the marketplace because it blundered. Churn — of people and businesses — has always defined America. Nobody subsidized U.S. Steel or the automaker Packard in the belief that the world without them was unthinkable.

And, of course, the alternative in the case of  the U.S. car companies — a government managed, subsidized and money-losing car industry — is the worst of all worlds. Indeed the image of Hank Paulson, who lacks any expertise in managing an industrial enterprise and already has a poor record in the “picking winners and losers” department, playing “Car Czar” is ludicrous. (One wonders if he knows much about negotiating when he declares up front that the companies are getting the money and won’t be going home empty-handed.)

A Paulson-devised bailout conveys the wrong message to risk takers and managers (“Don’t worry, the government is here for you.”) But that’s not the worst of it. It robs the taxpayers of money that should go to something else —  for example, investment in companies that will profit, employ more workers and create wealth. (Yes, it is the taxpayers’ money we’re still talking about — that mound of debt will have to be repaid by current and future generations.)

Lost in the “UAW vs. Republicans” argument is a more fundamental one: a car bailout is a perfectly horrid use of taxpayers’ money. Rather than asking if we should bailout the car companies, a better question would be: isn’t there something better to be done with tens if not hundreds of billions of dollars? Certainly we can come up with something better than a batch of nationalized Pan Am’s.