Friday, December 19, 2008

Not paying the price for failure

Listening to the radio, I was struck by this audio soundbite of the President this morning:

If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers. Under ordinary economic circumstances, I would say this is the price that failed companies must pay -- and I would not favor intervening to prevent the automakers from going out of business.
Of course, he then went on to explain why he’s handing $17 billion of taxpayer money to the car companies.

In other words, Bush knows that for a free market to work, there must be a price for failure. But when push came to shove, he didn’t believe that the managers, employees, unions and shareholders of the Big Three should pay that price. Not wanting to have two of the Big Three die on his watch, he backed down from strict accountability. (I wonder what kind of dad he was? It’s clear he wasn’t a very good manager.)

About the only thing to be said in favor of today’s bailout is that Bush is a lame duck — and with the change of parties, even lamer than most. So by keeping the car companies alive a few months, our next president and Congress will have the option to do as they please — consistent with the principles of a representative democracy.

Interestingly, our next president is not as big a believer in free and unfettered markets. But my hunch is that he has higher standards for accountability than most. The question is whether he’ll hold political allies accountable or (like most politicians) give them a pass.

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