Wednesday, December 10, 2008

Some semblance of accountability

On Tuesday, Senate Minority Leader Mitch McConnell laid out his party’s position on the proposed auto industry bailout. Some excerpts:

First and foremost, we will not let taxpayers spend their hard-earned money on ailing carmakers unless these companies are forced to reform their bad habits — either inside or outside of bankruptcy.
[I]t means that struggling car companies will have to rationalize their cost structures — because a company that does not respond to market conditions is a company that is doomed to failure anyway. And Republicans will not allow taxpayers to subsidize failure.
While some of his other points (particularly about state emission standards) would divide the Congress, it seems like the positions listed above should be above partisanship.

Those who don’t embrace these ideas seem most focused on the short-term consequences of automaker layoffs and their direct economic impacts, I suppose this works for politicians who like to “kick the can” down the road until after they retire.

However, more serious economic policy experts (like the 200 economists) worry about the long-term damage to our economy of (further) breaking the link between firm mistakes and market feedback. Breaking this link will have severe consequences for our children and grandchildren.

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