Allahpundit on the auto industry bailout:
Is anyone in the GOP leadership weighing the costs of action versus the costs of inaction or are we running on pure dogma here? I keep thinking about Mitch McConnell saying yesterday that he’ll oppose the bailout even though it’s “impossible to know” what the consequences of bankruptcy would be. Hey, Mitch? Not good enough. No one’s asking for absolute certainty on the outcome, which really is impossible; what I want is a good-faith attempt at assessing costs, benefits, and probabilities of all courses of action. If they’re convinced that economic catastrophe is inevitable and don’t want to burn any more taxpayer money trying to deflect the asteroid, that’s fine. If, on the flip side, they think the consequences of letting the Big Three fail and losing a million jobs in this economic climate won’t be that bad, that’s fine too. Both are good reasons to oppose a bailout. But make the case. Explain to me why, in the middle of a global economic crisis, propping up a failing industry to save jobs at least until the crisis is over is a worse option than pulling the plug now. The prospect of being taxed to support a $100 billion rescue of the auto industry is awful, but not nearly as awful as the cascade effect of consumer purchasing power drying up and me losing my job as part of a $500 billion hit to the economy. Is that what we’re looking at here or is it something less, or more? My sense is that both sides are uninterested in exploring the question, and that our side is content to repose religious faith in the divine market to arrive at the least painful solution. Can I at least see some numbers before I take communion?
I have my own take on this. I’m interested in predictions about the numbers, because I think Allapundit is right: we should have some idea where our actions will lead us. But I’m even more concerned about arguments concerning whether the free market is the way to solve this crisis.
I don’t feel qualified to offer a firm opinion on whether a bailout like this should happen; I felt the same way about the bailout of the financial industry. But I do believe in certain principles.
I’m skeptical of government intervention in economic affairs, because I believe they can lead to unintended consequences that are hard to predict. And I’m generally a believer in free-market principles. The idea is that the free market is the economic system most compatible with freedom, because rather than putting our trust in government to manage the economy, I believe we should trust the collective wisdom of consumers to make whatever decisions are best for them. As those decisions multiply, markets form as if by magic — and (in theory at least) it causes the best businesses to flourish while less useful ones fail. Put simply, a collection of choices, freely made, forms our markets.
At the same time, I’m not 100% “religious” about markets in the sense that Allahpundit means. There are market failures, because what is good for the individual is a) not always best for society as a whole, and b) is often not best for the future of humanity. So I don’t trust markets to protect the environment, for example. (By analogy, similar laissez-faire attitudes in government provide politicians with incentives to grab cash for their districts, without concern for the harm to the country as a whole, or the harm to future citizens caused by increasing debt.)
The question is this: standard free-market dogma says that the Big Three are failing because they aren’t producing cars that people want, for the prices that people want to pay. And if they’re not doing that, they need to fail, so that something better can take their place.
Is there a reason that outlook is wrong? I tend to think it’s not, but if someone wants to argue that it’s a market failure, I’m open to listening.
As for the numbers, I’m quite sure they would indicate that inaction would lead to extreme short-term economic pain. When businesses fail, it’s always tough; when big businesses fail, it’s tougher.
But what’s the alternative? Prop up businesses who aren’t properly meeting demand and turning over power to a “car czar”? (Shades of the Soviet Union.) If it takes some short-term pain to avoid that, then maybe we need some short-term pain.