Jeff Wartman

Steve Gordon has an astute quote, reacting to Chrysler’s “Thank You” ad in which they “thank” the taxpayers for their $4 billion bailout.

First of all, if you are going to pseudo-lawfully extort money from me, don’t further insult me with insincere politeness.  In other words, don’t thank me for a pleasant date right after you rape me.

Second, if I have invested in Chrysler, where are my stock certificates?  I want to sell them, and fast! If I sell them fast enough, perhaps I can even get one dime per dollar your federal collectors/enforcers have extracted from my bank account.

There are two important points to make here.  The first is that there is no reason for Chrysler to be “thanking” us for the money.  Taxpayers never consented to giving you any money.  Actually, we really didn’t give you any money at all.  What actually happened was that those in Washington decided to give you money we’ve borrowed from the Chinese, which our children will be responsible for.  So, if you’re really grateful, thank the politicians in Washington who decided to run up the credit card and put it in our kids names.

The second, as Gordon points out, is that there is no “investment’ being made.  In an investment there is an expectation of a direct return.  What Chrysler is asking for is a subsidy of their failing business practices, so that it isn’t their money at stake.  Any potential losses have been socialized — Chrysler is at a roulette table playing with someone else’s money.  If they lose it, as they’ve done in the past, no big deal.  If they win, they get to keep the winnings without sharing it with the people who put up the money to begin with.

On the blog, there is a comment from someone named Bill Harrison.  He writes,

Grow up. I don’t like the idea of subsidies either but we had little choice. The good, hard working middle class folks that work at these companies and their American suppliers just want to keep their jobs and homes. If we don’t support that the manufacturers in this very difficult stage we will only go further downhill.

It’s a really good thing for America that people who make this argument weren’t successful in the early part of the 20th century.  Back then, there were huge losses in one particular industry — the horse and buggy industry.  Many, like Mr. Harrison, called for government to step in and save the industry.  People were losing their jobs, and the buggy industry was one of the economy’s largest.  The reason for the downturn?  The buggy industry was getting killed because of the development of the automobile.  If people like Bill Harrison got what they wanted a century ago, their reasoning would have set the development of the automobile back indefinitely.  This is how economics works.  Trying to pump money into a firm with a proven failed business model doesn’t help things.  In the long run, it makes them worse.