Bailout Culture and the Free Markets

Liberal Dudes don't often trumpet conservative positions. But in the tradition of two dudes who "consider ourselves fiscal moderates," here are two must-reads from conservative columnists who raise red flags about our government's response to the economic crisis.

George Will reminds us that the trillion dollars earmarked for a bailout will not likely be a temporary measure, spent without political concerns. He notes that the "temporary" New Deal measure of agricultural subsidies and the emergency World War II rent-control imposed in New York have distorted free markets for more than the last five decades. In politics, taking away a government give-away is never easy.

David Brooks attacks a proposed Detroit car maker bailout as nothing more than "about saving politically powerful corporations." He argues that bankruptcy is preferable to a bailout, noting, "Airline, steel and retail companies have gone through bankruptcy proceedings and adjusted."

Taken together, these pieces make a persuasive argument against a sustained auto-industry specific bailout. A potential middle ground would be to provide the auto-industry with enough support to ensure that the Big Three automakers remain viable during the worst of the economic downturn (whether this can be best accomplished through short-term loans or bankruptcy, I don't pretend to know). But long-term support for the automakers to conduct business as usual should not be contemplated. Instead, government incentives and spending should be used to transform the industry-- to smaller, more fuel efficient cars and to massive investments in cars fully running on renewable resources.

As George Will recognizes, "falsely shouting 'socialism!' in a crowded theater such as Washington causes an epidemic of yawning." But young liberals and conservatives alike should recognize that massive spending decisions taking place right now, if not made wisely, will burden us for years to come.

UPDATE: This Economist editorial also argues for bankruptcy over bailout, but provides support for an argument that the Big Three are on the verge of better times, by virtue of their standing in developing countries.

-Law Dude