Some time ago, we used the analogy of a superhero to describe the government’s stemming of the economic crisis. The image of red-caped bureaucrats using taxpayer money to rescue companies in distress about sums it up.
This image is changing. While superheroes have great powers and feel duty-bound to use them for good purposes, the government’s economic responses have moved beyond altruistic to tread into the rarefied realm of the divine.
It’s about more than rescue now. It’s about, especially with American automakers, the latest market segment seeking government succor, the forgiveness of sins and trespasses, in hopes of earning the blessings of eternal life.
Separation of church and state? Hardly. By contemplating the financial rescue of the American automotive industry, the federal government is getting a God complex.
How else can this be explained? The superhero government saved Bear Stearns and AIG and Fannie Mae, et al., to preserve order in the financial system. As the foundation of the economy, their failings would have toppled us like shantytowns in an earthquake.
Automakers are a different tale, with their individual chapters detailing political muscle, insolence, arrogance, bad decision-making and inability to innovate. The crumbling financial markets exposed these lethal fissures deep beneath the surface. Now the industry, after years of fighting government’s tenets, is getting religion.
Perhaps the greatest symbol of American invention and innovation – the automobile – has become the most garish symbol of its failings. At a time when our smartest industrial minds should be leading the country from peril, they, too, sadly have their hands out.
And the government, in the interest of staving further crisis, seems only too willing to help. President-elect Barack Obama supports plans to extend monies to automakers as part of the underwhelming $700 billion bank bailout.
We don’t think it’s a good idea. While we swallowed the bailout, extending it to automakers is too bitter a pill, and too bad a precedent. If done, the line where government intervention in business ends would be erased.
It’s been blurred by banks. With Detroit on the dole, every flagging industry could demand – and rightly expect – the same privilege: economic confession, a penance, after which the slate would be wiped clean.
America cannot afford such a business environment. Its greatest gains have come through entrepreneurial spirit and capitalist thirst to create wealth, under the theory that taking great risks, could reap great rewards.
It’s not always the fairest system but, by God, it does work.
Bankruptcy, the other possible destination of American automakers, is not as hellish as it sounds. Other industries have gone through bankruptcy to return leaner, stronger and hungry for success – which is the point of the process.
A government injection of $25 billion or $50 billion, as proposed, provides the opposite: more positive reinforcement to misguided executives in Detroit that their poor decision-making has few ramifications.
The federal government must have means; it can only go so far, politically and fiscally, in holding this economy together. Offering rescue to automakers – and who else next? – is a step too far.
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