What is so irritating about this story is how old it seems. The Japanese car makers have been accurately anticipating the preferences of American car buyers for quite a while. In the 1980s, after Chrysler won loan guarantees from Congress, the Japanese were so good at serving this market that the Detroit firms implored President Reagan to grant them “breathing space” against the foreign competition so they could catch up. In one of his most egregious betrayals of his stated free-market principles ... Reagan demanded that the Japanese “voluntarily” restrain their exports to the United States . . . or else. They did so.This puts the current appeal for rescue into perspective. Yes, the government is partly at fault for the companies’ woes, and the general economy is flagging. But the company mangers and union leaders are hardly blameless. In any event, it shouldn’t be made the taxpayers problem. (The emphasis is my own.)
Later in the article Richman points out:
What gets lost in the debate is the fact that either the government or the market is going to determine who gets access to scarce resources. Capital devoted to making cars can’t be go into making anything else. So whether Congress gives or lends the money to the Detroit firms or simply guarantees repayment of private loans, it deprives other entrepreneurs of capital needed for their projects. That means consumers won’t get to enjoy the fruits of those still-born ventures that die for lack of resources. That’s a real cost of government intervention, but since it is unseen, it isn’t counted in most discussions of the proposed bailout.What if I want to start a little business, or my neighbor does, the resources that go to the support of Detroit won't go to my neighbor or myself. And if it is extracted through taxes, grudgingly, then my freedom goes with it.
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