Another post at Cafe Hayek leads me to another great article by Donald Boudreaux; see it here. He is writing about the bailouts, or, more specifically, the limits put on executive salaries at companies that accept the government's money. (Or rather the taxpayers' money that the politicians spend as if it were their own.) Early in the article Don lays down this point: "[T]he most egregious problem ... with all ... restrictions and requirements that are attached to bailout funds, is that it sets a frightening precedent." That precedent, as I see it, is that the government now has the responsibility to manage these companies that it keeps alive.
That precedent is very dangerous. If it is justifiable, then the consequences are far reaching. If the government can manage any company that benefits from bailout money then look at your own business or place of employment. Boudreaux points to how far it might go:
... Which ... firms ... feasted on Washington's bailout bounty? This question is not as easy to answer as you might think. Sure, it's clear that, say, Chrysler got bailout funds. But what about Chrysler's suppliers that, while none received any direct handout of taxpayer funds, enjoyed higher profits as a result of Chrysler remaining in operation?
Indeed, what about every firm in America? After all, the financial and auto-producer bailouts, and the more general "stimulus" packages, are meant to assist the entire economy. Funds spent on the bailouts and on the stimuli eventually wend their way throughout the whole economy, benefiting everyone. That's government's stated goal.
Because (the presumption is) without these bailouts and stimuli the U.S. economy would have collapsed into ruins, it stands to reason that every firm -- every American, even -- received government largess. And because this largess was bestowed, either directly or indirectly, upon every firm, no firm deserves to be excused from having to follow detailed marching orders from Washington.
I hope I'm wrong. But I genuinely fear that the extensive and massive "economic rescue" spending pouring today from Washington will combine with the newfound enthusiasm for hyperactive government to quickly create a culture of government direction of the economy as this country has never before known.
The correct answer is to never allow the federal government to get into the bailout business. If any reader would suggest that a state government should, then there could be a discussion. But that is not the role for the federal government.
Comments, suggestions, and questions can be directed to test.veeschay@gmail.com
