"Nyet" to Car Industry Bailout

David Harsanyi
Wednesday, December 10, 2008

A "car czar" is an imprecise title. It conjures up a romantic era of Russian tyrants and Faberge eggs. No, the control economy that Congress is slopping out these days is begging for a "car commissar," not a czar.

Nancy Pelosova has floated the idea of a national auto czar who would oversee the restructuring of the American car business. She would like to see this person appointed as soon as Congress approves the $15 billion (or is it $34 billion?) industry bailout plan, which may include a partial nationalization of the industry.

The U.S. government is an enterprise of massive incompetence and waste, with a $3 trillion yearly budget and $10 trillion — give or take a few billion — in outstanding national debt, according to the Treasury Department.

Who better to run a failing industry? And who better to oversee a top-down economic plan than someone with a razor-sharp mind like Barney Frank and his cronies, with their vast experience administrating multibillion-dollar corporations and insight into the needs of the American consumer?

In the Soviet era, central planning would dictate which industry could exist, what products the economy could create, how many units could be produced, what the wage of each worker could be and the amount of fuel each citizen would be allocated.

It all sounds familiar.

Congress is demanding Detroit build so-called "green" cars, even though Americans show little inclination to buy them willingly. Congress wants to determine executive pay, yet it won't allow extravagant union benefits to be renegotiated through bankruptcy.

Now, according to The Wall Street Journal, the government also may receive warrants for stock equivalent of at least 20 percent of the loans these companies receive — or, in other words, nationalization.

Many people are asking: Why can't these companies go bankrupt and reorganize like everyone else? In bankruptcy court, the process allows the auto industry to negotiate with creditors, stakeholders and unions.

Well, the auto industry spent nearly $50 million lobbying Congress in the first nine months of this year while unions spent hundreds of millions to put Democrats in Washington. Those are two reasons.

The Big 3 continue to float the myth that civilization will collapse should they fail. Yet, there are no assurances these companies will emerge from under the massive debt, mismanagement and legacy costs that drove (or is it "flew"?) CEOs to Washington to beg in the first place. Does anyone believe that the $40,000-plus electric Volt is going to save General Motors when gas costs $1.50 a gallon? (Then again, it should be noted that when cap-and-trade legislation kicks in so will the control energy economy. Congress can then get gas prices back where they belong: really high.)

"We don't want government to run companies," Barack Obama, who supports a bailout, recently said on "Meet the Press." "Generally, government historically hasn't done that very well."

Generally? Washington is now ready to sign off on the business plan of auto companies and buy into industry. If that's not "running" the economy, then what is?

Not long ago, incoming White House Chief of Staff Rahm Emanuel claimed that we "never want a serious crisis to go to waste. This crisis provides the opportunity for us to do things that you could not do before."

Does this mean a czar for every sector of the economy? Because this brand of economic planning has been tried, and it has failed — not "generally," but every time.