Obama didn’t save GM; he saved the union’s pension.
Of course he didn’t see it that way. Nevertheless, it is true.
Government interference in private markets never works; you always have consequences. Someone always has to pay the piper.
The corollary truth to this reality is that creative destruction also works. As we have seen time and again throughout history, government picking winners and losers only delays the inevitable, and wastes money. It is misallocation of capital. However, as we hear from socialist darling Alexandria Ocasio-Cortez, the Marxists keep believing.
Here are Obama’s words regardind the bailouts of the auto industry.
“Just a few years ago, the auto industry wasn’t just struggling – it was flatlining,” Mr. Obama said. “GM and Chrysler were on the verge of collapse. Suppliers and distributors were at risk of going under. More than a million jobs across the country were on the line – and not just auto jobs, but the jobs of teachers, small business owners, and everyone in communities that depend on this great American industry…[My administration] refused to throw in the towel and do nothing. We refused to let Detroit go bankrupt. We bet on American workers and American ingenuity, and three years later, that bet is paying off in a big way.”
Of course, all he did was save the payouts to union workers, a huge Democratic constituency at the time. The business model of General Motors, the focus on labor goodies instead of making great cars, was bound to fail. It was all over but the shouting.
GM should have died a long time ago. Something else would have risen up to take its place. Inefficient businesses should be allowed to die, so we don’t misallocate capital. This includes the big banks.
Lehman, and its overnight repo funding, should have and did disappear. But there were other financial institutions that should have shared its fate.
Of course I say this assuming a level, international trade playing field. I support Trump’s tariffs in this sense, in order to force free and fair trade, which we have not had for decades due to globalist polices.
Trump is also right on GM. They took America’s taxpayer dollars, and are now shuttering domestic plants in favor of lower-cost alternatives. But again, this could have been predicted.
Government interference in private markets is evil. Just as the Carter/Clinton Community Reinvestment Act forced large financial institutions in the United States to make non-commercial loans; ie, lend money to people who could never pay it back.
I heard recently that the Feds are once again looking to force banks to issue subprime loans, the same behavior that caused the housing crisis in 2008.
Socialism never works in the long run. When will we ever learn?