We now see the consequences of government bailouts and “too big to fail”:
I think anyone who owns auto-sector debt (whether directly or through a pension or life insurance policy) should be very concerned — they can only find their interests made subject to the political interests of organized labor. Further the American people should probably also be concerned, as we will continue to support with tax dollars a company that has simply proven itself incapable of competing in a free market for the last several decades.
Secondly, we should all be very, very concerned that the White House had decided that it is within its writ to decide who the captains of industry are. The CEO of any company should be chosen by its Board, as elected by its shareholders. The shareholders of GM have just been disenfranchised by a Presidential phone call.
Chief Executives being chosen by politicos is probably common in China or Russia, but those are not countries we want to be emulating. I do not like this at all.
Neither do I. And there’s a word for it.
It starts with “f.”
[Update a few minutes later]
Kaus: Obama’s Diem?
And Lileks twitters: “Maybe I’m old-school, but ‘President fires CEO’ looks as wrong as ‘Pope fires Missile.’ Does not compute.”
More on why this is such a bad idea:
GM is now Obama’s company. If it closes, it will be on his say-so. But Obama is a politician, not a CEO. So his first concern is to avoid bad political fallout, which means he will prop up the company for as long as it takes, regardless of what makes economic sense. This, in turn, will likely make the company either less economically sound or, it will rebound — but only by getting special breaks other companies won’t get. Either way, bad practices will be rewarded and/or good practices will be punished. More firms will see that gaming Washington pays off and the cycle will continue.
Of course, the good news is that being a law professor and community organizer totally prepares you to run huge white elephant multinational corporations.
The country’s in the very best of hands.
[Another a couple minutes later]
The first quid pro quo for the government giving you money (or “investing”, as President Obama and David Brooks say) is that it gets to regulate your behavior. Not just who sits on your board or (see Sarkozy last week) where your factory has to be. When the government “pays” for your health care, it reserves the right to deny (as in parts of Britain) heart disease treatment for smokers or hip replacement for the obese. Why be surprised? When the state’s “paying” for your health, your lifestyle directly impacts its “investment.”
The next stage is that, having gotten you used to having your behavior regulated, the state advances to approving not just what you do but what you’re allowed to read, see, hear, think: See the “Canadian Content” regulations up north, and the enforcers of the “human rights” commissions. Or Britain’s recent criminalization of “homophobic jokes.”
You’d be surprised how painlessly and smoothly once-free peoples slip from government “investing” to government control.
There is such a thing as American exceptionalism, but the current regime is doing everything possible to obliterate it as quickly as possible. Don’t think it can’t happen here. It can, if we let it.
[Update a few minutes later]
OK, one more — the fascist bargain:
The fascist bargain goes something like this. The state says to the industrialist, “You may stay in business and own your factories. In the spirit of cooperation and unity, we will even guarantee you profits and a lack of serious competition. In exchange, we expect you to agree with—and help implement—our political agenda.” The moral and economic content of the agenda depends on the nature of the regime. The left looked at German business’s support for the Nazi war machine and leaped to the conclusion that business always supports war. They did the same with American business after World War I, arguing that because arms manufacturers benefited from the war, the armaments industry was therefore responsible for it.
It’s fine to say that incestuous relationships between corporations and governments are fascistic. The problem comes when you claim that such arrangements are inherently right-wing. If the collusion of big business and government is right-wing, then FDR was a rightwinger. If corporatism and propagandistic militarism are fascist, then Woodrow Wilson was a fascist and so were the New Dealers. If you understand the right-wing or conservative position to be that of those who argue for free markets, competition, property rights, and the other political values inscribed in the original intent of the American founding fathers, then big business in Fascist Italy, Nazi Germany, and New Deal America was not right-wing; it was left-wing, and it was fascistic. What’s more, it still is.
What’s amazing is how blind they are to it.
[Update after noon]
I feel much better now:
…starting today, the United States government will stand behind your warrantee [sic].
Yes, because, you know, that’s the proper role of the federal government under the Constitution. To stand behind GM owners’ warranties. To provide for the care-free pursuit of car ownership.
[Late afternoon update]
The Wall-Street/Washington Industrial Complex.