The Associated Press is reporting some good news depending on how you look at it of course. The bailout bill fell apart in the Senate after Republicans wanted the United Auto Workers to take a wage cut. Many Democrats are painting this failure to get the bill passed as a very bad and disappointing thing.
We can all agree that these collapsing car companies is a terrible thing, but is the role of government supposed to be to save them? That is the question we should all come to ask.
My answer to the question is a simple no. The marketplace is a self-correcting machine. The companies failed for a reason. The more capitol we use to temporarily ‘save’ them will mean less capitol for companies that have actually made the right move. I believe that keeping these ‘sick’ car companies around hurts the whole economy in the long run. The best economies and the most flexible are the ones who are the most free, the ones that can quickly shake off the bad debt and produce more, where creative destruction is a slow but steady process. These car companies need to be left alone, it is a very slippery slope from here if we continue to just bailout.
If you even have the slightest interest about economics I encourage you to read Economics In One Lesson by Henry Hazlitt, this book has taught me a lot about basic economics. It is very easy to understand, and a great read!Published in