Open a Hole and Just Pour It In

There is only one small, and slender, consolation we have now that Stephen Harper and Dalton McGuinty have decided to give the domestic automakers four billionof my dollars and yours; there is no politician this side of Margaret Thatcher who would have done otherwise.  We have long since established that Stephen Harper is no Mrs Thatcher, the latter being far more of a man than the former.  Please don't pardon my sexism.  This is, we belabour the point because it is not made enough, the economic equivalent of putting four billion dollars on a huge raft, lighting it on fire and then letting it drift to the middle of Lake Ontario to sink.  The Big Three are in every meaningful sense of the word bankrupt.  The paranoid rantings of some commentators - many usually sensible - that people will not buy cars from an officially bankrupt car maker is beside the point.  Simply by asking for a bailout the Big Three have signaled, as clearly as any Chapter Eleven filing, that they might not be around for the Summer driving season, much less a year or two from now when the transmission starts to knock.  This is why all three have seen their sales plunge more than their non-North American based competitors.  Going cap in hand to Congress - and Parliament - is a confession of both professional incompetence and desperation.  A bail out does not solve the problem of collapse, it merely delays it.  The car buyers of North America now know that their warranties are being guaranteed by politicians.  Some actually imagine that this will engender confidence; that buying a car now requires the purchaser to read Congressional entrails.

The begging sessions we have witnessed are in many ways far worse than bankruptcy.  The two month saga of Congress hesitating on the bailout has generated greater uncertainty than if the Big Three had simply asked for court protection back in early November.  The shock would have begun to wear off, a comprehensive restructuring package would have been placed before the bankruptcy courts, and the public, by now or in the very near future.  With its bloated dealer networks and union contracts dispensed with there is every chance that the remains of the Big Three would - as did even the assets of Lehman Brothers - find willing buyers.  The bailout isn't about saving the Big Three, or hundreds of thousands of jobs, it's about saving the assets of the Big Three as currently organized and branded. 

Tens of thousands of jobs will be lost, hundreds of dealerships will be closed, all this will come but more slowly than it needs to.  The foolish comment earlier this week from Dalton McGuinty, that if the Big Three went under it would throw thousands onto EI and then welfare, rather misses the point, they're already on the dole.  Yes, they continue to work, producing cars no one wants to buy and consuming vast resources that might be better deployed elsewhere in a time of economic crisis.  It's worse than the dole, at least on the dole they can start looking for work or go back to school.  It's true that few will be able to find equally well paid employment elsewhere, but this is simply a long standing aberration coming to an end.  The power of organized labour in the auto sector effectively imposed a tax on the driving public for decades, thanks to their higher than market wages and benefits.  The Japanese manufacturers, through their innovation and skill have repealed that tax.  For this great service the least we can do is turn over the physical plant of the Big Three to more efficient and capable hands.  Let us all repeat the great truth, that we all should have been taught while in knee pants, YOU CANNOT CONSUME MORE THAN YOU PRODUCE.  If you do, someone else must take up the slack and you become a parasite. 

Being a parasite isn't itself an immoral thing, children and stay at home mothers are technically parasites, but those who foot their bill willing choose that obligation.  The middle aged bolt fastener making more than me isn't my child, and certainly not my spouse.  Nor are they even worthy objects of compassion.  If thousands of my dollars are to be extorted for charitable purposes, please send it directly to the children of Africa, or Latin America, who go hungry tonight through no fault of their own.  The welfare state has steadily crept up these last few years.  Once it was intended only for the poorest of the poor, now a sizable section of the comfortable middle class is on take.  I'd prefer the barge in the lake option, it would be a more edifying spectacle.

Mark Steyn does his bit here.  One of the best ones in awhile.