Monday, March 30, 2009

Italian Corporatism

Powerline has more on the GM... control?

The United States may have taken a major step toward corporatism today--an economic philosophy more reminiscent of Italy in the 1930s than of American free enterprise (although, to be fair, there were significant corporatist elements in Roosevelt's New Deal, too). I'm not sure whether Barack Obama ever ran a lemonade stand as a child, but if he did, it would be his most salient business experience. Nevertheless, in his apparently boundless self-confidence, Obama evidently thinks that he knows better how to run an automobile manufacturing company than the management of GM or Chrysler. I found this passage from his speech today striking:

Don't worry the President reassures us: "If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired just like always. Your warranty will be safe. In fact, it will be safer than it's ever been because, starting today, the United States government will stand behind your warranty."

That's right. Obama honestly thinks that the goverment can do a better job in the automotive sector than private industry.

Much has been made of Obama's firing of the Chairman of General Motors, Rick Wagoner. My guess, for what it's worth, is that this was mostly misdirection. Months ago, we and many others wrote that what General Motors needs is bankruptcy. Its legacy obligations, especially to retired UAW members, are simply unsustainable. Until those contracts are broken, bailing out GM was pouring money down the drain. It was not so much bailing out GM as it was bailing out the United Auto Workers. Obama more or less admitted as much today.

That's right. Your money was used to pay off Unions and keep these companies around just long enough to be snapped up by the government.

Goldberg explains the Bargain:

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.

See what's wrong with that? Check the link to read the... details.

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