Three of the most thoughtful and philosophically grounded conservative pundits—David Brooks, Pat Buchanan, and George Will—have weighed in on the proposed bailout of the Big Three American auto makers.
Brooks, in Bailout to Nowhere, argues that the free market should be allowed to work its “creative destruction” on the automakers. That’s how capitalism works, says Brooks. Those who made the best and most forward-thinking decisions deserve to reap the benefits of that foresight; those who made poor decisions must be made to suffer the consequences, in this case, bankruptcy.
Brooks makes the case against the bailout by appealing to the dynamism that “creative destruction” brings to a capitalist economy:
This is an excruciatingly hard call. A case could be made for keeping the Big Three afloat as a jobs program until the economy gets better and then letting them go bankrupt. But the most persuasive experts argue that bankruptcy is the least horrible option. Airline, steel and retail companies have gone through bankruptcy proceedings and adjusted. It would be a less politically tainted process. Government could use that $50 billion — and more — to help the workers who are going to be displaced no matter what.
But the larger principle is over the nature of America’s political system. Is this country going to slide into progressive corporatism, a merger of corporate and federal power that will inevitably stifle competition, empower corporate and federal bureaucrats and protect entrenched interests? Or is the U.S. going to stick with its historic model: Helping workers weather the storms of a dynamic economy, but preserving the dynamism that is the core of the country’s success.
George Will agrees with Brooks. In “In Detroit, Failure’s a Done Deal,” Will notes that the automakers have already failed, and that they’re not “too big to fail.” The question, Will asserts, is what should be done about those failures?
The answer? Do nothing that will delay bankrupt companies from filing for bankruptcy protection, so that improvident labor contracts can be unraveled, allowing the companies to try to devise plausible business models. Instead, advocates of a “rescue” propose extending to Detroit the government’s business model for the nation — redistributing wealth from the successful to the failed, an implausible formula for prosperity….
…a “rescue” without bankruptcy will make those four entities wards of government. Doing so would make the five entities (including Washington) collaborators in unfair competition with America’s thriving automobile industry that employs 113,000 Americans making vehicles containing many American-made components, but with foreign, mostly Japanese, nameplates. As Detroit continues to shrink, many American jobs “lost” will be regained in this industry, and its American suppliers, as Americans continue to buy cars.
Like Brooks, Will has faith in the market’s ability to adjust to a new circumstance in a rational way. The result may be painful for many, but good for all in the end.
The dissenting voice among the Big Three Conservative Thinkers is Pat Buchanan. Ever the champion of the industrial base and the working class, Buchanan, in “As GM Goes, So Goes the GOP,” writes:
When workers, execs, engineers, dealers, salesmen and suppliers are all factored in, the Big Three employ 3 million people who contribute $21 billion a year to Social Security and Medicare, and $25 billion in federal income taxes. Add in all the businesses that depend on the auto industry, and we are talking about one-tenth of the U.S. labor force….to let the auto industry die is to write America out of much of the economic future of the planet.
But Buchanan doesn’t suggest a simple bailout like the one offered to the financial industry. Instead, he favors trade restrictions aimed at giving American automakers an advantage, or at least an even playing field, compared to foreign automakers:
Nancy Pelosi is talking about tying loans to a restructuring of the industry. But Congress is not competent to do that.
What needs to be restructured is the U.S. tax-and-trade regime.
Dump globalism. Instruct Japan, Canada, Korea, Germany and China that if they wish to sell cars here, they will assemble them here and produce the parts here. And we shall have the same free access to and same share of their auto market as they have of ours.
To accomplish this, use the same import quotas and tariffs Ronald Reagan used to save the steel industry and Harley-Davidson.
Reciprocal trade. Even Democrats like FDR used to practice it.
Brooks, Buchanan, and Will all agree that writing another blank check isn’t in the best interests of the taxpayer, the nation, or the automakers themselves. Other means to the same end—a vibrant, comepetitive US auto industry—make more sense.
While these three conservatives should be heeded, a fourth voice with more experience in business and a background in Detroit puts it more bluntly and adds some much-needed specificity. Mitt Romney, whose father George helped save American Motors five decades ago, believes a bailout would be ruinous. In “Let Detroit Go Bankrupt,” he writes:
IF General Motors, Ford, and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.
Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.
Romney proceeds to give sage advice to both government and industry, the goal being to end competitive disadvantages under which US automakers have worked, to rethink the management/labor dynamic (under new management!), and to target government investment in ways that will help ensure the long term success of the Big Three. In the end, Romney says “yes” to government involvement, but “no” to a cash bailout:
It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.
But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.
The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.
In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.
Barack Obama clearly favors a bailout; a principled conservative opposition—not the short-sighted apologetics and obstructionism of talk radio—is needed to prevent Obama’s good intentions from leading the Big Three straight to Hell.
Posted by prestoncoleman 
Posted by prestoncoleman 
Posted by prestoncoleman 