The Chrysler Bailout, the Triple Hit, and the Laws of Political Economy

It looks like American taxpayers will lose more than $1.3 billion in the Chrysler bailout.

That bailout and loss demonstrate that we have forgotten the first rule of political economy:  You get more of what you subsidize.  We subsidize failure.  We keep getting it.  This is now the second time we've bailed out Chrysler.

How many more times will we reward their failure?  How many more times will we send the message that, if you are big, you are safe -- no matter what mistakes you make or how much it costs taxpayers?

Why do we do it?

We don’t, unless by “we” you mean the self-serving politicos in DC.

They do it because they want to keep themselves in positions of power and privilege.  They do it because they don’t have to pay the freight; you do.  They do it because it keeps money flowing in their direction, money from big business, from big labor, and from you.

Because big business wants to stay safe, big business keeps pouring money into political coffers.  It wants friends in Washington, so it buys them and keeps them in place.  Because big labor craves privilege and advantage over unattached workers, big labor keeps pouring money into political coffers.   It wants friends in Washington, so it buys them and keeps them in place.  Politicians, of course, want to stay in place, so they take the money offered them and protect those who give it, thereby protecting themselves.

Naturally, those politicians don’t say that’s why they do it.  They say they are doing it for America.  They say they are doing it for you, even though you are the one who pays; even though you are the one who loses.  Corporations are safe; labor is safe; politicians are safe; you are not.

You take a triple hit: (1) When unions take advantage of the privileges that government grants them in order to gain more money and benefits for their members, the cost of labor rises.  When labor costs rise, prices rise.  You lose.  (2) When corporations must pour millions of dollars into lobbying in order to stay safe, the cost of doing business rises.  When costs rise, prices rise.  You lose.  (3) When the whole labor/business/politician scheme falls through and billions of dollars get washed away, the cost of government rises.  When government costs rise, the tax burden rises.  You lose.

Government doesn't trust you and hundreds of millions of other consumers to pick the winners and losers in the marketplace.  Government, business, and labor will do it for you, your marketplace choices notwithstanding.  When government chooses the winners and losers, it's called crony capitalism.  But crony capitalism is phony capitalism.  It's not the real thing.

That brings me to the second law of political economy:  Regardless of who they are intended to help, every pubic policy hurts someone.  In this case, that someone is you.    

Big corporations and big unions have big government by the throat.  Big government has you by the throat.  It's time to break free.  You deserve better.  You won't get it until you vote the profligate lackies in Washington out of office.

That’s the only way big business, big labor, and big government will realize that if you wanted Chrysler to have your money you’d buy their cars.