Thursday, January 12, 2012

A Screed Against Industrial Policy


5) I want the Broncos to win the Super Bowl, but if they can't I want the Patriots. So I approach the game with a certain amount of equanimity. And fear. The Patriots are very good.

4) It was indeed a pleasure seeing you over the weekend. Thanks for the invite.

3) They are doing Romney a favor: Preparing him for the accusations he will bear when the real contest comes and they are forcing him to defend capitalism which will endear him more to those, like myself, who feel it is under attack. They are also showing they are unqualified for the office. Just as the current occupant will show the same when he makes the same accusation.

2) I have no specific knowledge of how the bond-holders were treated. I read they were treated illegally, but the accusations come from the editorial pages of the Wall Street Journal, which I don't regard as a completely reliable source. 

What rankles me is the blatant unfairness of it. When you save an inefficient enterprise the group hurt the most is the consumer. No one speaks for the consumer. Prices go up, choice goes down. It's a dead weight loss to our society. Full Stop. But it's worse. Because the group of consumers that are hurt the most are the poor. Because a car for the poor is a much greater share of their income. But its worse. Because it hurts the auto worker who works for the company you didn't bail out. In this case that's Ford, Honda, BMW, Mercedes, Toyota etc who employ hundred of thousands of AMERICAN workers, in AMERICA. It hurts them because the American consumer has said, with their wallets, over many years, "We prefer cars from Toyota, Honda, Ford etc." and the government has responded, "Too bad. You should buy from GM." And its worse. Because the current Administration justifies this by saying something that on the surface, is wrong. "We saved the auto industry by keeping it out of bankruptcy." Sometimes they'll use the euphemism for bankruptcy, "we kept it from going under." Horse hockey. They saved GM and Chrysler, and they put both into bankruptcy. There is so much more to object to than how the bondholders were treated.

The philosophy of government picking winners, think Solyndra, ethanol, wind power, is bad for consumers. Year after year, decade after decade, century after century, the evidence is overwhelming the Government is awful at picking winners. The evidence is overwhelming it hurts consumers, the evidence is overwhelming it hurts the poor most. Yet Republican or Democrat, we keep doing it. If the definition of crazy is indeed doing the same thing and expecting a different result, then this is crazy.

And here's how they sell it. "We are protecting (fill in the blank)." Workers, women, blacks, children, elderly, disabled. I would posit, that the vast majority of the time they are hurting the groups they purportedly are helping. Minimum wage laws hurt young workers, particularly young black workers. We should be ashamed of ourselves that over the course of the minimum wage laws we have denied the opportunity for young, less-educated, less-skilled workers the opportunity to gain experience. We have created a semi-permanent underclass bound to the government. Horrifying. 

And its worse. Because who does it help? The well connected. The rich, the powerful. Read Cadillac Desert and tell me I'm wrong.

1) Fascinating. I'm pretty sure I've heard you say, more than once, medical costs in the US are egregiously high because of unnecessary tests and procedures. I'm trying to square that with your statement on risk.

But the other issue is, we have centuries of experience with bankruptcies in the economy. I can't think of one that resulted in "unacceptable" damage. The need for action was manufactured. And yes, I say the same things about the bankers and the banking industry. Big bankers are no friend of mine.


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