GM to shed 1600 jobs this week

Expensive delayed bankruptcy.

Such foresight!

Such insight!

Such stupidity… let this thing go through bankruptcy, clear out the non-productive staff, buildings, and dealerships, get real contracts that can keep the company afloat and end this insanity. Our money has gone done a rathole for the thing that everyone said they should do last October.

It is not ‘too big to fail’: it was failing well enough without government help. Now it fails with it and lots of taxpayer money paying for something that should have been done months ago.

ajacksonian on April 20, 2009 at 3:11 PM

This “too big to fail” idea comes out of the same rotten stew of Keynesian economic theory that wound up bleeding away the dynamic energy of Western economies in the post-New Deal era. The fundamental mistake is the belief that losses and business-cycle downturns can be “socialized.” Even if Obama’s “stimulus” plan hadn’t been a ridiculous buffet lunch of big-ticket giveaways to political allies, it would still have been based on the idea that government can siphon money from the overall economy – the taxpaying chumps of today, and the voiceless taxpayers of tomorrow, who will be born with a pair of bloody holes in their necks – and use that money to cushion the losses of specific industries. Socialism is not about achieving success, but managing failure: we’ll make everyone hurt a little, so that no one has to hurt a lot.

The GM job losses are fallout from the collapse of that strategy. The socialist is betting that no one will hold him accountable for the jobs that quietly disappeared, or were never created, across the vast economy – he’ll be congratulated for “saving or creating” X jobs, without leaving any fingerprints at the crime scene where Y jobs were strangled in their sleep. This is an especially appealing policy for the socialist when the X jobs he’ll be “saving or creating” are concentrated in a single part of the country, or belong to a politically connected labor union, or both.

Of course, the modern liberal is very interested in socializing success, too. When the business cycle is down, government demands money and control to “fix” things… and when the business cycle is up, the liberal is even more strident in his demands that more money be placed in government’s hands to address various social needs. Resisting state control in an economic crisis is painted as treason, while trying to hold onto profits during the boom years is denounced as greed. It hobbles the economy and keeps it from growing as tall and strong as it could, during the up side of the business cycle. Instead of following the conventional wisdom and congratulating Clinton for economic genius during the boom 90s, we should be asking whether his early-90s tax hikes and regulatory binges, and the frightening year of the HillaryCare shadow looming over the economy, resulted in the thin, rapidly expanding bubble that popped at the end of the decade.

The General Motors debacle, like the Fannie Mae crisis before it, shows the ultimate folly of trying to control the business cycle by socializing losses: our socialist-dominated economy finally incurred losses that were too big to socialize. Politically forced into an unsustainable business model, the housing and finance industries became a game everyone crapped out on, and the rest of the economy couldn’t afford to cover their losses. Now it’s the same story at GM, pushed into an unsustainable cost vs. profit situation and artificially sustained beyond the point where the market would have dictated its collapse. This time, the cost of socializing these losses is so huge, the socialists can’t hide the pain from the rest of the taxpayers. Everyone is feeling it, and everyone is watching the socialists scramble to pull off absurd schemes like stealing trillions of dollars from the future to keep their game running. Instead of allowing Washington to devise complicated schemes to pay for complicated schemes to manage the fallout from the failure of previous complicated schemes, it would be wiser to allow the natural cycle of risk, reward, loss, and recovery to play itself out. Letting things continue as they have gone since the Sixties will just set us up for the next impossibly huge, systemic failure we can’t afford to absorb, and eventually we won’t be able to heist enough money from the next decade to cover the losses.

Doctor Zero on April 20, 2009 at 4:31 PM