Automakers Next In Line for Taxpayer Handouts

Daniel Mitchell wrote a great op-ed piece on CNN.com entitled "Say no to the auto bailout." I find myself in complete agreement with what he writes, especially the part about rewarding bad management and inflexible labor unions. Some estimate that up to 10% of the American work force is somehow related to the auto industry and that the government has to intervene to ensure that thousands of Americans aren't suddenly thrown into unemployment.

But throwing more money at the Big Three can't be the answer. Like Mitchell advocates, Ford and GM will be better companies if the free market handles the bad management and organizational choices they've made these past decades. I mean, the federal government has long pushed American auto makers for more fuel economical models and the auto makers resisted. Instead of thinking in the long term, they continued building gas guzzlers because of high profit margins and low oil prices. But everything pointed to oil eventually shooting up in price. What was the Big Three's plan B for $150 per barrel oil? They didn't have one and now they're burning through their cash reserves and want the U.S. government to throw even more money into the fire.

I say let them fail. American companies must move away from the moral hazard that has trapped too many of them into lining up for government handouts. It's almost laughable that the shining beacon of free market economics has so suddenly plunged into overt government intervention, manipulation, and flat-out take-over. Republicans frequently accuse Democrats of being Marxist socialists, but any Republican that voted in favor of a bailout had best lower his pointing finger. I can't believe Ford and GM need the U.S. government to tell them to manufacture quality cars that get good gas mileage. They deserve to get their asses kicked by Toyota and Honda. Maybe things will get bad enough, so bad that union contracts will go down right along with the companies they've effectively hamstringed. Perhaps something new and lean could arise from that rubble.

All I know is, I don't want another insurance company, or investment bank, or corporation rescued. The buck stopped with AIG as far as I'm concerned.