It was only a matter of time today before the proposed automobile industry bailout was compared to the banking industry bailout of a few months ago. And our winner is…
Michigan governor Jennifer Granholm, per The New York Times:
“‘Washington gave a bailout to the financial institutions, and did not ask a single question,’ the governor said, ‘then lay the blame for the auto industry, which is a victim of this financial meltdown, on the backs of the people who are working on the line.’”
There is no equivalence, rough or otherwise, between the banking and automobile industries.
There’s a reason why so many federal agencies are taxed with regulating the financial industry: it is the engine room of American capitalism. Nearly every economic crisis in American history begins and ends with the financial sector, the latest one included. A virus in the financial sector infects the entire country.
Of industries in the manufacturing sector, auto making is obviously one of the most important. Failure there will affect not just the manufacturers themselves, but will also affect parts companies, dealerships, and even local television broadcasters who depend greatly on dealership advertising revenue. Having said that, the auto industry still doesn’t begin to approach the financial sector. Despite the hyperbole employed by bailout proponents, we can and will survive a meltdown in Detroit.
Every single argument mounted by proponents of the bailout fails to hold water, and I can only imagine that their refusal to consider a pre-arranged bankruptcy where the government would provide debtor-in-possession financing is singly predicated on a desire to maintain current union and dealership contracts. These are the very millstones grinding Detroit into oblivion.
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