Stand Down, Governor Rounds
Governor Mike Rounds of South Dakota has officially jumped on the bailout wagon:
Gov. Jennifer Granholm and five other governors called on Washington on Thursday to take “immediate action” to help the country’s struggling auto industry amid a growing awareness and fear of potentially huge job losses.
“While all sectors of the economy are experiencing difficult times, the automotive industry is particularly challenged,” the governors said in a letter to U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke asking them to make more credit available to car buyers.
[snip]
“We urge that you use your broad regulatory authority to ensure that your continued actions help promote liquidity within the U.S. auto industry,” it said. In addition to Granholm, Govs. Steven Beshear of Kentucky, Ted Strickland of Ohio, Ruth Ann Miner of Delaware, David Paterson of New York and M. Michael Rounds of South Dakota signed the letter.
Their letter said U.S. automakers directly employ 355,000 workers and another 4.5 million Americans work in sectors supported by the domestic automakers.
If GM or Ford were to collapse, it would wipe out part of the auto parts supply chain, and even healthy international carmakers assembling vehicles in North America would suffer disruptions until they found new sources of parts, said Sean McAlinden, chief economist and vice president for research at the Center for Automotive Research in Ann Arbor.
“The loss of taxes and income (from an automaker going bankrupt) would far exceed the bailout money,” he said.
[ed: bold added]
I do not know the precise motivations behind Mike Rounds signing this letter, but the fallacy of “too big to fail” seems to be infecting folks across the nation. Does no one read history any more? Does not one person in a policy position understand that throwing money to companies which are engaging in unhealthy business practices (translation: dying from the inside out) only serves to temporarily postpone the reckoning, and inevitably prolong the agony?
Do. Not. Reward. Bad. Behavior. Unless, of course, you want more of it.
I do not want to see GM, Ford or Chrysler fail. I do understand their importance to the US economy. I am amazed by their histories and appreciate what US automakers did to establish automaking worldwide. Nonetheless, I would rather see a company fail than to see my tax dollars going to prop it back up. Such meddling in the business of business is not the role of the US government as found in any reading of the US Constitution.
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