Last time, we talked about GM. However, the deal for Chrysler is no better (and in fact may well be worse in the particulars since it gives the UAW a controlling interest in the company. John at PowerLine lays it out:
The Chrysler reorganization is shaping up as another milestone in the decline of the rule of law under Barack Obama. We’ve said for quite a while that bankruptcy is the only viable option for Chrysler and General Motors, not–as Obama claims–because they don’t know how to make the right kinds of vehicles, but because their unsustainable union contracts make it impossible for them to be profitable. That reality has now been turned on its head, as the administration has tried to bully Chrysler’s secured creditors into going away, while the United Auto Workers Union, solely on the basis of political clout, would be paid at an implied rate of 50 percent and would emerge owning 55 percent of the company, with the government also holding a stake.
This is banana republic capitalism at its worst. Political influence, rather than the law, dictates the rights of the parties. When some of the secured creditors refused to be intimidated, Obama libeled them in the press, saying, outrageously, “I don’t stand with those who held out when everyone else is making sacrifices.” Actually, under Obama’s plan the politically favored parties, principally the UAW, will benefit–will steal money, to put it crudely–from the parties who held out. Those parties call themselves the “non-TARP lenders.”
I was reading a bit of Hayek last night and came across a part in his book, Road to Serfdom, in which he lays out the argument that just because something is “legal” (that is, is done in accordance with authority given by a government) does not mean that same thing is in accordance with the rule of law. As John points out here, this principle applies directly and exactly to what the federal government is doing with Chrysler. The government is defining as “legal” something which is definitely not in accord with the rule of law (which says that justice is blind because everyone is treated equally–equal treatment, not equal outcomes) and then saying that those who refuse to simply roll over are bad, wicked, evil people (using the old-fashioned envy approach to get the people stirred up).
Ach, this is sickening.