With the election rapidly approaching, liberals are working to convince voters to support Obama. Some of the arguments amount to nothing more than saying that Obama is the candidate most likely to put and keep 315 million Americans squarely under the thumb of centralized government. Of course, liberals justify this by describing all the good things that the authoritarians will provide, which naturally doesn’t include freedom.
One of these liberals, Jonathan Cohn of The New Republic, is encouraging voters to think about Obama’s actions when GM and Chrysler were in trouble because according to Cohn, Obama not only saved the auto industry, but the bailout story puts the differences be-tween Obama and Romney into “almost perfect relief.” Cohn praises Obama’s handling of the bailout, claiming it proves Obama understands, and Romney doesn’t, that when the market breaks down, the government should act “to make the industry’s survival pos-sible.” For Cohn, Obama’s interventionist philosophy is superior.
SIDEBAR: Although Cohn speaks of the auto industry as if it were a single entity, there actually are two auto industries in the U.S., one situated in some of the southern states and the other located in the north. As only the northern sector is experiencing financial difficulties, Obama’s bailout is of only two of the three northern companies, not an entire industry. END SIDEBAR.
Most people would agree that the government should intervene in the case of a market breakdown. But it’s hard to see why Cohn calls what happened to GM and Chrysler a “market breakdown.” To a great extent, the labor unions caused the financial difficulties of the auto companies so maybe Cohn is referring to the damage that the monopoly power of labor unions can inflict on firms and markets, but somehow I doubt it. Because it wasn’t really a market failure, Obama’s actions are less defensible.
Cohn claims that Obama saved more than a million jobs, directly and indirectly, by granting government loans to GM and Chrysler, and forcing the firms into bankruptcy to reorganize. According to Cohn, Romney wanted private firms to finance the reorgan-ization under Chapter 11 of the bankruptcy law, but Cohn insists that no private lenders would have helped. So he believes both companies would have been liquidated outright under Chapter 7 instead of reorganized.
Cohn praises Obama’s approach although he also admits that only time will tell if GM and Chrysler can survive in the long term. This is the second bailout for Chrysler, so long term survival doesn’t look good. But then, companies don’t have to work too hard when their losses are guaranteed by the U.S. government. Central planning is not an approach that leads to the best use of society’s resources: bailouts and government guarantees only lead to stagnation and decline in the long term.
Half of Obama’s economic advisors opposed the bailout, yet Obama ignored them in favor of the bailout. He also ignored the rule of law in order to give preferential treatment to unions by giving them a big chunk of both GM and Chrysler. So Obama’s decision appears to have been political, yet Cohn stubbornly claims that the decision is an example of forward looking statesmanship.
Since Obama has proven himself in the auto industry, Cohn sees him as more likely than Romney to bring more government into the financial and healthcare sectors as well. Cohn also sees Obama as more likely to go after “manufacturers and energy companies” that fill the air with carbon. And Cohn is right: Obama would have no misgivings what-soever to exercise central control over just about everything and everyone. Hopefully, voters will not go along on November 6.