Sunday, September 21, 2008

Corporate Buyouts

I do not claim to be a economist. And I certainly do not know everything about government or Capitalism. I just cannot understand how all these corporate buyouts can be productive. In my atrophied mind, it would seem that corporate reliance upon the government will produce the same detrimental effects as domestic government programming. In the same sense that I believe, as a Conservative, that domestic government programming, such as welfare, promotes laziness, a lack of sense of domestic responsibility, and produces a society that is dependent upon government for their domestic commodities, these corporate buyouts will take away what little accountability corporate gurus must practice. As long as corporations can rely on the government to pull them out, they no longer must practice prudence in making corporate decisions. In my opinion, bad management should lead to a closed company. This will allow other, better managed, companies in the same industry to come in and take up the slack and make higher profit, which stimulates the economy and promotes employment.

Think about it on a smaller scale. What if the local McDonald's is having financial difficulty due to bad management. If it is bailed out by the government, or any other entity for that matter, it will still just barely be surviving, with its employees left wondering when their last day will be. But if it allowed to fold, then all the customers will now go to other restaurants, like Hardee's or Wendy's. This will boost their profits, and they will then need to expand their businesses. True, that the employees of McDonald's will lose their jobs. But if other restaurants are diligent in absorbing the business the McDonald's left, then they will have to hire these people.

And of course, there is the seperate issue of them using OUR TAX DOLLARS for this buyout. This infuriates me. Government using our money to help profit-oriented private businesses!? My hard-earned money paying the bloated salaries of the aristocracy or the Bourgeoisie? This is very close to Socialism, and it scares me. Not in the true sense of the word, of course. I am a Christian and I have a profound knowledge of where my future lies. But I still hate to see this society fall over such asinine decisions. Friday, the epitome of Liberal Democracy Nancy Pelosi* gave, not loaned, GAVE the big three automakers 1 trillion dollars. First, Billions to Fannie Mae. Billions to Freddie Mac. Billions to AIG? And now, a cool TRILLION to the big three, no strings attached? Why? If they cannot make it by producing a better product at a competitive price, let them die. Then better managed automakers can come in and claim their customers. That is Capitalism!!!

I cannot articulate this as well as I would like. I only study political science and the economy in a amateurish manner. So I want to post something I think expresses this much better than I ever could. On September 17, 2008, in the first hour of Brian and the Judge, Judge Andrew Napolitano expressed his views, which are virtually identical to my own, very well. I am posting this on this blog entry. It is from their podcast, which may be downloaded at the link above.

Feel free to leave a comment and let me know your thoughts.




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* - Footnote, this isn't an anti-liberal post. George W. Bush's support of these buyouts is equally appalling. It is amazing that not only have Conservatives failed to oppose this, there hasn't even been a call to debate these measures.

1 comment:

Joseph said...

I saw this and thought it was interesting. This was before the government decided to buy all the bad debt from banks.

http://www.cnn.com/video/#/video/politics/2008/09/18/lkl.economy.wed.cnn?iref=videosearch

Larry King had on his show Ali Velshi, CNN Sr business correspondent, and Dave Ramsey, financial expert and asked them this (it was posed to Ali but you could see Dave shaking head in agreement)

Larry King: Was the AIG bailout right?

Ali: 85 billion dollar question, Larry. AIG, think of it not of not as an insurer, thank of it as an autocompany. IF an autocompany were to go out of business, its not just the autoworkers. Its the tire makers, the seat makers, its the windshield makers.

AIG is the insurance equivalent of that. There are many many companies tied to it. Nevermind that they are not just insurer for people, they insure oil rigs when hurricanes hit, they insure hollywood movies, they insure airplanes. Business exists because they can budget for the risk that can happen. So AIG would have had a far more substantial ripple effect if it were to go bankrupt than Lehman brothers or Bear Stearns (sp). Bottom line, Larry, the world can do without a couple of investment banks, insurance is a little more crucial to our economy.

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