Column: Auto Bailout Sets Bad Precedent
This story was written by Peter Schaeffing, The Daily Gamecock
Right now the U.S. is at a crucial juncture. Facing a slew of failing companies, our beleaguered economy seems poised to take another hit. As the government decides how to address the current problems, it must choose between immediate comfort and long-term stability.
With the Big Three car companies on the verge of a nasty end to their histories, Congress is being pressed to spare a couple dozen more billion dollars to come to their aid. If Congress acquiesces, the Big Three may be saved. At least for now, that is.
The American business world needs to learn the hard way that fiscal responsibility and shrewd marketing and investment are necessary components of the formula for economic success. American car companies have failed repeatedly to respond to and accurately predict the desires of the car-buying public. Their foreign competitors, in no such dire straits despite the slumping economy, have outperformed them by every economic measure.
The market has spoken. Chrysler, GM and Ford have squandered their home field advantage and now must face the unhappy consequences. This is the nature of the market, and for the government to manipulate it in such a way that economically inviable companies are given a mulligan is ludicrous.
Sure, giving the car companies a helping hand would give the economy a shot in the arm. The reality is that this is as artificial a solution as anything could be.
This bailout attitude is the problem we should be fighting. Reckless investment and dubious loans naturally come with the tagline "high risk, high reward." By giving bailouts to corporations that have lost on their excessive risks and inept management the government is effectively eliminating the high-risk part of that proposition. To set a precedent that makes such a speculative strategy "low risk, high reward" encourages a massive abuse of the system.
This is a time when one of the few weaknesses of our governmental structure is woefully exposed. Because of the nature of the presidency, when Obama takes over he will undoubtedly be trying to live up to his mantra and to the impossibly high expectations of America by delivering immediate and positive change.
It doesn't matter if this change will be seen as beneficial 10 or 20 years down the road. Rather, the important time frame is four years. Because of that much beloved institution of the four-year term of the presidency and that often sought after second term, Obama is likely to pursue policy changes that act as an immediate boon regardless of the consequences that will be dealt with decades down the road.
The problem is, what's good in the short run is not always good in the long run. It's a lesson that we may soon learn the hard way.