George F. Will goes Galt as he rips GM a new one for being revived at with the help of the federal government.
The times truly are out of joint when the most important IPO — initial public offering — of 2010 could come from what was American capitalism’s iconic corporation for most of its 102 years. Andrew Bary, writing in Barron’s, says General Motors “may go public in the second half of this year, and its stock-market value could top $50 billion, more than Ford’s $40 billion.”
This is justice under today’s state capitalism: Ford took on $23.6 billion in debt to avoid becoming dependent on Washington, whereas GM shed much of its debt by becoming dependent. Washington, Bary explains, turned most of its $50 billion loan to GM into 60.8 percent ownership, the United Auto Workers got 17.5 percent for forgoing a $20 billion health-care claim against the company, and Canada’s government got an 11.7 percent stake for $9 billion.
Studebaker shut down in 1966, and American Motors was absorbed by Chrysler in 1987. But compassionate government has stopped the Darwinian culling of the herd.
When Washington bailed out Chrysler in the late 1970s, Alan Greenspan, then a Wall Street consultant, said the danger was not that the rescue would fail but that it would work, thereby whetting Washington’s appetite for interventions. The bailout “worked” in that the government made money from it and Chrysler survived to be rescued 30 years later by an administration that, as a wit has said, can imagine the world without the internal combustion engine but not without Chrysler.
His view seems to be that it would have been better for the country had GM and Chrysler gone bankrupt rather than take the bailouts. It would have meant hundreds of thousands of people in all sorts of industries throughout the already-battered states of the Midwest would be unemployed — and therefore collecting unemployment insurance and straining the already-battered support networks, not to mention the healthcare systems as their insurance benefits went away. But it would have been good for their character to prove that the free market and capitalism is what makes America great.
I wonder what kind of car George F. Will drives?