by Paul Hein
by Paul Hein
In a recent essay in LRC, Eric Englund proposes a brilliant solution to the financial problems of General Motors: let Warren Buffett, through his company, take care of it. Wonderful! Such a good idea, in fact, that it merits imitation. So let's have Bill Gates, through his company, take care of the problems of Ford, and, maybe, Chrysler. Both of these ultra-wealthy individuals believe it their duty to support the government, and how better to demonstrate that support than by relieving the government of the need to spend billions to bail out the automakers.
It's predictable that some will object to this simple, yet brilliant, scheme. Can't you just hear them? "Why, you can't make these two men bail out these companies!" Quite true. I can't, and you can't. But the "you" referred to by the objectors is not We, the People; it's Uncle Sam, and he can do whatever he wants.
Think about it. The rulers plan to spend about 25 billion, give or take a few billion, to prop up the automobile industry. (There's a certain bizarre justice in that, inasmuch as many of the woes of that industry can be traced to the requirements placed upon them by those selfsame rulers.) Now where is an organization trillions of dollars in debt going to get the 25 billion? It can borrow it, but who do you think will end up repaying the loan? It can simply print it, but whose income and savings will be reduced by the influx of new dollars into the economy? No, gentle reader, the answer is clear: directly or indirectly, the hapless American taxpayer will foot the bill.
What if he doesn't want to? Can he simply say, "No thanks," to Uncle's "request?" Well, I guess he could, if "he" were tens of thousands of determined individuals. Don't hold your breath waiting for that to happen. In fact, I've heard barely a suggestion that the taxpayers of the country rise up in revolt. (Of course, many of them derive all or part of their income from the automobile business.) Many will complain, of course, but complaining is cheap. In the end, they will put a large chunk of their earnings into Uncle's outstretched hand, perhaps noticing that in his other hand he has a gun.
Well, that's my point, sort-of. If Americans consider it somehow proper that, despite their complaints, they be forced to finance Uncle's schemes, why should they raise any objection to his forcing Messers. Buffett and Gates to pump their wealth into the coffers of the Big — or not so big — Three? What is the difference between the State forcing you and me to reimburse it for its spending, or forcing America's richest men to do it?
Do you think it unfair to require just a few very very rich men to bail out the auto industry? Sure it is. So what? Isn't the very principle of the graduated income tax that the rich get soaked, the rest get sprinkled, and a large percentage remain dry? This is the system of taxation, after all, which its proponents invariably characterize as "fair," although linking "fair" with "taxation" is an oxymoron. Oh, if there are a few others with wealth comparable to the pair of gentlemen we're talking about, I've no objection to including them in the plan. Our rulers are not bound by "fairness," or even the law, but they surely realize that the taxpayers outvote Buffett and Gates many times over. You go after the goose that lays the golden eggs, after all.
There's another scheme I will mention, just for the sake of thoroughness. Let the State (remember now, it can do whatever it pleases) require every family to buy a new car from GM, Ford, or Chrysler, within the next year. (Those buying an automobile from any other corporation will be heavily fined and/or imprisoned.) The advantages of this version of the bailout are obvious: the family would have a new car! This surely beats having the money simply taken by Washington and given to the Big Three, less a handsome handling charge, with the poor "contributor" having nothing to show for it. And giving the auto makers money isn't going to solve their problem: nobody is buying their cars. With this scheme, EVERYBODY would be buying them!
So there you have it: a couple of solutions to Detroit's economic crisis. If you think them fantastic, or utterly improper, remember that when YOU are asked to pay your "fair" share of bailing out the auto industry. If YOU can be forced to do it, even though you cannot afford it, why can't THEY be forced to do it? Or, if you MUST do it, why not at least get a new car in the bargain?
Think about it. It hurts a little, but not for long.
November 21, 2008
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