Former Republican presidential candidate Mitt Romney, seen here looking nice and smug, has a new opinion piece in the NY Times. While Democrats are making the case for an auto industry bailout, Romney says that faith in the Church of the Free Market requires the government to let Detroit fail (along with millions of jobs) so that it may be ressurected in a more efficient, business-friendly form. I'll leave it up to the reader to make his or her own decision about whether or not this is a good idea, but to help you out, here's a video of NY Times columnist and Nobel Prize winning economist Paul Krugman explaining why Romney's opinion is ridiculous.
This debate is sure to rage on through the first hundred days of Obama's administration, if things don't get worse before he takes office. CubPub will keep you in the know.
UPDATE: A reader tipped us off to an article over at The Economist which weighs in on the debate, coming down on Romney's side. There's also an article at The Nation that weighs in ... and comes down on Krugman's side. Be sure to stay informed.
Not sure sure
The Economist disagrees with you (or Krugman): http://www.economist.com/opinion/displaystory.cfm?story_id=12601932
Let them go.
These auto companies have earned themselves a bankruptcy. Why NOT let them go bankrupt? The have built "tough, built Ford tough" manly 4x4 trucks that guzzle a boatload of gasoline per mile, army-type Hummers that are appealing to absolutely no one with relatively still high gas prices, and are proud of it. Every Sunday afternoon I watch commercials where the Big Three brag about how they make the best, toughest, biggest, strongest, most "American" cars on the road.
Well, guess what, they can keep making them that way and drive off a bridge!!! Because the only people who want them made like that are billionaires and big-shot rappers in Hollywood who think they're pimps. They've had time to adjust (over a decade) while Toyota has eaten into, what I guess has to be, the "un-American" car consumer.
Especially, all you libertarians out there. Every young person nowadays seems to say laissez-faire for everything. "Get government out of my life! I want to have an abortion whenever I feel like it! Get out of my body! I want to marry whoever I want to! I want less intervention in the economy! I want to have more freedom no matter the responsibility that comes with it!" HERE'S YOUR CHANCE TO MAN UP AND SHOW SOME BALLS (OR WOMAN UP AND REPRESENT YOUR OVARIES).
same situation as lehman or aig
AIG earned itself bankruptcy too ... but the government bailed them out. it's a matter of how important these corporations are to the economic environment, not whether or not they deserve it. the government took the same approach to lehman, and look where that got us - it dug us an even deeper hole. i'm siding with krugman, we can't take a chance on this. that doesn't mean the government has to write the corporations a blank check, their restructuring and revitalization should be a part of the deal, but the government can't let the ball drop on this.
Fair enough.
Fair enough. But, as a small yet still valid taxpayer, I don't want my money going to a company that is proud of the way they have built their cars over the past two decades. They let Toyota eat into their market share and were proud of making their "giant, American cars." The Big Three jetted their CEOS into Washington on SEPARATE, GAS-GUSSLING PRIVATE PLANES. Are you kidding me? These industries are not FAILING. THEY ALREADY HAVE FAILED. And they will continue to stay failed until they change their leadership. Why did they not think of building more hybrid, fuel-efficient cars? I've heard about Ford's Volt, but I don't even think that it's available on the market yet-- or, if it is, it just got put on the market. These companies will take your money and my money and run with it into the ground. If you're a student at Columbia, then you will be living to help to pay off this giant bailout of the auto industry. I say enough is enough.
that's where the government comes in
the government should force them to make the changes you mentioned as part of any bailout deal, and make sure that they are held to those standards. there should also be a way for the people to benefit from the bailout, other than not being subjected to more economic disaster. there's no reason why the companies failing should mean that the gov cant give them the money while forcing them to do the restructuring that romney talks about
I don't know.
That sounds pretty socialist to me-- in every bad sense of the word. You want government to come in, pour money into these industries, and force them to make cars in one particular way. That sends a pretty scary message to all other industries out there. One, that the government will bail you out if you think you are going to fail now. And, two, that government will tell you and force you to conduct your industries in the way that government wants you to. I'm not an expert in economics, but I think one of the reasons why Russia had such a hard time economically during Yelsin's administration despite being more free-market than it was at any point in time was because corruption and not playing by "the rules of the game" was so pervasive for literally decades during the time of the Soviet Union. No one in Russia knew what kind of economic environment they were in and so were tepid and made decisions that were not necessarily reasonably, economic decisions that would help the economy. The emphasis that I'm trying to make is that it was an unknown economic environment for businesses.
And it's not like I haven't heard of the Great Depression and the New Deal, but when does it come to an end?
don't throw throw out the socialist card
that would not be the government forcing the car companies to make cars in a particular way, so don't try to label it as socialist. it is the government giving aid to the companies on the condition that they undertake the very business reforms that mitt romney says they will inevitably have to do to stay afloat. they're gonna do it one way or another if they want to stay relevant, so why not allow the government to give them aid while having them do what's best for their businesses and for the nation. it's what's fair in return for giving them tax payer money. this socialist BS is wearing thin. this isn't the government forcing anything, it's the government giving money on the conditions it wants, which is completely fair. and it isn't like this will happen in all occasions, the issue here is that these companies are involved in too many aspects of our economy to go under and cede the market to the foreign production. why can't people think long term?
Don't try to throw the socialist card at me.
Don't try to throw the socialist card at me. I'm tired of hearing people say, "OH, he threw the race card! Did he just throw the sexist card?" How many cards are in this crazy deck. I mean, at some point, this liberal sensitivity is just the opposite of what it is. Instead of being color-blind or genitalia-blind, you look at someones color or (pardon me) their genitalia to see whether or not you have to censor what you say even if you would have said it regardless of race or sex. So don't try to throw any cards my way. I try to call it as it is. I'm not going to be scared away just because you suddenly decide to accuse me of being McCarthy.
I gave my dues to the New Deal at the end of my post. I provided the rationale for saying no to an auto bailout-- because it creates an unknown economic environment for businesses. So I don't give a rats behind whether or not you say I used the socialist card or not.
The problem with giving the free money is that it's hard to believe an industry that has had so much time to adjust to the auto industry environment. It's not like Toyota just popped in from nowhere in the sky and had 20 plants across America and suddenly owned so much of the car market that Big Three CEOs are peeing their pants right now. So when you say, "they're gonna do it one way or another if they want to stay relevant." I could not more strongly disagree with you. What kind of cars is Ford known for? What kind of cars is GM known for? Big trucks. That's what they're known for. And they've been known for them for decades. "So why not allow the government to give them aid while having them do what's best for their businesses and for the nation?" Because why should I trust a group of CEOs that have knowingly driven their companies into the ground and who show up in Washington by the means of three separate, gas-guzzling private jets asking for free money? At some point, the credit crunch is going to hit every industry, because CREDIT IS IMPORTANT FOR EVERY INDUSTRY. So I reason and responsibly ask you now, "Why not keep the credit industry afloat as a means for other businesses to stay viable and just let other industries go?" Because eventually, the credit crunch will hurt every industry. Are you prepared to bail out every industry that tetters, or worse, pretends to tetter over the edge?
you're the one who likened aid to socialism ...
so don't try to throw it back on me. you say the companies are known for creating big trucks. guess what, they're now attempting to do the responsible thing and think long term. ever heard of the volt? if ford goes bankrupt, chances are the damn thing won't see the light of day, and that car has the best alternative fuel technology seen to date. to condemn the companies for not reforming without giving them a chance (and without recognizing that they never had the impetus to do so - blame the consumer as well) is asinine. furthermore, i don't see how you can fault the car companies for being irresponsible, then turn around and say it's fine to give money to AIG or the financial industry. the financial industry was even more irresponsible and guess what, the collapse of the auto industry will definitely have an impact on the economy. in this climate, it doesn't take much to push it a little further towards disaster, as krugman pointed out in the video. millions of people lose jobs, then their houses, don't spend as much, while the stock market panics over the collapse. not to mention the fact that we will be ceding yet another aspect of production to foreign companies, further weakening our position in the world economy. you think economists are worried over these companies for nothing? my reasoned answer to you is that the collapse of the auto industry is very important in the midst of this crisis, even though you would like to think otherwise.
I honestly don't have anymore time.
It's three in the morning so I'm going to keep this short:
1) When does bailing industries out end? When does it end? Will all companies that are tettering get bailed out? The credit industry, as I said, very much affects every industry. (This is not to say that the auto industry can't affect other industries or the economy for that matter because it will. But the credit industry is a source of the problem. Furthermore, the financial industry played by the rules of the game-- as far as we know now. They went after profit where there was a legitimate means of doing it. The rules simply weren't set up well. The auto industry has not even seemed to want to make more fuel-efficient cars. For example, the Hummer came out years after the Toyota hybrid came out and gas prices were rising.) So what industries should be bailed out and which ones shouldn't? All I'm trying to do is set a limit to where free money should end. (Notice how I said that I'm trying to "reason and reasonably ask you.") If you think the auto industry should be bailed out, then what happens if the telecommunications industry tetters? What happens when retailers tetter? What will you do? Give more money? This is not an insult or an attempt to mock you. But really what will you do? How many industries?
2) I was going to keep going. But it's too late. But I look forward to reading your response.
of course the government
of course the government can't just give money to every company that is on the brink of disaster, but in this case, there are no more options (bankruptcy is not a realistic option, because the current credit squeeze could quickly turn that into liquidation). there have to be guidelines and reasonable provocation for bailouts, and the the panic over the car industry is definitely reasonable. nobody can say where the money will stop, but the one thing we can say is that if there is a chance that a collapsing company will endanger the entire economy, then the government should be prepared to do something about. if the telecommunications industry comes with a request that is not valid, then they should not be bailed out; if there is clear cause for concern, then the government should try to engineer something, not necessarily a bailout (as in the case of the merger of washington mutual and jp morgan and chase), but something to stave off more trouble. if there was any other option, i would be along with you opposing this thing, but from what i understand, there isn't really any other compelling or realistic solution. we can't take a chance on this and let it dig us a deeper hole, as lehman did. so, in short, of course we shouldn't give money to every company that asks, but only those whose requests are valid and substantial, and only as a last resort.
secondly, your assertion that the credit industry was playing by the rules is misleading. they were playing fast and loose with the rules, lending to people it was clear they shouldn't lend to, like people who don't have jobs. they were engaging in other actions that the corporations knew were shady, but did not care to stop because they were turning massive profits. in short, they were irresponsibly operating on short-term goals. if you're willing to give them a break, then you also have to give one to the car companies - they, too, were playing by the rules, thinking short-term and doing what would make then money immediately. they were only doing what consumers wanted and making money, just as the credit companies did before they screwed themselves over. your analogy isn't apt.
completely agree
i completely agree with you 100%
Krugman
Krugman is a fool. A liberal, New York Times-award winning fool. I hate to say it, but Romney is right. Why side with a wonk-ish professor from Princeton who has no actual business experience over a man who has turned real businesses around and made his living by actually working in the world where Krugman only can speculate.
difference between running business and running an economy
lots of people know how to run businesses for profit. that's what the financial industry had been doing up until the way they got their profit put our entire country in danger. there is a huge difference between knowing how to run a business and knowing how to manage an economy, and we've seen that through this financial crisis. what's in the interest of the free market isn't always good for the rest of us, or have you not noticed? krugman isn't respected for nothing.
Krugman
Krugman is a fool. A liberal, New York Times-award winning fool. I hate to say it, but Romney is right. Why side with a wonk-ish professor from Princeton who has no actual business experience over a man who has turned real businesses around and made his living by actually working in the world where Krugman only can speculate.
Say Idiot!
Do you think there might be a slight difference between running a company and running a superpower. I mean really, my seven year old daughter can run a lemonaid stand, ergo, she must be ready to run Oracle or Walmart. Stupid ass librarian.
Church of the Free Market?
Church of the Free Market? What is this? Well, we definitely know where Bailey's Original stands.
can't be sure
he accused the democrats of throwing money at the problem in an earlier post, so ...
Why did no one ask?
Why did no one-- out of three presidential debates and countless interviews and press conferences-- ask Barack Obama whether he would let the Bush tax cuts expire or "set" taxes at the same level as Clinton as soon as he gets into office? That would have been an Emmy-award winning question had left-wing journalists not gotten a hand-up-the-leg feeling every time the thought of Obama. The question posed by the moderator, whose name escapes me for the moment, is a brilliant question. No doubt, too late now to ask the man who walks on water.
what?
It's been stated that Obama was going to let the Bush tax cuts expire when they came to an end, numerous times. That would be a return to Clinton era tax rates that will allow him to get more revenue without raising taxes for the time being.
OK.
OK, so you're telling me that the American people clearly, CLEARLY understood (because thats the job of the press) the fact that Obama was going to do nothing on taxes for ONE OUT OF HIS FOUR YEARS IN OFFICE? For a quarter of his time being president, nothing would be done to "spread the wealth" around? REALLY? Why do you think that the question about Obama and taxes right at the end of the Youtube interview (around 9:20) attached to this post show confusion among the panelists? Watch the video first and then you can ask "what?"
The time.
Actually. The question that the moderator asks is at about 9:40/ 9:50 right before the video ends. But, please, watch it. It might enlighten some people.
wrong
just because he's not going to raise taxes immediately doesn't mean he won't be doing anything on taxes. the tax break he promised to the middle class in his campaign is integral to his economic policy, and he hasn't said anything on that yet, so we can only assume that it's still in play. how can you fault him for simply letting the bush tax cuts expire in order to fund a health care plan and create a more fair tax policy? that's ridiculous. plus, many people hit him over the head about not raising taxes in a soft economy ... well, here it is. looks like he's taking the lesson to heart, and going about the tax issue in a more efficient way.
The problem.
See, the problem is that Obama is a man of words. He spent TWO YEARS in the senate before deciding to run for the highest office in the land. So, he has no record. All people have to go on is his words. His rhetoric. That's it. Period.
He said he was going to give us universal healthcare. I expect that to be given to me sometime soon after he gets into office. There's a reason why "the first 100 days" is a famous phrase associated with new presidents. What I find ridiculous is that there will not be anything done on healthcare until 2011. 2011! Hello??? Obama's term ends in 2012! And, according to Krugman, the legislation will only be put to Congress in 2011. Let's be generous on this uselessly, miserable Congress and say that they actually do pass it in 2011. And that's an extraordinarily generous estimate for those fat-cats in Washington. I'm thinking a lot of people who voted for Obama would have had second thoughts about doing so if the media did a better job of making Obama clearly say that he would not do anything on healthcare, or maybe the slew of other things he promised during the campaign, until THREE QUARTERS OF HIS PRESIDENCY HAD PASSED. That the earliest they would get anything would be three years after he takes office.
So, when you say, "Plus, many people hit him over the head about not raising taxes in a soft economy... well, here it is." I say, "Obama promised me universal healthcare, a strong defense, a fix to Social Security, a fix to the environment, etc., etc. Plus, yes, Obama did say he would not raise taxes on anyone making less than $250K a year. If you ask me, that combination of not raising taxes yet still giving me great programs and fixing all of these problems DOESN'T FIT. But, HEY, ALL I HAVE TO GO ON IS HIS WORDS. SO DO IT PRESIDENT-ELECT OBAMA. DON'T RAISE MY TAXES AND GIVE ME MY PROGRAMS AND FIX EVERY PROBLEM OUT THERE. I'LL HOLD YOU TO YOUR WORDS."
are you insane?
you seriously expected obama to deliver on healthcare, the environment, defense, and all of the issues you listed, in his first hundred days, in the midst of an economic crisis? that's ridiculous, and you must know it. campaign promises don't translate into responsible, pragmatic policies suited to the situation we're in. and all you're doing is inferring obama's policies from punditry ... obama himself has never said anything along the lines of what krugman or the other pundits said. you can't say that obama will not deliver on healthcare until 2011, because you don't know that. it's speculation. anyway, you act like these issues are going to be solved immediately with no resistance. the likelihood is that obama is going to meet with some resistance on many of these issues, and will have to take time to work out compromises that will get passed by congress. that means healthcare may not get pushed through until the end of his term, but at least it will be done, hopefully. be realistic.
what are you smoking?
i don't know. . . i mean, i guess i'll try to be REALISTIC and hold obama to his word on so many of his UNREALISTIC campaign promises
ridiculous
you're being ridiculous ... how about realizing that the playing field has changed dramatically from where it was even two weeks ago ... policy was bound to change, and for you to criticize obama for adapting pragmatically to solving the problem rather than being an ideologue and bullishly sticking to a plan that's not working (like bush) is ridiculous. i bet if mccain had to adapt his policies to this economic mess, you wouldn't bat an eye.
By the way.
By the way, watch Krugman try to downplay expectations for Obama at 8:20. So, Obama was just going to put on a show for the American people and not really get anything done until he is about to leave office? Listen to Krugman say, "THERE"S GOING TO BE LEGISLATION PUSHED FOR THINGS ON HEALTHCARE BUT THAT WASN'T EVER REALLY GOING TO HAPPEN. WASN'T EVER GOING TO GO INTO EFFECT UNTIL 2011." Maybe Krugman or Obama should have been straight with the American people and told them that before the election, huh? Then watch Krugman walk away like a dog with his tail between his legs as another panelist corrects him.
Here.
Here you go, Bailey's Original. Hopefully, you can post that video too. Here's a clip of Romney supporting his plan on Morning Joe. I believe he can also be seen on countless other respected news programs as he went on a news blitz right after his piece was released.
Clip: http://www.youtube.com/watch?v=VZEKvLFXPWQ
I just didn't want him to just look "nice and smug" in a picture.
Great Depression Analogy
As much as libertarian economists like George Will cringe at the thought of rescuing an insolvent company, this is a historic second-chance not to incur major economic disasters because of our demonic fear of the government. We've learned since the 30s that government spending can fix large and small economic problems without sacrificing the economy's market principles. Do we need the same debate all over again?
Why can't Romney's restructuring take place if companies accept temporary govt aid?
completely agree
you are so right
Why can't.
Why can't Romney's restructuring take place if companies go into bankruptcy?
according to krugman
according to krugman, chapter 11 bankruptcy is dependent on being able to get lines of credit, which is precisely what's wrong with out economy right now. if the companies go bankrupt and then can't get credit, they will be forced to liquidate themselves, which means they'll be gone entirely.
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