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Last week, General Motors
finally declared bankruptcy. Many in government thought $20 billion in
taxpayer dollars would save the company, but as predicted, it only postponed
the inevitable. The government will dump another $30 billion into GM
and take a 60 percent controlling interest for it. Public officials are
now involving themselves in tactical business decisions such as where
GM’s headquarters should move and what kind of cars it will build.
The promise that this is
temporary and will eventually be profitable is supposed to ease the American
people into accepting this arrangement, but it is of little comfort to those
who remember similar promises when the American taxpayers bought
Amtrak. After three years, government was supposed to be out of the
passenger rail business. 40 years and billions of dollars later, the
government is still operating Amtrak at a loss, despite the fact that they
have created a monopoly by making it illegal to compete with Amtrak. Imagine
what they can now do to what is left of the great American auto industry!
In a truly free market, GM would
get your money one way and one way only – by selling you a car you
want, at a price you are willing to pay. Instead, the government is
giving public money to a private company in spite of the market signals it
has been sending. Throwing money at GM does not stop it from being an
engine of wealth destruction; on the contrary, it simply gives it more wealth
to destroy.
Had it been allowed to fail
naturally, the profitable pieces of GM would have been bought up and put to
good use by now. The laid off employees would likely have found new
jobs and all that capital would be in private hands, reinvested in companies
that produce products demanded by consumers. Instead, we are all poorer
now.
Political pressure, rather than
the rule of law, is deciding how to divide up the remains of GM. The
bondholders had billions in retirement savings invested in the company, and
though they were entitled to nearly three times as much as the United Auto
Workers, the bondholders were left with just a 10 percent stake compared to
the union’s 17.5 percent stake. For their 60 percent stake,
taxpayers have a future of constant bailouts to look forward to.
Comingling public control of
private business is known as fascism. While today’s politicians
may feel emboldened with all their new power, history will only repeat itself
as all this collapses on itself. It is the height of hubris for
bureaucrats and politicians to attempt to control the market and the freewill
of the American people. In the end, the market always wins out.
Maybe one day future generations will wise up and allow free markets to
function and thrive without the albatross of government around its
neck. For now, it looks like those in charge have not learned the
lessons of the past, and have doomed us to repeat those mistakes once again.
Ron Paul
www.house.gov/paul
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other articles by Ron Paul
Congressman Ron Paul of
Texas enjoys a national reputation as the premier advocate for liberty in
politics today. Dr. Paul is the leading spokesman in Washington for limited
constitutional government, low taxes, free markets, and a return to sound
monetary policies based on commodity-backed currency. For more information
click on the Project Freedom website.
Published with the
authorization of Dr. Paul.
Copyright Dr. Ron
Paul
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