The Kiplinger Letter Forecasts for Management
the following observation in the November 7, 2008 edition: “Does
Uncle Sam have a choice on bailing out the Detroit Three? Not really.
The three U.S.-brand automakers don’t have enough cash. Miserable
sales mean little money coming in from dealers. Borrowing is out of
the question… [C]redit ratings of all three companies are in
the tank. No one wants to buy them.”
It is obvious to the market place that these entities cannot sustain
how they conduct themselves in a competitive market place. Apparently,
this does not matter to elected officials and bureaucrats. While the
market place will not roll the dice and lend to or buy these companies,
our government representatives seem willing to take our hard-earned
money and roll the dice. After all, it is just taxpayers’ money.
Politicians have a great deal to gain. Both the Big 3 and the United
Auto Workers (UAW) give millions to politicians and provide thousands
of workers for their campaigns.
U. S. House Speaker Nancy Pelosi proclaimed that bankruptcy for the
Big 3 “is not an option.” Instead of allowing the marketplace
to work, Pelosi and company are working to providing billions of our
dollars to support a union and industry that have ignored the market
place. These entities have paid homage to these politicians in the
form of cash and election support. Now, they are seeking their payoff.
They hope, with the help of Congress and the President, to make taxpayers
fund what no rational investors will.
The UAW pushed for decades to gain pay, benefits, and work rules completely
out of line with productivity and the realities of the market place.
The Big 3 went along, believing they could simply pass the costs on
to buyers. Competition has not allowed this arrogance to sustain itself.
Now, Pelosi and the like are moving to reward this arrogance at the
expense of the very people the Big 3 and the UAW have abused and taken
for granted: taxpayers.
We have yet to see whether taxpayers will continue to be used and
abused by the people they elect. The bailouts, approaching $8 trillion,
are rewarding misfeasance, malfeasance, and poor judgment. The reality
check has not yet hit those of us who will be required to fund the
bailout. That reality check is coming. It will be in the form of higher
taxes, inflation, and fewer jobs, and it is likely to be sooner than
Our current political leaders believe that if it throws enough money
fast enough, somehow no one will notice the mess that has been created
through their failure to represent average Americans. Our leaders for
decades have shamelessly engaged in special interest spending and legislation.
What no one has yet mentioned is an arrogance toward the market place
that dwarfs the current financial debacle, including the proposed bailout
of the Big 3. Federal and state employees, the majority of whom are
unionized, mirror the employees of the Big 3 automakers and the UAW.
They have pay, benefits, and work rules completely out of line with
the productivity and marketplace realities. Bloated government payrolls,
benefits, and inefficient work habits are bankrupting the average working
family in America.
The size and scope of government are beginning to dwarf the private
sector. The single biggest employer in state after state is the government.
This growth cannot be sustained. Taxes and fees on citizens are growing
at three to five times the rate of increase in family income. Families
are forced to reduce their budgets to fund government excesses.
Government growth is not benign. It hurts families. Today government
regulates virtually everything we do, and regulations grow by thousands
of pages each year. These regulations impose huge costs on the private
sector, all of which must be passed on to the consumer. Virtually all
regulations now imposed provide no benefit to consumers. However, regulations
provide government jobs. Consumers are hit with a double whammy: paying
for the costs of the regulations with no or questionable benefits and
funding the job of the regulator.
It would be refreshing if our elected officials would do what the
Big 3 and the UAW failed to do. Before our nation bankrupts itself,
our officials must reform government employment practices and reverse
its unrestrained growth. While it would be refreshing to see this happen,
it will not happen with the current political leadership found at all
levels of government.
While Ms. Pelosi may believe the Big 3 are too big to fail and may
squander billions to hold the tide of the marketplace back, her policies
are unlikely to succeed. Our nation is on the road to failure. Unless
we find and support leadership willing to make the right decisions
and reverse this orgy of spending, growth, and regulation, the trip
may be very short indeed.
This column is copyright (c) 2008 by Robert L. Hale and the Fitzgerald Griffin Foundation.
All rights reserved.
Robert L. Hale received his J.D. in law from Gonzaga University Law
School in Spokane, Washington. He is founder and director of a non-profit
public interest law firm. For more than three decades he has been involved
in drafting proposed laws and counseling elected officials in ways
to remove burdensome and unnecessary rules and regulations.
See a complete biographical sketch.
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