Jeff Neal for C.U.R.E. - Certain Unalienable Rights Endowment

GM’s Alive. Rule of Law is Dead.

In Opinion on October 23, 2012 at 9:13 pm

After last night’s spat over Mitt Romney’s OpEd (Let Detroit Go Bankrupt) I’m again doubly perturbed.  Mr. Romney did recommend ‘post-bankruptcy’ government guarantees, contrary to his opponent’s statement to the contrary.  He won the bogus ‘fact-check’ battle.

Since it’s against their nature to admit that their messiah made a mistake, Romney’s critics are saying ‘post bankruptcy’ guarantees would have arrived too late.  They thereby reveal their utter ignorance about finance – Mitt didn’t mean ‘let it happen and THEN provide guarantees’ – he meant that the government should have offered the guarantees up front as an incentive for private capital to do the bail-out.  Mitt makes a distinction without a difference. Mitt reveals his latent views that government can ‘fix’ things (ergo my ‘doubly perturbed’ state of mind).

So, Mitt was being honest about having recommended a policy proposal that was different only incidentally, not fundamentally.  In either case, the government would [wrongly] subsidize and perpetuate a failed business model.  [For brevity, I won’t address the flaw Romney should – the political, illegal recognition of the unions’ claims over those of the bondholders.] The market, millions of players making billions of decisions, and not political payola considerations, should have determined the right re-allocation of resources (plants, labor, technology, etc).

“GM is alive” and “private markets wouldn’t have done it” and other statist defenses of the GM bail-out reveal a fundamental misunderstanding of free market capitalism.  Instances where the government exercises the power to TAKE our money and risks it where we wouldn’t is the ultimate conceit of government power. The market doesn’t guarantee success or profit. It does guarantee an efficient, best possible (again, not flawless) allocation of capital that does not leave any of the losers (GM bondholders) wondering if political pull rather than merit and the rule of law are the cause of their loss. The market and rule of law are inextricably connected – severing that connection is tyrannical, unconstitutional and destructive.  The GM bail-out (both Obama’s AND Romney’s version) was an impeachable offense. It was antithetical to the Constitution and freedom.

So, regime risk – a horrible new term in our lexicon – is the darkest cloud hanging over our economy.  Though I’m not Romney’s most ardent fan, I grant that the specter of regime risk will be significantly reduced on November 7 in the event the current regime is fired.

I pray.

  1. It’s close, so they say, but the end is near. Prepare yourself emotionally.
    Join me on a distant island if you want. I’ll have Direct TV accessing only SEC football, ACC hoops, and porn.

    Douglas D. Olson
    Monument Realty. Building Success.
    T 202.777.2004

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