Dec. 12, 2008
FRC has not officially weighed in on the various bailouts simply because the topic is not central to our mission. There is no question that financial irresponsibility, whether by government or business, impacts the family, but we have to pick our battles and the bailouts are not one of them. However, having said that, I do get a number of calls and emails from folks across the country asking for my thoughts on this parade of bailouts. I am not an economist, but I have worked with and on budgets in the private and public sector and studied the basics of our free market system. From that perspective, this latest failed effort to bailout the auto industry raises a number of questions that require answers.
First, where do the bailouts stop? Certainly the auto industry is an important part of our economy. In fact, most of our manufacturing base has left the country, so it is surely important. But you could also make the case that as our economy is increasingly driven by the service sector actions should be taken for those businesses as well. Bottom line - where does it stop?
Second, could this not be the result of poor business practices that come to light in a tough economy? Economist Walter Williams raises these issues in a recent column. Williams points to the "cozy relationship" between the Big Three and the United Auto Workers union that drives up hourly wages. Williams points to GM's $73 hourly wage cost and compares that to Toyota's five U.S. assembly plants where the hourly cost is $48. It doesn't take an economist to figure that one out. But it apparently does take more than a congressman like Barney Frank.
Finally, someone needs to explain how a Washington "Car Czar" would to make sure the auto industry keeps it between the lines. I am not one of those who say government needs to run like a business. It is just not the nature of government to be efficient. Those areas that can be run like a business are the areas that governments most often privatize, but they are a small percentage of the overall responsibilities of government. Conversely, the last thing America needs is business that runs like government.