Bailout or Shakeout

The Cato Institute has posted Daniel J. Ikeson's article from the New York Daily News, There's Nothing Wrong with a "Big Two."

I agree with Mr. Ikeson that it is foolishness to use Federal tax dollars to bailout failing businesses, and then claim that capitalism has failed. We need to stand back, and allow the market to function properly. The invisible hand of capitalism will thin the sick and the weak companies out of the herd, allowing the fiscally dominant companies to rise to the top.

"The "Big Three" auto producers - Ford, Daimler-Chrysler and General Motors - want the public to believe their industry faces an existential threat. It doesn't. They want the public to believe they are innocent victims of circumstances beyond their control. They're not. They want the treasury secretary to authorize a fresh $25 billion bailout for the industry and the President-elect to pledge support for their parochial cause. Neither should..."

"If one or two of the Big Three went into bankruptcy and liquidated, people would lose their jobs. But the sky would not fall. In fact, that outcome would ultimately improve prospects for the firms and workers that remain in the industry. That is precisely what happened with the U.S. steel industry, which responded to waning fortunes and dozens of bankruptcies earlier in the decade by finally allowing unproductive, inefficient mills to shut down." For entire article click here.