Frum: Don’t bail out the automakers
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KAI RYSSDAL: Given Henry Paulson’s change of heart on how to handle the bailout, it’s probably no surprise that companies from all parts of the economy are lining up to get theirs. Detroit being exhibit A. Commentator David From says we ought to think this one over carefully.
DAVID FRUM: President-elect Obama has expressed support for yet another bailout package for the U.S. auto industry.
Here’s the case: Manufacturing is the backbone of the U.S. economy, and the Detroit automakers are the backbone of U.S. manufacturing.
There was a time when this argument was true — back in the 1970s, when Chrysler extracted the first auto bailout from the U.S. government. Not any more.
Time was when General Motors alone ranked among the largest employers in the United States.
Today, UPS employs almost four times as many people as the two big U.S. companies, Ford and GM, combined. While the Big Two decline, Toyota USA, Nissan USA, BMW, KIA are all expanding — and not asking for any bailout.
The Big Two remain important employers. Their troubles are felt up and down the manufacturing supply chain. But of course that is true for every industry.
Last week, the stock of Las Vegas Sands Corporation collapsed. Bankruptcy seems a real possibility. Indeed, the whole casino gambling industry in Nevada is facing the worst crisis in at least a generation, maybe ever. Casino gambling directly employs more people than the domestic automobile industry. Add in the supply chain for both industries, and casinos still employ almost half as many people as the automobile sector.
So what about a bailout for the casino industry? Ridiculous! Right? But why right?
Gambling is a vice, it’s true. But automobiles emit greenhouse gases.
The answer is not to bail out both. It is to bail out neither.
We bailed out the banks, not to save the banks, but to save the rest of the economy. If a crisis in autos — or steel or casinos or any other industry — threatened to have a similar impact, then conceded, we’d have no choice but to intervene. But if not, NOT!
RYSSDAL: David Frum is a resident fellow at the American Enterprise Institute. His most recent book is called, “Comeback: Conservatism That Can Win Again.”
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