Jay Ambrose
Socialism won't work for Obama, either
By: Jay Ambrose
Examiner Columnist
June 2, 2009
In 1991, only days after the failed Soviet coup, a bunch of journalists, academics and others met with some gleeful Russians in Aspen. Not only had unrepentant Communist hardliners failed to oust Mikhail Gorbachev from power, but it was clear the whole Soviet system was failing apart. The visitors saw themselves as free at last.
They had capitalist aspirations – some were followers of Milton Friedman – and their hopes were as bright and optimistic as they were dull and pessimistic the very next year in a follow-up meeting.
Things had not worked out well because continued government underwriting of faltering enterprises had not produced any better results in a non-Marxist state than in one that was mixing some old practices with some new ones.
I was at both sessions, and recall how American economists at the second tried to explain how you had to let market-blind businesses die out despite the sense of the Russian guests that this would lead to social catastrophe.
If the businesses were not producing what people wanted at a price people would pay, they were simply taking up resources that could be better allocated elsewhere, the economists said.
To have wealth and growth, you had to make room for productive, innovative enterprises that would eventually employ more people than had lost their jobs when the old companies withered into oblivion.
My question is where are those economists now that we need them to preach the same lesson to the Obama administration, which has nationalized General Motors, saying that, well, if we didn’t, GM would collapse and unemployment would climb to 10 percent or worse, and, anyway, Washington knows best.
That would be the same Washington that cannot operate a Social Security and Medicare system without running up tens of trillions of unfunded, economy-threatening liabilities; that has already come out against auto features that consumers want and moved ahead with efficiency-reducing, politically inspired protectionist measures, and that will almost surely put favored interests and partisan advantage over sound managerial decision-making, no matter what the promises of the moment.
The essential promise is that Obama and friends will fix things with $50 billion, a new board, new managers, vast environmental ambitions, bankruptcy proceedings returning 10 cents on the dollar to bondholders, the elimination of 21,000 union jobs, the closing of 2,400 dealerships and the further closing of factories hither and yon. Soon enough, we are further told, the government will get out of Detroit.
But that’s a long shot because the government won’t be able to resist still more interventions and still more subsidies as unwanted cars sit in the hybrid hell of remaining dealerships, gradually rusting away. GM will be smaller, but it will still be too big to fail without posing reelection difficulties for the bosses in D.C.
The better bet would have been to let the market do its work. Either General Motors and the rest of Detroit would find ways to survive through renegotiated union contracts, bankruptcy proceedings as necessary, belt-tightening and refurbished product lines, or they would pay the price.
We would still have a foreign-owned auto industry making cars in this country and expanding to take up the slack, and we would have new businesses developing to give us more growth and jobs than Detroit could deliver.
It’s one thing for Russians with little background in the workings of free enterprise to cling to disproven ways, but something far less understandable for this country to engage in a socialist experiment that will likely be damaging to the whole nation in the long run.
Examiner columnist Jay Ambrose is a former Washington opinion writer and editor of two dailies. He can be reached at: Speaktojay@aol.com.
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