Ivan Seeking said:
The problem is that your actions affect my life. Who protects me from everyone else's bad choices? We should do the same thing to incandescent bulbs that we do for cigarettes - tax them according to their cost to society. This is how we can maintain liberty while still protecting the general public.
Everything affects everything else in some manner. But to say that my choice of light bulbs affects you in any measurable way is an utter absurdity.
Frankly, that is just silly. Sure, we need to allow market corrections, but not when we're facing the greatest crisis since the depression. We simply couldn't afford to take the hit that the collapse of the auto industry would have generated.
The crisis we're in right now was CAUSED by those government policies, not the free market. It was from what's called "Crony Capitalism". When one group goes to government and pushes to get laws passed that benefit their industry, or company.
Government passed laws that encouraged banks to give mortgages to people who could not afford them, and promised that they would buy those mortgages through FNMA. All of a sudden, everyone and their grandmother (literally) were buying houses, so the inflation-adjusted price for a house (a value which for over a century was nearly Kansas-flat) all of a sudden went through the roof. Houses were overpriced, and it had to stop sometime. In 2003, someone said we need to stop this type of lending now, but some other group of people said "you just hate the poor". So nothing was done about it.
Now, all of a sudden someone pulls back the curtain and sees what all these crappy mortgages really are, and all of a sudden, NOBODY buys the government-backed securities from FNMA. Here's where the trouble starts.
Banks can only lend based on how much assets they have on hand. They have a TON of government-backed securities, which are one of the safest form of investments. All of a sudden though, those government-backed securities are worth a fraction of what they once were.
This normally wouldn't be a problem, except for another brilliant Government fix, the Sarbanes-Oxley act, which says you can only claim the "market value" of an asset. Well since nobody bought those Government-backed securities at the market this week, guess what they're worth "at the market"? ZERO. So now guess who has virtually "zero" assets on hand? Banks. So guess who can't loan *any* money anymore for any purpose whatsoever?
Then on top of that, as this gets worse, and people stop buying houses (because nobody has the cash to buy a house, and very few can get loans except from a few select small local banks and credit unions), the value of houses goes through the floor. NOW guess what? Those mortgage backed securities REALLY aren't worth what they're supposed to be worth anymore, and the problem went from "this could be bad" to "oh **** (a slang word for biological waste)"
Now, if you want to look directly at the auto industry, there's some cute little group of laws (again, Government) called "anti-scab laws". Basically what they say is, if a shop is a union shop, and they go on strike for any reason, it is ILLEGAL for the owner of that company to hire workers in their place while those workers are on strike. Doesn't matter if they're getting paid $35 an hour (like they did in the auto industry) plus a benefit package that would make a Senator blush... even if there's a line of 25,000 people outside the door saying "I'll take that job for $6 an hour", the owner of that company can NOT hire those people. It is ILLEGAL.
And so, the unions know it, and the management knows it. The management just wants to get back to making parts so they don't lose their job, so they give in, knowing the deal is unsustainable. The union bosses want to make more money, and they want to keep their members, so they push hard to get them these raises and benefits, knowing it's unsustainable.
But who cares, they all know the government won't let such big companies fail...
And you know why nobody else gets into the business to compete with these big 3? Because it's utterly impossible. Even if you had a 50 mpg full size truck that had the best safety system on the planet, and 500,000 of them were already built, you would need literally millions of dollars to even so much as get a single vehicle to market.
Why? Because of all the government regulations that prohibit market entry. Who do you think pushed the government for all these regulations on the auto industry? I'll give you one hint, one company's name starts with a "G" and ends with "eneral Motors". The other two you can guess... They know they have the resources to deal with those regulations, but upstart companies don't.
I live in Michigan, my business indirectly is dependent on the auto industry, but guess what, those bailouts were the most moronic thing we could have done.
Know what would have been a tremendous thing to happen? If we didn't have these asinine government regulations on the auto industry, the best thing would have been one, two, or all three of these companies breaking up, and their assets being sold to the highest bidder, piece by piece. Then, dozens of small US car manufacturers could start over, without the unfunded liabilities like the ridiculously high pensions and such, and make cars that are the most competitive in the world.