Were our predecessors wrong in refusing to bailout the typewriter manufacturers or the horse-drawn carriage-makers or the gas lamp manufacturers?
It's easy to understand the justification for bailing out the auto industry: it's certainly struggling. These are hard times, and millions of American jobs are at stake. Hundreds of billions of dollars were pledged to the financial interests: why not a few dozen billion to the auto manufacturers?
We should wonder how sustainable this bailout mentality is. When do we stop handing out cash? Who do we refuse? Is it really fair to give wealthy big businesses unprecedented access to huge resources while small businesses are struggling?
Are we really more advanced than our predecessors who refused to bail out the typewriter manufacturers or the horse-drawn carriage-makers or the gas lamp manufacturers? Consider what life would be like if the candle-makers were bailed out after meeting stiff competition from gas light? Or if the pony express stopped construction of the railroad to preserve their mail-delivery business?
This bailout mindset is irrational, unethical, inconsistent, and unsustainable. Unfortunately, protectionist economic policies have sunk deep into the American psyche. There are shameful but existing historical precedents for these bailouts: Amtrak and farm subsidies, to name two examples. Unfortunately, our bailout mindset has gotten worse over time.
What should be done?
The government should eliminate or greatly reduce barriers to starting and maintaining a business: consider all the fees, licenses, taxes, regulations, bylaws, etc., associated with starting or maintaining a new business. Greatly reduce these, and the number of individuals able to start and maintain new businesses grows. The number they can employ also grows. If a big company bites the dust, employment would be much less of an issue than with today's over-regulated and over-taxed private sector.
Perhaps most importantly, eliminate the federal reserve and central banking overall and move to a market-driven (individuals acting freely) currency standard, one without the booms and busts which so many associate with the free-market economy. The credit crunch, housing failure, and current recession is a direct result of government economic intervention.
When will we understand that the boom-bust cycle is merely one more lesson that governments are inherently less efficient at allocating resources (i.e. people, money, food) than individuals acting freely in a market society? Until we learn this lesson, we are doomed to repeat it again and again by mistrusting government to allocate resources according to their bureaucratic or oligarchic whim.
Chris Reeve is an active member of The Church of Jesus Christ of Latter-day Saints. He currently resides with his wife and two children in northern Ohio. Visit Chris’ website Mormon Paleo Thought.
