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Bailouts for whom? Capitalist hypocrisy stumbles

Rather amazingly the New York Times, David Brooks manages to argue from both sides of his mouth.

He is against the bailout of the big three auto companies, but he is for the bailout of the banks:

Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler and Ford. They have decided to follow an earlier $25 billion loan with a $50 billion bailout, which would inevitably be followed by more billions later, because if these companies are not permitted to go bankrupt now, they never will be.

This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.

This just doesn’t make any sense.

I would agree that the bailout of the auto makers is futile and doomed to failure.

But the banks must be held to the same standard. Instead the banks have taken the federal money, put it into the kitty and are using it as takeover fund to finance bids on their weakest rivals.

Bankers continue to pay themselves and their staffs bonuses, continue to enjoy vastly inflated salaries. The banks should either have been nationalized or left to die. As nationalized institutions, the books could have been cleaned, the assets packaged and sold off. But basically what happened instead is a get-out-of-jail-free card for the bankers.

Why should auto companies be treated any worse than these bankers? Hypocrisy of the worst sort.

Anyone who is not part of the American financial elite or a senior bank officer is getting bamboozled here. You are subsidising the lifestyle of the same guys who sold us all down the river.

If anything, subsidising the auto companies is less harmful, as it is a way to keep a city alive during a difficult period. The goals of the subsidies should be crystal clear – to come out the other side with a revitalized and green auto industry. Something like a college fund: university costs money but presumably on the other side the student is better prepared for life and work and so the end returns (for the end is always only forty years away) balance out.

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