Congressman Frank, like so many facile "thinkers," wants to know why, if government needed to step in and save the country's banks, it can't do the same to save the jobs (and perks) of the auto manufacturers. But the administration's quick, day-to-day decisions to bail out this bank or let that investment house go under wasn't done to save bankers' jobs but the banks themselves, and an economy that depends on stable banks. It was done to avoid a repeat of the monetary crisis that did in the American economy back in the 1930s, when some 9,000 banks failed, depositors' money disappeared, and the country's money supply was essentially frozen.
By the time Franklin D. Roosevelt was sworn in as president on March 4, 1933, the banks in all of the then 48 states had been shuttered or withdrawals from them strictly limited. The economy was at a standstill, and the first thing the new president did was to close the nation's banks for three days (a "bank holiday," it was called) until they could be saved, merged, or put out of their misery in the least painful way for all concerned.
It was to avoid that kind of disaster, which was looming as the Panic of 2008 spread this fall, that the Federal Reserve and the U.S. Treasury began taking over, bailing out, and generally backing up the country's supply of money and credit, which are much the same thing. The purpose, like FDR's, was not to destroy American capitalism but to save it.
But for government to begin taking over the direction of huge private companies, issuing directives about what kind of products and services they are to supply, which contracts they're to honor and which ones renegotiate, which executives they're to hire and fire and on what terms ... would fundamentally alter a once free economy.
Do we really want mainstays of the American economy like the auto industry run with the efficiency and profitabilty of, say, the U.S. post office? And essentially become means of distributing government largesse instead of saleable products?
There comes a time to just say No. That time has come for the auto industry. It can be postponed, and just might be if Congress and the administration agree to give the Big Three a bridge loan to nowhere. But come spring, the same execs doubtless would be back, and the same question would face the country: Should we throw good billions after bad?
Enough. Government certainly has a role to play when major industries go under. It can provide unemployment benefits, funds to retrain workers for other jobs when assembly lines shut down, and generally act as a responsible receiver in bankruptcy, saving what it can of those firms that for years have failed to show the vision, flexibility and principle that successful enterprises should.
What government shouldn't do is go on acting as an enabler for fast failing enterprises that have driven themselves to the wall, and now propose to do much the same service for the U.S. Treasury.
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