In response to:

Good Economists

oldnjal Wrote: Apr 18, 2012 1:57 AM
This seems related to Romney and Bain Capital, as the idea is firmly established that he was a corporate raider, with no heart, leaving people without jobs or retirements. Bain was rated among the best in turning failed businesses around, and two are constantly brought up by dolts like DWS. They were failing. That is not hard to grasp. They were not salvageable, and because sales would not support promises given to unions. Two ways to go. Socialize them, as Obama did, with GM. Chiefly a gift to the unions that had made them unprofitable, in the first place. Or take advantage of Bankruptcy restructuring, which often worked, and added to Bain Capital's reputation as the 'Go To' people when disaster loomed.
Kenneth L. Wrote: Apr 18, 2012 7:04 AM
Is one approach better? Some will argue that what was done to GM was necessary to save a million jobs, prevent the next great depression, etc. But the answer is obvious. Bankruptcy is an orderly process provided by law. In a bankruptcy bondholders and preferred stockholders would have retained their position in the hierarchy of creditors. What the government did was illegal.
As far as the million jobs, the union would have realized a loss of pension benefits already lost due to mismanagement of the trust fund. But the jobs would still have existed. Is anybody arguing that we would have stopped traveling by automobile? The illegal action by the government was a scam perpetrated to steal GM capital and give it to the UAW.
Mark1369 Wrote: Apr 18, 2012 9:05 AM
Kenneth, you are on the money with that explanation and it is one I hope Romney and the Republicans bring up every time Obama and the Democrats try to claim they saved jobs while the Republicans wanted to close down GM and Chrysler.
tgwWhale Wrote: Apr 18, 2012 10:09 PM
Kenneth: exactly right. GM would have survived bankruptcy -- there were piles of assets. What would not have survived is the union contract. GM was bust because of $2K of legacy costs (pensions and retirees' healthcare benefits) per car. A legal bankruptcy process would have included the voiding union contract, with a reduction of legacy costs to where the company was profitable.

In other words, the Obaminations didn't bail out GM -- they bailed out the UAW.
It's difficult to be a good economist and simultaneously be perceived as compassionate. To be a good economist, one has to deal with reality. To appear compassionate, often one has to avoid unpleasant questions, use "caring" terminology and view reality as optional.

Affordable housing and health care costs are terms with considerable emotional appeal that politicians exploit but have absolutely no useful meaning or analytical worth. For example, can anyone tell me in actual dollars and cents the price of an affordable car, house or myomectomy? It's probably more pleasant to pretend that there is universal agreement about what is or is...