Bailing on the Bailouts

With calls for nationalization of credit card companies and auto manufacturers along with further nationalization of the insurance industry, I think it is time for Republicans to get out of the bailout business.

I had very mixed feelings about the initial $700 billion bailout package. As a small-government conservative, I hated the idea of committing taxpayers’ money to a bailout of private business. As someone whose livelihood depends on the identification and assessment of business risks, I think those who are overly aggressive about taking on risks should bear the consequences of those judgments. I try not to be thick-headed about my libertarianism, and it seemed that a lot of smart people who understood the situation felt that the bailout package was essential. I gave some credit to folks who put their political careers at risk to vote for it. In hindsight, though, I’m not so certain the bailout package was necessary. I thought the key element was to create a market for illiquid “toxic” assets, but Hank Paulson now says that Treasury would focus on “injecting” cash into the financial industry not on purchasing these assets.

So, we seeing considerable mission creep on the initial $700 billion and "special interests" are lining up with their hands out. It’s time for a principled stand. Although there are a few folks who have made money by investing in failing businesses, they’ve done so by ruthlessly cutting costs (i.e., laying people off) and restructuring. The federal government lacks the competence and guts to do that. I hope I’m wrong, but I will be shocked if these investments wind up being anything other than an enormous cluster-f. Mr. Hope/Change and his friends will soon control the federal government. Let them own the coming disaster.