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Here’s a letter to Forbes:
Interviewed a while back by Adam Hartung, Bob Deitrick says that “The auto rescue plan has worked. American car manufacturers are still dominant and employing millions directly and in supplier companies” (“Economically, Could Obama Be America’s Best President? [2]” May 13).
Mr. Deitrick’s concept of “worked” is too lax. No one doubts that companies can be kept afloat with enough special privileges from government. In contrast, when the concept of “worked” requires improvement of the overall economy, the mere continued operation – or even thriving – of subsidized corporations is insufficient evidence that such subsidies have worked. What industries are kept smaller because government is directing resources artificially to auto producers? What jobs are not being created because auto jobs are protected? What excessively risky decisions are auto executives now taking, confident that their firms likely will be bailed out again when trouble strikes?
To conclude that today’s U.S. economy is strengthened by the special privileges that inflate the profits of Detroit auto factories is like concluding that the antebellum U.S. economy was strengthened by the special privileges that inflated the profits of slave-based southern plantations. The higher profits of the special-privileged should not be mistaken for the greater prosperity of the people.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
(I thank Susan Kilday for the pointer to the Forbes essay.)