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No More Bailouts

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Over in The Wonk Room, Pat Garofalo argues that "If It Happens, The Auto Industry Bailout Needs To Be Done Right [2]."  While it’s true that some
ways of bailing out this industry would be less harmful than other
ways, there is absolutely no "right" way to do it.  To advise
government to do the auto industry bailout "right" makes as much sense
as advising a burglar to burgle the neighborhood houses "right."

And, unfortunately, Garofalo himself advocates a condition of the bailout that would make it worse than it would be if Uncle Sam simply gave $50 billion to GM, Ford, and Chrysler.  He wants the money to come along with a government mandate:

More importantly though – as Pelosi and Reid said – “federal aid should
come with ’strong conditions,’ such as requirements that car makers
build more fuel-efficient vehicles.” Bill Scher at OurFuture writes,
“With the auto industry in dire straits, we taxpayers have maximum
leverage to demand the cars necessary [3] to help lower energy costs, cut carbon emissions and reduce our dependency on foreign oil.”

Producers should serve consumers who express their demands in the market — consumers spending their own money in settings in which each individual’s choice is decisive.  Danger lurks in policies mandating that producers serve politically voguish ideas masquerading as taxpayers’ interests.

I’m no fan of carbon taxes or of the inherently vague notion of "energy independence," but if Uncle Sam is so terribly worried about carbon emissions from automobiles and Americans’ purchase of oil from other countries, then the best way he can deal with those concerns is to raise gasoline taxes.  Auto producers and consumers would then experiment and respond with different ways and find those ways (note the plural) that best suit as many consumers as possible.  Mandating greater fuel-efficiency sounds progressive, but it’s dumb and dangerous.

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