The forced nationalization of the auto industry is unethical. We are seeing just the start of the negative consequences that will flow from this act of statist hubris.
To start with the obvious, we have all learned by now that OBAMA has no problem doing the very thing he is denying. (In ordinary life this political artfulness is called lying).
He fired one CEO, forced Chrysler to accept Fiat (WSJ.com 6/5/09), told GM that it cannot move its headquarters out of Detroit (WSJ.com 6/3/09), and may have ordered that whoever buys GM’s European auto maker Opel must agree not to export cars to the U.S.. (WSJ.com 6/1/09) These decisions were made in secret with no Congressional oversight, by a zealot with no training or experience of any kind in business, never mind the auto business.
The companies will be run by politicians, who will make decisions for the benefit of political agendas rather than on sound business principles. The result will be that the auto companies and the union will not make the deep changes required to make the companies profitable, so we can anticipate many more cash infusions.
Worse yet, we can foresee that now that the UAW and feds have control of Chrysler and GM, they won’t stop there.
Their natural instinct will be to achieve monopolistic control. The UAW has helped drive Chrysler and GM to the wall and is now co-owner with the government of most of the equity. They will likely next target Ford, to get equity ownership of it.
Then look for the UAW and the administration it controls to attempt to force the employees of foreign auto makers in this country to join the UAW, or use environmental and other regulatory laws to put those companies out of business.
But the negative consequences will spread well beyond the auto industry. By stiffing the bondholders in favor of his political supporters, Obama has made raising capital vastly more difficult. Every investor now knows past bankruptcy law means nothing!
When a President is paid off by some special interest group, he will rip off the secured debt holders to satisfy his supporters. This will surely lower the demand for corporate bonds, leading to less capital for business expansion, hence fewer jobs.
This debacle a ironic illustration of what the economist Frederic Bastiat warned us about in his classic essay, “The Seen and the Unseen.” What Obama hopes we will see are the thousands of UAW jobs saved. What he knows we won’t see are all the jobs that will be lost or not created because of his dictatorial and ANTI America conduct.
The American people needs to make it clear this nationalization will not be permitted to succeed. We need to boycott these companies, and tell this rogue administration exactly what we are doing. The alternative is that they will do this again.
We are very aware that Obama does not respect his office, the constitution or our laws and operates a corrupt government that must be taken down!