It is now clear that there is no real difference between the government and the entity that identifies itself as GM. For all intents and purposes, the government, which is set to assume a 50 percent equity stake in the company, is GM, and it has been calling the shots in negotiations with creditors. While the Obama administration has been playing hardball with bondholders, it has been more than happy to play nice with the United Auto Workers. How else to explain why a retiree health-care fund controlled by the UAW is slated to get a 39 percent equity stake in GM for its remaining $10 billion in claims while bondholders are being pressured to take a 10 percent stake for their $27 billion? It’s highly unlikely that the auto industry professionals at GM would have cut such a deal had the government not been standing over them — or providing the steady stream of taxpayer dollars needed to keep the factory doors open.—
When Obama was derided as a would-be socialist during the campaign, such concerns were dismissed as reckless and irresponsible. A typical response went something like this: “Socialism means that the Government owns the means of production; Obama just wants to transfer wealth by readjusting taxes—that’s not socialism!”
Well, now we have a Government that owns the means of production. So maybe, just maybe, the campaign alarmism was spot-on.
Our leaders are often tarred with the worst characterizations … and then they become them.
Credit cards are a demagogue’s dream come true. What better way to win public affection than to rail against banks for their harsh terms? In the politicians’ morality play, creditors are the villains and debtors their helpless victims.
A little context first: No one has a natural right to a credit card. Someone has to be willing to undertake the risk in issuing it. Banks issue cards in their quest for profits. Nothing wrong with that.
Think about what a credit card is. It’s convenient access to unsecured loans, permitting consumers to buy things large and small — not to mention emergency services — without cash. […]
The “bill of rights” seems designed to prevent people from getting themselves in over their heads. That motive is honorable, but government has never been very good at such protection. The law of unintended consequences cannot be repealed, and what government gives with one hand, it inadvertently takes away with the other. Increasing the banks’ costs will make it harder for poorer people to get credit cards, and that will only push them into costlier forms of debt, like payday lenders.
I’ve never understood how the poor are helped by limiting their choices.
~ John Stossel, “Government Help Hurts”
But instead of cracking down on companies that treat their customers poorly, why doesn’t the government just offer a credit card of its own? After all, government regulation may help, but it’s unlikely to solve the problems of the credit industry—namely, spiraling interest rates coupled with rising defaults. Obama likes to talk about constructive alternatives. Why not offer an O-card? With his face on it?—
I just threw up a little in my mouth.
John Stossel has a much more palatable column on the same topic, here.
I don’t subscribe to the Obam-is-a-closet-socialist mantra, but that sign is flat-out awesome.
The history of socialism is the history of failure—and so is the history of capitalism, but in a different sense. For the history of socialism is one of fundamental failure, a failure to provide incentives and an inability to coordinate information about supply and effective demand. The history of capitalism, by contrast, is the history of dialectical failure: it is a history of the creation of new institutions and practices that may be successful, even transformative for a while, but which eventually prove dysfunctional, either because their intrinsic weaknesses become more evident over time or because of a change in external circumstances. Historically, these institutional failures have led to two reactions. They lead to governmental attempts to reform corporate and financial institutions, through changes in law and regulation (such as limited liability laws, creation of the FDIC, the SEC, etc.). They also lead market institutions to reform themselves, as investors and managers learn what forms of organization and which practices are dysfunctional. The history of capitalism, then, is the history of success through dialectical failure.— Jerry Muller, “Our Epistemological Depression” (via superhamburgeramerica)