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Here are some worthwhile sources to consider on the GM/Chrysler bailout:

Joseph Stiglitz endorses Chapter 11 over an auto industry bailout (via Mankiw).

Todd Zywicki takes the same position, arguing the industry is merely “financially failed”.

Richard Posner comes out for at least a temporary reprieve, acknowledging that

The realistic goal of an auto-industry bailout is not to reform, revitalize, or restructure the domestic industry; it is merely to postpone its bankruptcy for a year or two, until the end of the depression is at least in sight and consumer confidence is restored to the point at which the bankruptcy of the domestic manufacturers can be taken in stride.

Gary Becker responds that a recession is a relatively good time to make the required adjustments to supply that will enable the industry to again become competitive.

Mickey Kaus has several posts, with the key one arguing that the problem is the very nature of Wagner Act unionism (i.e. work rules), even more than wages and benefits, that hobble the industry and doom a bailout.

Michael Barone adds some historical perspective to Kaus’ position, describing how the work rules were a response to early 20th century industrial efficiency theories and a GM that, just before the industry was transformed in the 70′s (by gas prices, environmental regulation and foreign competition), feared most of all a federal antitrust action to break it up.

Which brings to mind one of the Ronald Reagan’s classic jokes. The government’s view of the economy can be summed up in a few short phrases:

  • If it moves, tax it.
  • If it keeps moving, regulate it.
  • And if it stops moving, subsidize it.

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