A Detroit Bailout Is Unwise

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The three big U.S. car makers are angling for government help to the tune of $50 billion. It is understandable: They are struggling, and policy makers have thrown money at financial sector basket cases. But Chrysler, Ford Motor and General Motors shouldn't get handouts.

Aside from the cost to taxpayers, a government safety net for companies discourages prudent management. It also potentially puts rivals at a disadvantage, making markets less efficient and ultimately hurting consumers. That doesn't mean policy makers should never, ever, step in. But the test should be whether the alternative is disastrous enough to justify intervention.

Take the blank check Congress recently wrote to backstop mortgage giants Fannie Mae and Freddie Mac. It is disheartening to see taxpayers' money put at risk. But the alternative probably was a near-seizure of the already-beleaguered U.S. mortgage market -- a horrendous outcome for millions of American homeowners.

Click here to read more at the Wall Street Journal

Date published: Aug 30, 2008

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