For those who believe in a deity, it’s overdue to petition the heavens for a favour: Dear God, send the political class home for summer early lest they “stimulate” anything more, put us into additional debt, and do more damage to our finances, language, and to clear-headedness.
Ever since last September when Lehman Brothers imploded, and when already teetering sub-prime mortgages and a variety of other leveraged bets collapsed everyone into a recession, the political class spent the last ten months doing a few sensible things but much that qualifies as the opposite.
An example of the former was governments guarantees for interbank and other financial institution lending; had those slats not been swiftly constructed, the collapse would have been uglier than what occurred.
But that’s about where defensible government action started and stopped; much of the rest has been nonsensical. The damage is not only to our future finances–the new love affair with debt in Canada just wiped out 10 to 15 years of progress, but to linguistic and moral clarity.
Thus, in the service of restored frankness, here are five reasons why the bailouts and much of the stimulus programs around the world should have been opposed.
Reason #1: Because no matter how often industry advocates, politicians or others tell the public “jobs are saved” by bailouts, the reality is that it’s only about a shell-game of job redistribution. When automobile sales are down by 20 per cent in Canada, some autoworker somewhere will be laid off: if not at GM or Chrysler–because government is busy “saving” jobs there–then at Ford.
Reason #2: Because bailouts are unfair to better-managed competitors.
When GM and Chrysler go into bankruptcy restructuring (and thus reduce their debt because they welch on it) and take taxpayer cash, competitors are kneecapped: the Fords and Toyotas of the world still have their debt, now relatively tougher to carry. It’s akin to running a small business where your competitor has a million-dollar mortgage while yours is $200,000.Except that when he gets into financial difficulty, the bankruptcy court and government reduce his debt to $100,000–and let him keep his business.
Reason #3: Because the bailouts and protectionism aggravate our worst instincts; they don’t support our best ones.
A photocopy salesman once tried to sell me his product because it was made in Canada (my existing model was made in Japan). He lost the sale because I have friends in a number of countries, including Japan. The bailout game -“save jobs here,” “Buy USA”, “Buy in Canada” –promotes tribalism. It’s positive when jobs are created everywhere. But they’re not when two governments drag their taxpayers into financing corporate battles across international borders. Here’s a thought: let corporations duke it out without drafting citizens–of any country, into the battles.
Reason #4: Because the rule of law has been damaged.
Normally, creditors take precedence over others with a stake in the company, including employees or shareholders. Some may not like that system, but no one’s obligated to lend money to a failing company. People do it knowing the risk but also the rule: bondholders are first in line.
The Obama administration has freelanced with the rule of law here. It hasn’t yet been slapped down a by a court–but the key word is “yet.” Similar to Franklin Roosevelt’s over-reach in the late 1930s, which included actions then slapped down by the U.S. Supreme Court in some cases, the frenetic Obama White House will one day meet the immoveable object of a court opinion that blocks some hubristic excess of its own.
Reason #5: Language and its purpose are damaged.
Aristotle thought that speech is what separates man from animals–our ability to converse, reason, and persuade. But for that to happen, language must clarify and not cloak one’s intentions. Otherwise, words are only used as the verbal equivalent to a predator’s run-up before it captures prey. And that puts us all back into the animal kingdom.
Politics, as George Orwell observed in his famous essay on that profession and the English language, has always injured speech. In 1946, he observed that was because, “political speech and writing are largely the defense of the indefensible.”
Orwell was overly negative and missed a positive example from his own time–Winston Churchill’s wartime speeches did nothing of the sort but instead roused Britons to fight. But since last autumn, the English language again took a hit from politics. Also, the deliberate distortions have only grown with each news release and every new subsidy.
When U.S. president Barack Obama claimed recently that “What we are not doing–what I have no interest in doing–is running GM,” his words were already betrayed by his actions in the previous months: the White House already fired a GM president, already insisted GM make smaller cars regardless of market demand, and already demanded that GM import fewer cars and parts from “foreign” plants.
The first four reasons are justification enough for opposition to the billion-dollar bailouts and much of the stimulus, but they are “only” about money; the fifth is about how we talk to each other.