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The Next Bridge to Nowhere

Posted By Conn Carroll On November 14, 2008 @ 11:17 am In Economics | Comments Disabled

In the video below, Sen. Carl Levin (D-MI) describes the inevitable bailout of the auto industry as “a bridge to the future.”

[youtube]http://www.youtube.com/watch?v=3w8jEKoX5-Q[/youtube]

A “bridge to nowhere” is more like it. As David Brooks [1] notes today:

Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction — with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country’s prosperity.

But this, apparently, is about to change. Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler and Ford. They have decided to follow an earlier $25 billion loan with a $50 billion bailout, which would inevitably be followed by more billions later, because if these companies are not permitted to go bankrupt now, they never will be.

Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it.


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URL to article: http://blog.heritage.org/2008/11/14/the-next-bridge-to-nowhere/

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[1] David Brooks: http://www.nytimes.com/2008/11/14/opinion/14brooks.html?ref=todayspaper

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