Our friends Q (your everyday consumer) and A (your free-market-obsessed advisor) are back... Q read an article that claims the TARP (bailout) program will net a profit to the taxpayer... As you'd guess, I have a somewhat different take - one that I'll deliver in a series of columns... We'll start with the auto industry...
Q: You always bemoan bailouts, but I just read that TARP is going to net a profit to the taxpayer, and we saved a bunch of jobs in the process...
A: We'll get to the profit myth later... Today I want to get your thoughts on the auto industry bailout, which was part of the TARP program...
Q: Okay fine...
A: If Chrysler had gone out of business in 2008, would folks be buying fewer cars today?
Q: Probably not, but they'd (A interrupts)
A: If people wouldn't be buying fewer cars today, would there be fewer U.S. jobs?
Q: Yes... Beca(A interrupts again)
A: Why?
Q: Well if you'd friggin let me talk!!
A: Sorry...
Q: There'd still be fewer jobs, because while some ex-Chrysler employees would've gone to work for GM and Ford, some of those would've-been-Chrysler buyers would've bought foreign cars...
A: So all the would've-been-Chrysler buyers aren't the buy-only-U.S. types? I mean who goes looking for a Chrysler?
Q: What about the Dodge Ram? Or the Jeep Grand Cherokee?
A: Oh you're right... But there'd still be a bunch that'd go Ford or GM before going Toyota, right?
Q: Yes, but some of that business would still go to Toyota..
A: I agree... So all those new-Toyota-buyers would fly to Japan to buy those cars and trucks?
Q: That's stupid! Of course not! They'd just go to their local Toyota dealership...
A: You mean the dealership owned and run by all those folks Toyota flies in from Japan?
Q: No... my cousin Johnny manages a Toyota dealership...
A: Oh.... So if demand for Toyota pickups picks up, there might be a few new U.S. jobs created at Toyota dealerships - to replace some of those Chrysler dealer and manufacturing jobs, right?
Q: I guess so...
A: I wonder if there'd be new jobs to be had in Mississippi, Kentucky, Texas, Indiana, Alabama and West Virginia?
Q: Why just those, there's Toyota dealers in all 50 states...
A: No, I'm talking about Toyota manufacturing plants...
Q: No kidding?
A: No kidding... Toyota has manufacturing plants in all those U.S. states...
Q: I didn't know that...
A: I know you didn't... That's because you knowing that doesn't jive with protectionist politicking... Often inspired by the UAW (United Auto Workers Union)...
Q: Say what?
A: Those Toyota plants are non-union... And the UAW has huge political influence - and they lobby violently for politicians who'd pay them rents...
Q: What do you mean by "rents"?
A: Have you ever heard the term "rent-seeking"? That's an economist's term for currying political favor... The rents being things like ownership of GM (17.5% to VEBA) and exempting them out of the Affordable Care Act...
Q: That's disgusting!
A: Yyyyep...
Q: But still, we're going to lose some business to Japan...
A: You're right - auto business... But what are those Toyota-buyers going to buy those Toyotas with?
Q: Say what?
A: What currency?
Q: Duh! Dollars...
A: And what are those Japanese going to do with those dollars?
Q: Spend them I suppose...
A: And what can you spend U.S. dollars on?
Q: Huh?
A: U.S. stuff of course... You see the only reason Toyota sells us cars is because there's something they want that only U.S dollars can buy... In essence, when someone in the U.S. buys a car made in Japan, somebody in Japan either buys, or invests in, something in the U.S. - or buys something from somebody else who needs those dollars to buy, or invest in, something in the U.S...
Q: So you're saying jobs would be created in U.S. export industries - to offset lost Chrysler jobs...
A: You got it...
Q: I never thought of it that way...
A: You're not supposed to....
Q: How come you didn't mention GM?
A: Because, from what I gather, GM could've filed bankruptcy, per the laws (which were broken in the bailout), restructured and stayed in business right off the bat... Chrysler probably would've had to liquidate...
Q: Oh well... At least folks are still working at Chrysler...
A: Yep, a Chrysler that should be out of business... A Chrysler that our money was used to prop back up - at the expense of American exporters, etc.. That's the government picking winners and losers...
Q: That doesn't sound like capitalism to me...
A: It's not... It's what you call cronyism... And it's a bad thing!!
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