Don’t get me wrong - I’m an economist, I understand the significance of job losses, financial assets, and all the other bad things that would happen if GM went under. I get it. I still think it’s thievery - and long-term, it’s going to hurt the economy even more than the short-term failure would for a number of reasons.

1. Precedent. People really underestimate the slippery slope effect, particularly in politics. This month a GM bailout seems reasonable, next month we go “hey, we’ve bailed out GM last week - why not bailout Google this week too?” in a couple years we’ve bought up the entire economy - or at least set the precedent that doing things like this is alright. It sets the standard for business that, as long as they’re large enough, they don’t have to worry (or, at least, they can worry less) about being in financial shambles, because, the government will come along and “protect” all those important American jobs.

2. Innovation. Really - market forces exist for a reason, notably, when a company is doing something wrong, another company (say, Toyota) will do it better; even if that company has its own share of government interventionism helping it out, they will take over the market in terms of profit, indicating to the lesser company that it needs to innovate, change or face the reality: it needs to be replaced by the better company. The irrelevance of where that company is stands clear - mostly free trade between countries, particularly for large companies like GM and Toyota, means that it doesn’t matter for a second which country Toyota is located in, especially when Americans get to reap the benefits of the losses Japanese citizens pay in terms of taxes which are redirected to Toyota sponsorships - to whatever extent that this does occur.

3. Inflation. Major bailout plans, particularly those for the financial and automotive industries have a major problem - to pay off all that new debt either taxes have to be raised (which has a clear negative effect on the economy) or debt needs to be taken (which, according to at least Ricardian equivalence theory - will have the same negative effect) which means that money needs to be printed or otherwise injected in to the economy to pay for the losses eventually. Creating or injecting money is the penultimate¹ form of nonprogressive policy - that is, people who are worse off pay the losses at least as much, if not more than those with lots of money - diminishing returns to money makes the actual value losses here non-trivial. This is theft.

1. With, taking money from the poor only being the ultimate, I suppose. [↩]

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