Wednesday evening, I heard two interesting sound bites on NPR. They were covering the House debate on the doomed automaker bailout bill. Republican Representative Eric Cantor of Virginia took the floor to argue against the bill. He asked why Congress should invest public dollars in GM and Chrysler when private investors were unwilling to put their money in those companies. Democratic Representative Dennis Kucinich of Ohio responded that the loss of 3.3 million jobs tied to the American automotive industry was simply "untenable."
The bill passed the House, but failed in the Senate. Now President Bush appears to be taking Rep. Kucinich's position, reversing earlier opposition and looking for a way to direct some TARP money toward GM—not much, maybe $4 billion and change, just enough to keep them afloat until Inauguration Day, when Bush can wash his hands of the problem.
Two ironies here: one, that George W. Bush is agreeing with Dennis Kucinich, and two, that I, a diehard Kucinich supporter, am not sure either man is right. I actually have some sympathy for Rep. Cantor's argument, as the free market still holds great appeal for me. The automakers' plans for restructuring were discussed publicly at the Congressional hearings; if those plans were so great, Wall Street should have responded, right? The market would have recognized the automakers' plan as a winner and started pouring private capital back into the automakers' coffers. That didn't happen (although we can argue chickens and eggs here: GM's stock did tick up on Monday, but investors were more likely betting on government aid, not faith in GM's vision).
Cantor's argument is free market fundamentalism at its finest: if the free market says die, let it die. And for the most part, when it comes to these greedy, mismanaged, short-sighted corporations, I agree. Workers and homeowners have to live and die by the market; why not corporations?
But let's remember: the free market isn't the final arbiter of value. Like Kucinich and now President Bush, Adam Smith saw the free market as a means to some but not all ends. Adam Smith recognized that government has a proper role in doing what the free market cannot. Among other things, the government has in Smith's economics a duty to support those great public works that the free market cannot, things like roads, bridges, and parks.
So the question is not simply "Can GM survive in the free market?" The question is, "Is GM not just a corporation, but a great public work?" Does GM serve such an important public purpose—providing useful jobs, benefits, and products—that we should invest public dollars in it?
President Bush seems to be coming around to Rep. Kucinich's position that yes, GM is so worthy. Will wonders never cease?
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