Diary

Moral Hazard Rears Her Ugly Head

So now, the bailout target of choice appears to be Big Auto. An industry that has largely failed to adapt to modern times is beseeching Washington for funds with which to stay afloat. I vote no. Everything that those concerned about moral hazard have warned about is coming to pass; businesses are viewing the government as the stopgap of last resort and passing off their losses to the taxpayer. More and more, government is being forced to choose which industries live and which die. This was and is the job of the free market and the market can certainly do the job better than any clique of politicians can ever hope to. Alas, humankind’s tendency to meddle in affairs it knows nothing about is manifesting itself yet again.

In its waning days, the Bush Administration should put the kibosh on any talk of a bailout for the auto industry. Make the next Administration deal with the matter. If governmental power is to be expanded yet again, let’s not have a situation where a Republican Administration gives cover to the Democrats, the consistent advocates of that expansion, by participating in a bailout of the auto industry. Let Barack Obama and the Congressional Democrats be responsible for this latest proposal to micromanage the economy. And let them be responsible for what follows next.