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February 18, 2013 | 73 comments
Another name for Obamanomics’ trillion dollar business model.
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This is beguiling rhetoric, but it is not the way anyone thinks (or can afford to think) in running a business. Businesses exist for the purpose of finding profitable ways to satisfy paying customers. The essence of private enterprise is that businesses go out of business if they aren’t up to the task of earning a decent return on capital deployed while, at the same time, satisfying their customers (the automakers, unfortunately, have failed miserably on both counts). The creation of employment and the enrichment of workers are byproducts of running a successful business, not ends in their own right.
The lemonade stand that the administration is erecting for Detroit’s benefit is like that of the kiddies in being rife with subsidies — with little regard for whether the resulting product is anything that any real (i.e. independent and value-conscious) customer would want to pay for. The subsidies range from government-backed warranties and tax breaks to lower the price of cars, to elimination of a great deal of outstanding debt for the auto makers and the provision of federal loans to cover their working capital needs.
In subsidizing General Motors, the government is effectively trying to make up for an unfavorable cost differential between GM and the most efficient producers, and between GM and the manufacturers of the most highly desired automobiles. Either way, the subsidies impose both direct and indirect costs upon the American people (use of taxpayers’ money, firstly, and then protectionism, disruption of trade, larger, more intrusive government, reduced return on investment and loss of productivity), and these are costs that are potentially open-ended and all too likely to mount over time.
To its credit, the administration seems to have recognized these dangers. It has acknowledged that it may still be necessary to hang out a bankruptcy sign — with a possible Chapter 11 reorganization for GM and the further possibility of Chrysler going into liquidation.
Even this government, it seems, may grow tired of the funny business of running a lemonade stand.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?
H/T to National Review Online