Last night, restless because of a cold and bummed by reports
about the auto bailout, I picked up my copy of
Bright Promises, Dismal Performance, a collection of Milton
Friedman's old Newsweek columns. I was drawn to one in
particular, a September 10, 1979 piece on the prospect of an auto
bailout, titled, "Chrysler: Are Jobs the Issue?" This part jumped
out at me as especially relevant today:
Bailing out Chrysler will not change the total amount of
capital available to the economy. But it will divert capital to
Chrysler from other more productive uses.
Bailing out Chrysler would simply preserve unproductive jobs at
the expense of productive jobs. However, the people who would
be denied jobs by a Chrysler bailout do not even know who they
are, so they cannot speak out to counter the self-serving
claims of the firm's present management.
The private enterprise economic system is often described as a
profit system. That is a misnomer. It is a profit and
loss system. If anything, the loss part is even more
vital than the profit part. That is where it differs most from
a government-controlled system. A private enterprise that fails
to use its resources effectively loses money and is forced to
change its ways. A government enterprise that fails to use its
resources effectively is in a very different position.
