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.