…is a fraud, as Shikha Dalmia points out at Reason. President Obama wants to make his handling of the auto bailouts a major theme of his 2012 campaign, but the inescapable reality is that those bailouts were a failure in every way, other than in helping Democratic constituencies. No one has done a better job of explaining why exactly the GM and Chrysler bailouts were terrible policy than Dalmia.
The worst part, as Dalmia argues, is that it’s only a matter of time before those same companies are in dire trouble again:
Even for GM and Chrysler, the bailout constitutes a missed opportunity, not a second chance. They didn’t get nearly the kind of relief from labor costs that they would have in a normal bankruptcy. Not only are they on the hook for most of their legacy costs, they still pay union workers $58 per hour including benefits. This wouldn’t be so bad if Toyota, whose costs are $56 per hour, were setting the industry’s cost curve. But that’s no longer the case. Hyundai and Kia, with $40-an-hour costs, do that. The bailout prepared GM and Chrysler to compete with the industry leaders of yesterday, not tomorrow.