© Robert S. Miller 2008
Thursday, November 18, 2010
THE GREAT RECESSION OF 2008: So Where’s My Bailout?
I would like to convey to United States Secretary of Treasury Henry Paulson, Secretary of Treasury Designate Timothy Geithner, United States President George W. Bush and President-Elect Barack Obama the following sentiment: I, Robert S. Miller, play a vital role in the American Economy. This may seem like boasting, but please think about this for a moment. Hollywood alone is taking in approximately $15 billion annually at the box office. This does not include revenue generated by independent studios or by the major television networks. This also does not include major shifts in policy brought on due to the influence of these media sources. Yet name one major movie critic that is there to responsibly evaluate what the film makers are delivering to the general viewing public in such a manner that misinformation can be sifted out. I actually don’t care how many people watch some particular film. I’m more hoping that the viewers actually think for themselves when watching the film. It’s fine if they agree with me, but if they disagree with me so much the better. And besides the movie critics, I don’t want Bill Moyers, Matt Drudge, David Brooks, Chris Matthews, Cokie Roberts, George Will or Arianna Huffington telling people how to think, either. These individuals do a great disservice by playing arbiter rather than mediator of the truth. For example, just the other day I heard Ms. Huffington proclaim that the progressives have won the day in the battle of words concerning the impact of the Iraqi War begun under the George W. Bush administration. Yet if this was the case, why has the war been projected to continue until 2011 – three years into the Obama administration? Maybe Ms. Huffington has only been successful in converting a certain segment of the population to her way of thinking while failing to convince the rest. Whether she is right or wrong, I’m happy that at least a portion of the population disagrees with her.
And so beyond the $700 billion already allocated by Congress and the Senate to salvage the economy, we probably have a trillion dollars more being proposed to rescue various industries in the United States. Much of that money is to be reinvested in businesses that would otherwise fail without assistance by the government. “Goodness is the only investment that never fails,” said Henry David Thoreau. I realize that this comes very close to sounding like self-righteous twaddle, but I do think this quote comes at least somewhat close to defining what has gone wrong on Wall Street. The banking industry was made up of executives that approved loans that would at least temporarily improve the stock portfolio for their investors, and then they sold their own stock before the rest of the nation was to learn that the portfolio was too good to be true. The banks are now being bailed out. Also, the United States Government has long pointed to the automobile manufacturers (and in particular, the “Big Three”) as to being the number one contributor to pollution in the nation and in the world. One particular former senator has in fact made a fortune for himself and won himself a Nobel Prize by claiming that manmade global warming is the major issue of our day. Yet now we have longtime supporters of that former senator (namely Barney Frank and Nancy Pelosi) claiming that the automobile industry, and particularly those three companies that have failed to market environmental and energy saving innovations, must be bailed out (without overtly saying that the economy has now trumped environmental concerns).
Now economists such as Thomas Friedman and Nobel Prize Winner Paul Krugman have jumped on the bailout bandwagon. Please note that both of these best selling authors and commentators are assuredly millionaires that can readily identify with the needs of the middle-class. Friedman is particularly ingratiating in providing unsolicited advice with his The World is Flat folksy analogies of the wonders of a global economy. Friedman is very good at predicting the ten great trends towards globalization … after the fact. He also writes movingly about advancements taking place in India due to globalization, though I haven’t yet heard him suggest that maybe India is not as flat as he previously thought following the terrorist attacks in Mumbai. Maybe it will take more than globalization to make terrorism go away. Or maybe it was precisely because of globalization where industries move their companies to other countries to exploit the cheap labor that they can find in these nations that made Mumbai an ideal target for terrorists where these terrorists could strike back at one more symbol of the modern world (just as they struck at New York City on September 11, 2001). Maybe the global economy is not as simple as these economists would have us believe, and maybe it requires more forethought than simply bailing out companies that are “too big to fail.” These two economists have changed their story by now pushing for short-term economic solutions that they believe are absolutely essential. They are now all about corporate welfare, deficit spending and other inflationary policies that ten years ago they would have claimed to abhor. On the other hand, these two scholars did show a lack of foresight in not earlier predicting a credit crunch. I don’t know why they failed to see ten years ago that there was a problem with banks when incredibly easy credit was handed out and even college students were being handed out credit card applications while lounging on the beaches of Daytona for spring-break.
At risk of boring you some more, let’s take a closer look at a recent column by Friedman that appeared in the New York Times on December 7, 2008. Friedman says: “Our kids should be so much more radical than they are today. I understand why they aren’t. They’re so worried about just getting a job or paying next semester’s tuition. But we must not take their quietism as license to do whatever we want with this bailout cash.” This is typical of Friedman who often condescends to those he claims to care for. Maybe Friedman should be more radical in not kissing up to every interest that will provide him with a future speaking engagement. Friedman goes on to say: “They are going to have to pay this money back. And therefore, we have an incredibly weighty obligation to make sure that we not only spend every stimulus dollar wisely but also with an eye to creating new technologies.” I’m glad that he wants for the government to spend the money wisely, but I think that was something that should have been considered before he started pushing for the bailout to begin with. Should the spending of this amount have been accomplished with such ease? Friedman, an outspoken critic of the Bush administration, pushed for putting $700 billion in the hands of the Bush administration. “Let’s get specific. When it comes to Detroit, my views are clear: I think we should be talking about ‘bail,’ not ‘bailouts,’ regarding the people running the Big Three car companies and the lawmakers who mindlessly protected them for so long. Still, I do not want to see jobs destroyed.” That’s very generous of Friedman to be concerned about the workers in Detroit. However, in opposition to the stance of the autoworkers’ union, Friedman has been one of the strongest advocates of globalization. I haven’t heard him complain when General Motors sent more than thirty-five thousand jobs away from Michigan and down to Mexico. “But if taxpayers are going to give Detroit money, we must not entrust the spending to people who have run their businesses into the ground.” That statement is impossible to disagree with. But please, please Mr. Friedman, tell us how you are going to prevent that from occurring short of the senate voting against the bailout. Unfortunately, I believe that Thomas Friedman is going to have his wish to see General Motors bailed out when every major newspaper left in the country prints the headline: “General Motors Has Filed for Bankruptcy!” At that point, all opposition to bailing out the “Big Three” will almost disappear.
I wonder if there has ever been any sole proprietorship, partnership, limited partnership, limited liability partnership, joint venture, franchise, corporation of any size (be it charitable or “for profit”), religious organization or government bureaucracy that has come before the halls of Congress and stated: “We’re too little to fail.” Does it make any less sense than saying we’re too big to fail? In 1988, a movie came out named Tucker that was based upon the real life adventures of an inventor named Preston Tucker. Tucker built an automobile with safety features (including seat belts) well ahead of its time, and also introduced to the automobile industry the concept of an energy efficient design. Of course, Tucker was never actually able to compete with the “Big Three” (remember, the companies now wishing to be bailed out), but many of the features of his design were later implemented into other automobiles. The movie, of course, was a vast oversimplification of what really occurred because what also brought Tucker down were allegations that he had participated in stock fraud. Still, wouldn’t it have been nice for an innovator to have remained in business instead of failing because the company was in competition with other companies “too big to fail”? It is good to remember that John D. Rockefeller, Andrew Carnegie and, of course, Henry Ford all came from humble backgrounds and started businesses that are now “too big to fail” with much less promise of success than even Tucker had in his business entrepreneurship. Yet no one ever considers that if we need to bail out businesses at all, maybe a small to medium sized business would be as great of an investment as anything else. The excuse, of course, is that we can’t do that because we have no way of knowing which little businesses will succeed and which ones will fail. The commentators seem to think we can predict which big businesses will succeed or fail with the prescience of Nostradamus.
So why not bail out me? I don’t get paid for my commentary and, other than my own personal biasness I have little incentive to take one side versus the other in any debate. I don’t even want to appease anyone by delivering a glowing review about something they did or said. I just want to express what I think with the hopes of having the appearance of wisdom on my side and maybe turning the minds of one or two readers in another direction. Am I asking too much? All I ask for is just enough money so that I can devote myself fulltime to writing without worries of retribution if I happen to skewer one of my intended victims with words. I shall wait patiently for a response from the Federal Government. They can leave their response upon my website if they so wish.
December 13, 2008
© Robert S. Miller 2008
© Robert S. Miller 2008