I just read a great article by Megan McArdle, explaining — in case anyone didn’t already get this — why the Chrysler bailouts have to do almost exclusively with the unions. She makes her case eloquently, by examining other possible motives and subsequently discarding them, for good reasons:
Chrysler is a good company caught in a bad situation. Chrysler has been a bad headache for years. Daimler bought it for $36 billion in 1998, and actually paid $650 million to have Cerebrus take the company off their hands in 2007.
Clearly, that dog won’t hunt.
The administration isn’t kowtowing to the unions; it’s trying to prevent massive job loss. Chrysler employs about 60,000 people. This is a rounding error in the number of jobs that have been lost since this recession began.
Nope, try again. Ms. McArdle lists out other possible opportunities and explains why she finds them all lacking, and ends with an elegantly simple coup de grâce:
I am unaware of any evidence that a single industrial failure has ever precipitated the kind of massive, widespread hardship that followed, say, the failure of Jay Cooke & Co. Intervening to prop up a company that has been struggling for a decade is almost textbook bad economic policy. [emphasis mine]
And she’s right.