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May 25, 2010


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Perhaps GM should have gone bankrupt. But the government faced large issues if they had. They are an exceedingly large employer whose workers would have had to collect unemployment insurance, which would have had to been paid by the government. The cascade to dealers, suppliers, etc. would have made the problem even worse.

The government did a few things right:
- It got rid of management.
- It forced a reorganization.

I am not a GM fan, but the country is (should be) about more than capitalist economic purity. It is about the people who live here. Would they have been better off - in concrete terms - if GM had simply failed? If so, how?

Yes they would be better off if GM had failed. The assets would have been redistributed to companies that created products and services that society values enough to keep them in business without a government bailout. We gain nothing by propping up a company that is destroying wealth. With a bailout the company has no incentive to make the tough choices to stay in business through competing.

Yes, the country is about more than capitalist economic purity: it involves private industry, government, and religious or charitable organizations. The role of private industry is to create economic wealth; the role of government is to make and enforce laws and to defend the country; and the role of charity is to help one's neighbors and families and communities.

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