I'm not a Democrat Anymore

I guess I just have to accept the already obvious (but hard-to-accept) fact that I'm not a Democrat anymore. On national security issues, this fact has been quite apparent to me for a long time. On economic issues, however, I've never had strong views one way or the other. Lately, that's been changing, and the proposed bailout of the auto industry has finally crystallized my apparently non-liberal views on the economy. Today, I'll just quote from three conservative commentators, all of whom make the same (seemingly obvious) point. First, Jim Manzi:

Bankruptcy for GM

What would it mean to have GM go bankrupt? A change in ownership and a renegotiation of contracts.

The factories, computers, office space, intellectual property and so forth that are now owned by GM would not disappear; they would basically become the property of GM’s creditors. These creditors would sell the assets to the highest bidder. Assuming there is economic value to be created by continuing to operate the company as a business, private equity or strategic investors would buy the assets, shut down some plants, fire some union and exempt workers, and probably use the leverage of bankruptcy court to get a better deal from the unions. The current employees and creditors would be better off if you and I were forced by the federal government to prevent this by paying money to the corporate entity named General Motors, to then be paid to these employees and creditors. Of course, you and I would be worse off in this situation. On balance, if you believe that markets are more efficient allocators of capital than Congress is, the population of the United States would, on the whole, be worse off.
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A bailout of GM would be a pure exercise of political power to deliver taxpayer funds to one organized group of citizens at the expense of the country as a whole. It should be avoided.

Next, David Brooks:

Bailout to Nowhere

Not so long ago, corporate giants with names like PanAm, ITT and Montgomery Ward roamed the earth. They faded and were replaced by new companies with names like Microsoft, Southwest Airlines and Target. The U.S. became famous for this pattern of decay and new growth. Over time, American government built a bigger safety net so workers could survive the vicissitudes of this creative destruction — with unemployment insurance and soon, one hopes, health care security. But the government has generally not interfered in the dynamic process itself, which is the source of the country’s prosperity.

But this, apparently, is about to change. Democrats from Barack Obama to Nancy Pelosi want to grant immortality to General Motors, Chrysler and Ford. They have decided to follow an earlier $25 billion loan with a $50 billion bailout, which would inevitably be followed by more billions later, because if these companies are not permitted to go bankrupt now, they never will be.

This is a different sort of endeavor than the $750 billion bailout of Wall Street. That money was used to save the financial system itself. It was used to save the capital markets on which the process of creative destruction depends.

Granting immortality to Detroit’s Big Three does not enhance creative destruction. It retards it. It crosses a line, a bright line. It is not about saving a system; there will still be cars made and sold in America. It is about saving politically powerful corporations. A Detroit bailout would set a precedent for every single politically connected corporation in America. There already is a long line of lobbyists bidding for federal money. If Detroit gets money, then everyone would have a case. After all, are the employees of Circuit City or the newspaper industry inferior to the employees of Chrysler?

Finally, the incomparable Charles Krauthammer:

The Bailout's Fault Lines

WASHINGTON -- Finally, the outlines of a coherent debate on the federal bailout...The fault line is the auto industry bailout. The Democrats are pushing hard for it. The White House is resisting.

Underlying the policy differences is a philosophical divide. The Bush administration sees the $700 billion rescue as an emergency measure to save the financial sector on the grounds that finance is a utility. No government would let the electric companies go under and leave the country without power. By the same token, government must save the financial sector lest credit dry up and strangle the rest of the economy.
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With almost 5 million workers supported by the auto industry, Democrats are pressing for a federal rescue. But the problems are obvious.

First, the arbitrariness. Where do you stop? Once you've gone beyond the financial sector, every struggling industry will make a claim on the federal treasury. What are the grounds for saying yes or no?

The criteria will inevitably be arbitrary and political. The money will flow preferentially to industries with lines to Capitol Hill and the White House. To the companies heavily concentrated in the districts of committee chairmen. To clout. Is this not precisely the kind of lobby-driven policymaking that Obama ran against?

Second is the sheer inefficiency. Saving Detroit means saving it from bankruptcy. As we have seen with the airlines, bankruptcy can allow operations to continue while helping shed fatally unsupportable obligations. For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48)...

I not only find myself agreeing with all of this; I find it all so obvious that it need not be said. Yet Democrats disagree. If am far removed from the Democrats on both national security and the economy (which I definitely am), I guess it's time to switch my party affiliation (to Independent!). If I ever find myself opposing gay marriage, arguing that life begins at conception, opposing all forms of affirmative action (not just diversity-based affirmative action programs, which I do oppose), and resisting modest gun control efforts, then I guess I'll join the Republican party. The evil and greedy Republican Party (which is how I viewed conservatives until the last 5 years or so).

UPDATE: An alternative view on the bailout can be found here. The essence of the argument is this:

Panic in Detroit

by Jonathan Cohn

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One reason for the casual support for letting GM fail is the assumption that bankruptcy would be no big deal: As USA Today editorialized recently, "Bankruptcy need not mean that the company disappears." But, while it's worked out that way for the airlines, among others, it's unlikely a GM business failure would play out in the same fashion. In order to seek so-called Chapter 11 status, a distressed company must find some way to operate while the bankruptcy court keeps creditors at bay. But GM can't build cars without parts, and it can't get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.

That's why many analysts and scholars believe GM would likely end up in Chapter 7 bankruptcy, which would entail total liquidation. The company would close its doors, immediately throwing more than 100,000 people out of work. And, according to experts, the damage would spread quickly. Automobile parts suppliers in the United States rely disproportionately on GM's business to stay afloat. If GM shut down, many if not all of the suppliers would soon follow. Without parts, Chrysler, Ford, and eventually foreign-owned factories in the United States would have to cease operations. From Toledo to Tuscaloosa, the nation's?assembly lines could go silent, sending a chill through their local economies as the idled workers stopped spending money.

Restaurants, gas stations, hospitals, and then cities, counties, and states--all of them would feel pressure on their bottom lines. A study just published by the Michigan-based Center for Automotive Research (CAR) predicted that three million people would lose their jobs in the first year after such a Big Three meltdown, swelling the ranks of the unemployed by nearly one-third nationally and leading to hundreds of billions of dollars in lost income.

Basically, he is saying that we should bail out GM for the same reason we should bail out the financial markets (i.e., the collapse of GM would create a systemic problem, not just a problem for GM). In other words, GM is too big to fail. I'm not sure this is true, but if it were deemed to be true, couldn't the government just find a way to guarantee the availability of credit so that Chapter 11 bankruptcy (rather than Chapter 7 bankruptcy) could be used?