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More on Freedom (or “how to not run GM”)

July 16, 2009

One of the ways in which governments start to take power is by taking control of industries or by regulating the industries in such as way as to pick winners and losers within the industry.  When the government at least limits itself to creating transparent regulations (I know, what sort of foolish utopia do I think we have!?), then at least everyone has to play by the same rules.  Unfortunately, when the government insists upon owning businesses or industries, they can’t resist the need to tamper with them.  It’s kind of like buying a car and not being able to drive it.  You KNOW you’ve at least got to test drive the thing if you paid for it.

In a recent, egregious case, the government took over the running of General Motors.  At the time, was said to be a temporary thing and that, “What we are not doing … is running GM.”   However, fast forward a couple of months and this story appears:

The car’s been sitting in the driveway for a while.  Not just Obama, but congress and the UAW have the keys to the car as well.  Someone just had to take it for a drive.. and so it starts:

Got that? Then, GM tries to close hundreds of excess dealerships to cut costs…and now Congress is stepping in to stop them. Reason’s Ron Bailey points to today’s Washington Post: “Under legislation that has rapidly gained support, GM and Chrysler would have to reinstate more than 2,000 dealerships that the companies had slated for closure… Since federal money has been used to sustain the automakers, [the dealerships] say Congress has an obligation to intervene.” Bet this won’t be the last time Congress moves to intervene in GM’s management decisions.

Even without evaluating whether or not this is a good idea, it’s just a symptom of what this system of ownership promotes.  Give Congress the keys to the car and they’re going to start screwing around with it (normally, I’d say they take it out and drive drunk with it at high speeds…). What does this mean in terms of freedom?  Well, first of all it means that yet again the investors get screwed by not being able to run the company (or take the company into bankruptcy) the way they would like – especially the bondholders who were dismissed while the government was busy giving favors to the UAW.

Anyone who thinks this is shocking is, well… a fool.  This is how things work.  One of the things the founding fathers gave a lot of thought to is human nature.  It is human nature to take advantage of situations like these.  It is human nature for politicians to wield power in a way that benefits them and the people who support them.

You cannot change human nature, it’s simply not something that works.  You can, however, set up a system and enforce a system that doesn’t put people into a position where we have to rely on the best part of their nature to help them avoid corruption.

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