Wednesday, November 28, 2018

General Motors Layoffs: Great Recession Bailouts Didn't Work

General Motors just shared some very bad news: It is closing five factories in the United States and Canada, eliminating 15 percent of its work force, and getting out of the passenger-car business almost entirely to focus on SUVs and trucks.

GM has a much healthier business selling trucks and SUVs, a business that it now will focus its resources on - as it should have done long ago.

We were told that we simply must bail out General Motors during the financial crisis because if we failed to, that would lead to a bloodbath of job losses and cascading business failures.

If New York City can only hope to attract a firm like Amazon by essentially bribing its shareholders, then what does that say about New York City? A New York City with excellent schools, a first-rate mass-transit system, a sensible tax and regulatory environment, and better public sanitation might not have to pay off corporate shareholders - no, that kind of New York City would have the confidence to say: "This is New York. Lots of people want to be here. You're welcome to join us, and we'll provide the best municipal services we can, but don't act like you're doing us a favor. We were a big deal before you came along, guys." But fixing the schools and subways is hard work, and doing it economically is even harder.

We engage in a great deal of social spending that encourages people not to work when we probably should spend some of that helping people to work, for instance by repacking some unemployment benefits as relocation assistance to help unemployed workers go where the jobs are.

Just giving companies money - in the form of bailouts or Amazon-style incentives, which ultimately amount to the same thing - in exchange for their "Creating jobs" is a losing proposition.

The lesson we should have learned - to let business be business and let government be government - seems to be for the moment beyond our political imagination: Left and Right alike are partly or wholly captive to the fantasies of managerial progressivism and neo-mercantilism, with the Left imagining that Washington can intelligently direct energy and labor markets and much of the Right falling in behind protectionism, "Managed trade," and corporate welfare for everybody from Boeing to Foxconn.

https://www.nationalreview.com/2018/11/general-motors-restructuring-bailouts-dont-work/

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