NY Times, November 14, 2008
Op-Ed Columnist
Bailout to Nowhere
By DAVID BROOKS
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.
full: http://www.nytimes.com/2008/11/14/opinion/14brooks.html
Brooks is a long-time conservative ideologue who like William F.
Buckley's son Christopher was very critical of the McCain campaign but
did not go all the way and vote for Obama.
"Creative destruction" refers to economist Joseph Schumpeter's belief:
"The opening up of new markets, foreign or domestic, and the
organizational development from the craft shop and factory to such
concerns as U.S. Steel illustrate the same process of industrial
mutation–if I may use that biological term–that incessantly
revolutionizes the economic structure from within, incessantly
destroying the old one, incessantly creating a new one. This process of
Creative Destruction is the essential fact about capitalism. It is what
capitalism consists in and what every capitalist concern has got to live
in. . . ."
full:
http://transcriptions.english.ucsb.edu/archive/courses/liu/english25/materials/schumpeter.html
This appears to jibe with the attitude of Republican legislators' toward
an automaker bailout:
NY Times, November 14, 2008
Chances Dwindle on Bailout Plan for Automakers
By DAVID M. HERSZENHORN
WASHINGTON — The prospects of a government rescue for the foundering
American automakers dwindled Thursday as Democratic Congressional
leaders conceded that they would face potentially insurmountable
Republican opposition during a lame-duck session next week.
At the same time, hope among many Democrats on Capitol Hill for an
aggressive economic stimulus measure all but evaporated. Democratic
leaders have been calling for a package that would include help for the
auto companies as well as new spending on public works projects, an
extension of jobless benefits, increased food stamps and aid to states
for rising Medicaid expenses.
But while Democrats said the stimulus measure would wait until
President-elect Barack Obama takes office in January, some industry
experts fear that one of the Big Three automakers will collapse before
then, with potentially devastating consequences.
Despite hardening opposition at the White House and among Republicans on
Capitol Hill, the Democrats said they would press ahead with efforts to
provide $25 billion in emergency aid for the automakers. But they said
the bill would need to be approved first in the Senate, which some
Democrats said was highly unlikely.
full: http://www.nytimes.com/2008/11/14/business/14auto.html
Hmmm. During the 1930s, there wasn't much chance that Ford, GM and
Chrysler would go out of business, right? The pain was much greater in
the 1930s but the potential for an even greater collapse exists today.
Creative destruction rests on the premise that capitalist expansion is a
kind of perpetual motion machine. But what will replace GM if it goes
under? Something tells me that we need to use a different frame of
reference to understand today's crisis rather than 1929. I am not sure
what it is. Perhaps that is a function of being in uncharted waters.
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