By Robert Perrego, at 8:05 am on December 9th, 2008
The political philosopher Alexis de Tocqueville said “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.“
That day is at hand and this latest event, if left unchecked, will be the beginning of the end of The American Republic’s business competitiveness and the American Dream itself.
Illinois Governor Rod Blagojevich’s, Cook County Commissioner Mike Quigley and Senator Christopher Dodd are now trying to dictate how businesses run their business and are making threats to come down on Bank of America and General Motors unless they run their business as dictated. This is one of the most dangerous moves to the American Dream I have ever seen by any politician in the history of the United States.
Last week Bank of America cut off a line of credit to Republic Windows & Door, who in turn shut down their production facilities. The employees of the plant staged a sit in at the plant in order to protest and get monies they were promised by the company.
Bank of America was making a business decision in response to a bad credit situation. Their view was that the risk of leaving this line of credit open was that the company would borrow further funds and that they would not be able to pay the money back. This is what banks do – they assess credit risk and make, or take (according to the legal credit provisions in the originally agreed upon loan) loans based on the ability of the borrower to pay the money back. If the borrower is not credit worthy, or if the probability increases the loan is not going to be paid back, the bank stops loaning the money.
The sit in at the factory created national headlines with Obama coming out in favor of the 250 union workers who believe they are owed money. I believe the workers should get their money as they are owed it to, but where this money is coming from is a whole different matter. If the company made bad business decisions and does not have the money is it Bank of Americas liability to loan the company the money knowing they are most likely not going to get it paid back? Is this a wise decision on the part of the bank when running their business? Is the bank in business to correct the mistakes or misfortunes of the company?
You think this is sensationalistic? Not at all. Now the local and state politicians want to punish Bank of America and force them to give the money to the company so the workers get paid. It is not the Bank’s responsibility to do this – each business makes decisions as a business. If one business fails that happens to be how the system works. Enter stage left the politicians who can score some votes, and never forget that a politicians number one job is to get re-elected.
If government officials, long known to be most concerned with getting re-elected, get involved and start to pressure companies to make decisions not based on smart business, but on what is ‘right’ or ‘wrong’ and on what makes them look good in the eyes of ‘the people’ (read – get more votes) it is the death knell of American business competitiveness and the first evil tendril of socialism seeping into and corrupting the health of the economy.
Senator Dodd thinks he should be able to tell General Motors how to run their business. How long has Senator Dodd been working in the automotive business? If the government wants to help the automakers out that’s fine and that is their yes or no decision. Where this slope gets slippery is when the government, who is not an expert in any business but being the government, starts to dictate too many provisions and micro-manage business they have no expertise managing. I would venture to say it is a commonly held opinion that the government is just barely able to take care of government business these days.
How are what Dodd, Blagojevich and Quiqley doing any different from Hugo Chavez’s nationalization of the oil industry? Chavez decided that the oil profits and wealth should be ’spread around’. Since Chavez, a politician, got involved in the oil industry a few years ago the Venezuelan oil production has dropped by a quarter even while the price of a barrel of oil was skyrocketing.
How long is it before some senator gets it in their head that since the government loaned the auto industry money, that someone making under a certain amount a year should be able to buy a car from General Motors for a cheaper price? I can see it now – just bring your 2008 tax forms down to your local General Motors dealership for 10% off a new car. I am sure this will get whomever is in office a lot of votes. Maybe Bank of America should have to give mortgages to people with bad credit as they did take government assistance this year. Oh wait a minute – we just tried that with the CRA Act of 1977 and its revisions in 1995 which involved the changes in the regulations involving the securitization of mortgages that was supposed to make the mortgages less risky so that people of lower credit could get a mortgage. How is that working out for us now?
Basically when a business decision is made by a politician it is usually not in the best interests of good business, but in the interest of votes. This loss of focus most always results in the business being crippled, wasting assets and eventually going under.
This is how a politician buys your vote with your tax dollars. Its called extortion and bribery in the name of ‘fairness’. It is called socialism.
This is the beginning of the end.
“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” — Winston Churchill
