The Giles Files: Statism nothing but failed policy

Merriam-Webster defines statism as the ‘concentration of economic controls and planning in… Merriam-Webster defines statism as the ‘concentration of economic controls and planning in the hands of a highly centralized government often extending to government ownership of industry.’

Statist economies have an illustrious history that includes the disastrous genocidal experiments of the Khmer Rouge, Chinese communists and Russian Soviets, as well as the German Nazis and Italian fascists. Indeed, the thread that runs through both communist and fascist ideologies — two disparate and diametrically opposed philosophies — is statist economic policy.

In extreme examples, such as the experiences of communist and fascist states, statist economies produce immense human suffering and loss of life. But in its less drastic applications in the post-World War II economies of European nations such as Britain and France, the effects of statist economic practices include economic stagnation and a loss of individual liberty.

For this reason, Britain and France largely abandoned central economic control and national ownership of businesses. Inexplicably, President Barack Obama has chosen to ignore the dismal record of statism and has plunged the United States into a centuries-old quagmire of government control and nationalization.

The latest target: the U.S. auto industry.

On Sunday, the Obama administration ousted General Motors’ CEO Rick Wagoner and ‘instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as conditions for receiving another much-needed round of government aid,’ the New York Times reported.

This new initiative is objectionable in two ways.

First, Obama’s actions amount to the nationalization of significant sectors of the economy, including banking, insurance and now transportation. Although AIG, Chrysler and GM are not explicitly owned and operated by the U.S. government, the ability of the Obama administration to dictate mergers, management and bonuses amounts to the effective nationalization of these companies.

Second, by refusing to allow the free market to naturally correct the automobile industry, Obama guarantees that the decline of U.S. auto manufacturers will be longer, more painful and far more costly than if they had simply been allowed to enter into bankruptcy immediately.

It’s important to remember that the federal government already bailed Chrysler out in 1980 and that GM’s share of the market has consistently decreased in recent years. In short, consumers have rejected both auto manufacturers on more than one occasion. The taxpayer should not finance such failure.

An essential aspect of the problem is that the government is acting to insulate individuals and corporations from the negative consequences of their actions.

The government is coddling individuals who bought homes they couldn’t afford at rates they didn’t comprehend and keeping corporations afloat that’s products are not wanted and that’s business models are fundamentally flawed.

The government is keeping auto workers employed — workers whose demands for more benefits and higher wages than similar workers at competing companies contributed to the downfall of the U.S. automobile industry.

The government has no responsibility to the careless, the useless or the shortsighted. Rather, Obama must turn away from such heavy-handed intrusions into the U.S. market before they harm the free market foundations of this country.

It must be recognized that the United States is inextricably linked to the existence of a free market. But Obama is demanding that the American people abandon the free-market system envisioned by the founding fathers and sacrifice their economic liberty for bread, circuses and the U.S. auto industry.

But the very liberty at the root of our economic system is not worth sacrificing for the continuation of failed businesses and the jobs attached to them.

John Adams wrote, ‘Remember democracy never lasts long. It soon wastes, exhausts and murders itself. There never was a democracy yet that did not commit suicide.’

Only we, the citizens of this nation, can destroy our democracy. Let us reject the statist economic model that led so many nations to financial and political ruin before we do any more damage to the country.

E-mail Giles at gbh4@pitt.edu.