[youtube:http://www.youtube.com/watch?v=pZ3BXixtahg 450 300]
Some weeks back, before the auto industry bankruptcies were effected, an observer objected to Alpha Dawg’s depiction of the Obama Adminstration’s handling of the Chrysler bankruptcy as “fast and loose” with our traditional respect for the rule of law. The Obama defender said that it was not true that the Administration sought to circumvent traditional protections for senior creditors that have been laid out in corporate law since the beginnings of the industrial age, and that such machinations would not occur.
Well now we know different, and it appears that members within the Administration (as well as certain key Congressional members) have taken it upon themselves to re-order our formal capital infrastructure along lines that are, at least in the short term, more politically expedient for them and their key constituencies in Labor and the Environmental Left.
The question arises as a matter of linear reasoning — for how long will our “best system” survive such repeated violations of the ground rules? As with the examples of the ratings of bogus bond agencies or the corrupted evaluations of compromised underwriters, the credibility and cost of capital does not easily survive an uneven — and worse — arbitrary playing field. Moreover, when the font of such arbitrary rule is the far less checkable Executive Branch (thanks to the “Imperial Presidency” that’s been on the march since Teddy Roosevelt’s day), we must ask what price capital will demand in order to stay seated in the U.S. casino?
I submit that our government’s increasing propensity to interefere on the “front end” of our private sector malinvestments raises the price of doing business in this country for everyone, from the lowliest pizza franchisee to the largest and most independent of private employers. As a nation of commerce that must support an increasingly burdensome government debt, the U.S. can ill afford to become as short sighted with the levers of our economy as the typically historically benighted Latin American dictatorship.
Therefore, the first thing we must insist upon — starting today — is strict adherence to the rule of law in adjudicating the many bankrupticies that are sure to follow those of our recently ill starred auto industry. I think the only way to do so is to firewall the Executive Branch, and yes, even the Legislative Branch from these crumbling companies. No more bailouts for cronies or interest groups, no more “temporary” takeovers, and most important, no more use of regulatory or fiscal authority to pit one competitor, employee pool or supply group against another. If this need be enacted via judicial suit or non-violent protest, it must be our first priority.
The reason is simply that our families’ futures depend upon re-establishing our national credibility as a level playing field for business. For if there’s one thing I’ve said here before that I’d repeat until I was blue in the face or until every short term thinking government “fix” proponent got it, it is this short slogan:
“CAPITAL IS MOBILE!”
If you think that capital will stand passively by for continual abuse simply because it’s being housed in the heretofore “land of the free” and home of the “#1 economy” (never mind “the brave,” we’ll let that one go for now), you do not recognize the power of the global capital markets in assessing risk.
Believe me, after the embarrassingly thuggish “rescue” effected in the video above, the U.S. auto industry will be subject to that lesson in sudden and exquisite detail for as long as it takes this country to win it’s credibility back.
Don’t hold your breath. Instead, get out in front of your Congressional advocates. Let them know you take the reshaping of our legal infrastructure seriously. And that you will hold them accountable for their silence.