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February 18, 2012 12:43 PM You want to know something the federal government is good at?

By Rich Yeselson

Temporarily taking over dysfunctional, yet critical industries (or even entire industrial sectors) and improving their efficiency and bottom lines.

The other day Mitt Romney repeated his opposition to the restructuring of GM and Chrysler using public money.. As many have remarked, including former Washington Monthly super blogger, Steve Benen, this would almost sound sensible except for the fact that—hello!—there was a monster financial crisis in 2008 and 2009. The entire international credit system was frozen—there was no private capital interested and available for such a massive project. If Bush and Obama had followed Romney’s advice, we might have had a bonfire of the liquidators and stuffed the 10 cents on the dollar cars with five cent on the dollar books from Borders. It’s almost painful to also observe, as Benen does, that Romney’s analysis is transparently given in bad faith, so as to somehow mete out the pathological criticism of Obama that the party base requires even when his policies have succeeded.

But it’s even worse than that (isn’t always with Romney?). If you actually know the history of similar interventions in American history (including the Chrysler bailout of just thirty years earlier) as spelled out in this great Phillip Longman essay in this magazine from 2009 it turns out that the federal government has regularly salvaged companies vital to the nation’s economic ecology—and done so with great success.

Indeed, progressive fascist Woodrow Wilson even nationalized the entire national rail system during World War I, at a time when rail was, arguably, even more significant to the American economy (because it controlled almost all interstate commercial transportation) then the automobile is today. And Secretary of the Treasury, Williams Gibbs McAdoo, was appointed Director General of the nation’s railroads, which was like having the power of the God of Thunder, Mighty Thor, compared to the mere “Czars” and their little fiefdoms that pollute the Obama administration.

And McAdoo improved the efficiency of the railroad industry. Then, after the Armistice, Wilson turned around and gave to Congress the task of reconverting the railroads to private ownership, which was completed in just 18 months.

And years later, Mitt Romney was still permitted to pay under 14% of his income in federal taxes—and, thus, the natural order was restored.

Comments

  • thebewilderness on February 18, 2012 2:03 PM:

    That may very well be true, but just think what Bain Capital could have done with the auto industry.

  • Rick B on February 18, 2012 2:24 PM:

    Romney can't admit that the government bailout was successful because that would mean that his entire argument for being elected President (I'm a businessman and I know how to create jobs.) is exposed as a lie.

    Businessmen cannot be trusted to run critical industries on their own! History has proven that time and again in one nation after another. That's especially true for banks which will, without some active controls, take larger and larger risks to make money until they blow up the economy and put it into recession or depression. Businessmen think too narrowly to be trusted with a critical element in the national economy on their own. They always require supervision.

  • jjm on February 18, 2012 2:31 PM:

    Sick businesses are there for ME, MITT, to make money on! Never actually try to heal them, just suck the last drops of blood out of them. That's what really is winding Mitt up -- the government taking away E-Z victims.

    By the way, the one "good" thing to come out of Citizens United is the exposure of the terminal insanity, nastiness, shortsightedness and viciousness of the billionaires who have already been ruling our country. Now we know, and should act accordingly. They are SO UNDESERVING of any political power whatsoever.

    I don't know just what it takes to become a billionaire, but is obviously isn't brains, good character or decency. Yes there are some exceptions, but they aren't bankrolling retreads like Santorum who want to return to the good old days of pre-Reformation Catholicism, or at least to the Counterreformation. Or sleazebags like Mitt.

  • emjayay on February 18, 2012 2:39 PM:

    thebewilderness: I assume you're joking, but Chrysler had of course already been taken over by a Bainlike private equity group, Cerberus.

    Without specific knowledge and given the two year or so lag time in putting out new car models, it's hard to pinpoint exactly who to blame for what. Chrysler had merged with/been bought out by Daimler a few years before that. With that one-two mismanagement punch, they ended up with a bunch of misconceived new models, mostly with stupid names besides. Most were not well designed, sorted out, or built, and with noticeably chintzy interiors besides. All of which indicates a lack of sufficient investment, which is probably mostly the result of the Cerberus buyout and cost cutting policies.

    The new ObamaMotors raced to sort out and restyle the existing models, stick in new interiors, and get replacements out. I don't know if they have figured out how to screw them together properly.

  • j on February 18, 2012 2:48 PM:

    But didn't Mittens beg for and get bailout money for the Utah olympics?

  • Steve on February 18, 2012 2:50 PM:

    4th paragraph, it should be "than" not "then."

    Just sayin'.

  • SYSPROG on February 18, 2012 2:52 PM:

    Nice...I'm SAVING this one for the Republicans that constantly bombard me with hate email about GM. I really loved one the other day that said 'yeah he saved the auto industry but the workers had to take a cut in salary!!!' I asked him how did he square that with the Republican governors attack on Unions and the 'right-to-work-for-less' states? No reply.

  • Matt on February 18, 2012 2:53 PM:

    "And years later, Mitt Romney was still permitted to pay under 14% of his income in federal taxes—and, thus, the natural order was restored."

    Nice touch at the end.

  • DJ on February 18, 2012 2:54 PM:

    And Secretary of the Treasury, William Gibbs McAdoo, was appointed Director General of the nation’s railroads, which was like having the power of the God of Thunder, Mighty Thor, compared to the mere “Czars” and their little fiefdoms that pollute the Obama administration.

    He was also Wilson's son-in-law.

  • Jimo on February 18, 2012 5:33 PM:

    "That may very well be true, but just think what Bain Capital could have done with the auto industry."

    But isn't this the great truth: that what Romney did as his claim to fame -- restructure businesses so that they could return to some long-term profitability -- the Obama Administration did with the auto industry? Except that the Obama people did it much, much more successfully than the woeful litany of Bain Capital questionable "successes".

  • Anonymous on February 18, 2012 5:41 PM:

    @Jimo: How can you call it successful? None of the people in the administration made hundreds of millions of dollars from the deal. In fact they didn't even steal the pension fund, which is the first step in any successful vulture capitalist takeover.

  • Kurt Rex Cooper on February 18, 2012 7:16 PM:

    But, that ability to restore ailing industries depends on good civil service workers ones who are beyond the bullying & threats that come with a non-appointed position. Well in case you missed it, Arizona is about to strip its civil service of their rights and you know what happens with one right wing state is copy catted by others.

    The Arizona State Legislature and it's members are about to become responsible for personnel issues in the state. If Governor Brewer's proposal to strip some and new employees of their current protection under merit rules passes, then the legislature becomes the ultimate go to people when problems develop. 

    If you are harassed, you have no recourse within the system so you complain to your legislator. If someone asked you to bend the numbers or give a contract to a friend, then you call your legislator. If your desk is at the wrong height, your legislator can get them to fix it. If someone is hired over you well it may be they have friends in high places so you call you legislator.

    If they will not help you, and you lose your job, then you sue. I am sure the legal teams of major firms like Goldberg & Osborne would he happy file properly documented harassment cases. 

    Meanwhile to paraphrase Ayn Rand, "In Arizona, the aristocracy of merit has been replaced by the aristocracy of pull." "It might be nice to get a state job?" "Who do you know?" "No one." "Sorry friend, unless you know powerful people you are out of luck."

    Here's the link: http://tinyurl.com/8yfbtgc 

  • Thomas on February 19, 2012 12:24 AM:

    To be fair to Romney:

    He's boxed into a losing position that he can't renege on. I guess we're all seeing a disadvantage of starting a presidential campaign on Inauguration Day - you might criticize a policy that has enough time to succeed before the election. Oh and by the way, criticizing a successful policy is nothing new in electoral politics, and certainly not limited to the GOP base.

    But a word of caution to everybody: Sure, the auto bailout worked, but don't overestimate their popularity. Bailouts, in general, are still anathema to most voters, and Romney knows this. Despite the success, I'm willing to bet most people are at least reluctant to admit they support it.

    In the end, Romney is still stuck supporting a losing position. His only real option is to mitigate the damage by reminding people they still don't like bailouts, which isn't an unreasonable move at all.

  • The Oracle on February 19, 2012 2:56 AM:

    Maybe what's really pissing off Mitt Romney is that Bain Capital in 2009 didn't get a chance to takeover GM and Chrysler, for pennies on the dollar, and do what Bain has done to other companies, while turning Bain a hefty profit as Bain cannibalized the companies.

  • max on February 19, 2012 3:02 PM:

    A good book that not enough people have read is University of Cambridge Professor Ha-Joon Chang's, "23 Things They Don't Tell You About Capitalism". There are dozens of capitalist models any nation can adopt, but the one we have adopted - rightly referred to as "corporate communism" by Dylan Ratigan - brought us the 2008 economic meltdown and continues to threaten our economy every day. Rigid free marketeers (who really aren't) never supported even a temporary loan to the vital U.S. auto industry, and when it worked they claimed it didn't, as if we are all wearing blinders. Other capitalist nations have been bolder with considerable success. For example, the South Korean government subsidized three industries that did not even exist in South Korea - steel, electronics, and automobiles over the cries of free market "experts". And they are all very successful. Imagine what we could accomplish here if we could remove the dead weight of corporate cronism and their dinosaur cheerleaders from the equation.