Jag Venugopal's Blog

July 21, 2011

A Major Accomplishment

Filed under: Business — Jag @ 6:08 am

The US Government exited its investment in Chrysler. All told, it lost about $1.3 billion dollars (that’s billion with a “B”). The treasury hailed it as a “major accomplishment”.

One needs look no farther to examine the reason for many people’s antipathy towards the Obama administration than the above sentence. I hate to think of how many more “major accomplishments” the administration hopes to achieve with borrowed money.

For all the tall claims, what the government did was to prop up a chronically ill carmaker that churns out product that no one wants to buy. In a capitalist society, Chrysler would have gone out of business, and the resources consumed by it would have been put to better use. In a socialist society, this is not allowed to happen, thus perpetuating the drain on scarce resources by these companies. Often, this happens in the guise of protecting jobs, etc. A few thousand or tens of thousands of jobs are “saved”, while saddling the millions with the costs.

Milton Friedman must be turning over in his grave.

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