Ryan’s story about Janesville GM plant highlights bigger concern about government
In August at the Republican National Convention, vice presidential nominee Paul Ryan said that President Obama broke his promise to keep the struggling General Motors plant in Ryan’s hometown of Janesville from shutting its doors. The problem isn’t government’s failure to keep a single struggling auto plant open; it’s our mentality that it’s appropriate for government to intervene in the market to save struggling companies.
When the going gets tough, companies increasingly look to government for help.
We don’t always question whether it’s government’s responsibility to step in and save private companies from the brink of collapse—we just accept that it happens. It doesn’t matter who occupied the Oval Office when the Janesville GM plant shut its doors—presidents should have nothing to do with plant closings at all.
Like most Washington politicians, the president is too far removed from the auto business—or any business, for that matter—to know what’s best for the market. Americans are better off when the government stays out of the market entirely and instead allows market forces to work on their own.
It’s merely a matter of time before cars go the way of buggy whips, typewriters and cassette tapes. Overall welfare would improve if the government embraced the creative destruction in the economy instead of cementing favored activities for reasons of nostalgia and favoritism.
Later in his speech, Rep. Ryan rightly criticized companies that received federal stimulus money for their “gold-plated connections, subsidized jobs, and make-believe markets,” but he failed to connect the dots. If President Obama had delivered on his promise to bail out the Janesville GM plant, the jobs would be similarly subsidized and the demand would be similarly artificial.
Republicans distinguish themselves as champions of limited government and a strong private sector, but their policies paint a different picture. Republicans are just as addicted to doling out special favors as their colleagues on the Left.
Propping up companies comes at a real cost. This money doesn’t appear out of thin air; it comes from the pockets of hardworking taxpayers and consumers. When Republicans give special tax breaks to their favored companies, it shifts the tax burden onto the rest of Americans. With the national debt exceeding $16 trillion, taxpayers can’t afford to prop up every private company teetering on the brink of collapse. With each bailout, handout, and special-interest giveaway, the government sends the mistaken message that it’s OK to pick winners and losers in the marketplace.
We should strive for an economic climate where strong, profitable companies can compete on their merits, not one where struggling companies turn to government to save them.
Christine Harbin is federal policy analyst for Americans for Prosperity, the nation’s largest free-market grass-roots organization. AFP is committed to educating citizens about economic policy and mobilizing those citizens as advocates in the public policy process. Address 2111 Wilson Blvd., Suite 350, Arlington, VA 22201; phone (703) 224-3163; website americansforprosperity.org.