The Treasury Department says in a new report the government expects to lose more than $25 billion on the $85 billion auto bailout. That’s 15 percent higher than its previous forecast.
In a monthly report sent to Congress on Friday, the Obama administration boosted its forecast of expected losses by more than $3.3 billion to almost $25.1 billion, up from $21.7 billion in the last quarterly update.
I have to spend some space apologizing (in more than one sense) for posting about this. Because this is about the Obama Administration, some will think that I’m being partisan. If I try to ward this off by pointing out that Paul Ryan voted for this policy, then someone will call me a Paulbot.
In my opinion at this moment, politics is just useless. The only thing to do is to try to give people a chance to re-engage in reality. Hopefully this spreads and, amid the horrible political chaos and cultural destruction that is about to ensue, there will be enough of a memory of reality to start something new eventually that aligns with it.
In other words, this post is about economics and nothing more.
Because if we only had lost only $25 billion we would be far better off than we are now.
Or so I guess. I’m virtually certain we are worse off, but I have no way of figuring out an exact number.
So let me change the subject…
Awhile back the bookstore chain, Borders, went bankrupt and liquidated. This meant two bookstores in my area of Saint Louis vaporized. At about the same time, my local Barnes and Noble went out of business. Three empty big boxes and no cool bookstore anywhere near me.
I found this depressing. No pun intended.
It was partly my fault. I can’t afford to buy books. Mostly I just walked around Borders and inhaled the smell of a disposable income I wish I could have some day. I would take notes and look stuff up at the public library (see: living off of the taxpayers undermines commerce). Other times, I’d go online and find a cheaper price. This was premeditated. I’ve used birthday money to pay for Amazon Prime, so I got free two-day shipping. That meant a discount on all books.
Hey, I would rather go to Borders and impulse-buy the way I used to to at BookStop and BookStar in Florida and then Nashville. But that was before I had children to support. Don’t judge me.
So no more places to go and sniff the pages and sit in the comfy chairs…
And then V-stock opened up for business in one of the ex-Borders locations.
All of a sudden, I had a place that, like Borders, sold music, videos, and books, but also sold games and game systems, comic books, and posters. And much more importantly, it sold these not only new but used, and would buy stuff from me and give me either cash or store credit!
I now own a hardback edition of Tim Powers’ The Anubis Gates! It was only $10 and in perfect condition, but I didn’t touch it until the store had their 3 for $10 hardback sale!
I have bought Wii games for the kids with nothing more than old DVD sets I got for past birthdays!
So what if Borders had been bailed out?
I would have still had my window-shopping museum. And everyone would praise the bureaucrats for saving jobs and propping up the commercial real estate market.
No one would know or care about the fact that V-stock wasn’t growing as fast. It wouldn’t be a blip on anyone’s screen.
And no one would care that I had fewer books or games in my house. As a consumer I wouldn’t matter at all.
We didn’t bail out “the auto industry.” We bailed out specific companies using scarce resources in ways that consumers don’t want. We will never know what would have happened if all that capital had been re-allocated by more efficient producers who were better able to meet consumer demand.
We didn’t just lose $25 billion (and I’m sure that’s a low figure anyway). We lost less expensive cars and other things that would have benefited the people. We would all be better off if the government had taken all those billions of dollars and just burned them and left us with the freedom to force inefficient businesses to stop and better businesses to form.
Political democracy has, once again, conquered economic democracy.