Thursday, May 3, 2012

Foreigners and Free Markets

I was watching This Week with George Stephanopolous from this past weekend, and I heard something that struck me as being particularly dim-witted. At one point in the discussion, one of Mitt Romney's campaign coordinators from California was complaining about the automaker bailouts. This wasn't surprising, given that Republicans frequently like to do this, but the way she criticized it was particularly amusing to me. A Democrat from Michigan, the former governor, I think, was talking about how the automaker rescue was a resounding success, to which the Romney campaigner said something to the effect of, "Chrysler is now owned by Fiat, how is that a success?!"

I've heard this criticism before, too. Newt Gingrich brought it up in one of the debates. I had hoped that that was just Newt being Newt, but I guess that isn't the case.

At first glance, I guess I could understand how this might be a criticism of the result of the bailouts. "Oh no, a once great American carmaker is now owned by Italians!" The horror, I know. But really, once you think about it, this criticism becomes utterly inane and hypocritical. Look at it this way: the chief Republican criticism of the bailouts is that the government should not have intervened in the private markets and that the carmakers should have gone through private bankruptcy proceedings. Ignoring the fact that it was highly unlikely that this could happen, given the frozen up credit markets in late 2008, let's take a quick step back. 

Republicans are criticizing that the government intervened in private markets, and at the same time, they're criticizing the fact that Chrysler was bought by Fiat. So government rescue bad, private buyouts...bad?? I don't follow their logic. This is how the free market works--companies buy large stakes in other companies. And that's exactly what happened with Fiat and Chrysler. Somehow it's being treated as if Fiat buying out Chrysler is worse than, say, the government deciding to hold its share of Chrysler stock instead of selling it. And it has been, I think, a resounding success; Chrysler has literally come back from the brink. 

Maybe there's some national pride at work here. Maybe it sort of bruises our egos to think that one of the "Big Three" American carmakers is now run by an Italian company. I don't personally care that much, because this is nothing new. Before Fiat, Chrysler was owned by Diamler, a German company. There's nothing that says an American car company can't be bought by a foreign one. Welcome to the free market. If Republicans like Gingrich and the Romney staffer want to criticize the bailouts on "free market principles" that's fine, but the least they could do is be consistent about it.