Taxpayers Play Role of Crash-Test Dummies

Any federal bailout of U.S. auto makers is theft; there's no other way to describe it. For the benefit of inefficient corporations, their management, union leaders and employees, the honest American taxpayer is being burglarized. Both Republicans and Democrats are to blame.

There is no such thing as a right to a job; there is only the right to free trade. As an industry, auto makers have no more or less rights than shopkeepers, restaurant owners, marketing consultants or professional clowns. When the tech bubble burst and thousands of individuals were laid off from companies ranging from Pets.com to Psudo.com, there was no federal bailout. The majority of those workers, just as vital as auto makers, all found other jobs.

The real (free) market is shunning these companies. General Motors' (GM) 8.375% bond due in July 2033 is yielding 34%, while the stock trades at 1950s levels. Ford Motor's (F) 7.45% note due in July 2031 yields 22%, and the stock trades at where it did in the early 1980s. These are now tiny companies. GM's market capitalization is less than 2% that of Toyota's (TM). Ford's is about 5% of Honda's (HMC).

Nancy Pelosi , Harry Reid and, yes, Henry Paulson (the banker formerly of Goldman Sachs (GS)) are looking to invest your money in these train wrecks as many before them already have -- with disastrous results. Billionaire Kirk Kerkorian started buying Ford stock when it was at $7.70 a share in April only to dump it months later for a roughly 70% loss.

Many more were smart enough not to invest in Ford or GM. Yet now, in the name of "the public good," the government is likely to put tens of billions more taxpayer dollars into companies that, by every measure, should fold up shop.

More taxpayer dollars? Indeed. It was just four weeks ago when the government approved $25 billion in low-interest loans to help these train wrecks produce more fuel-efficient cars and trucks. That alone was the biggest federal subsidy for the auto industry since the 1980 bailout of Chrysler.

Yes, you're already invested in these companies; yes, you're already propping them up -- but without the transparency, fair dealing and accountability these same lawmakers were berating Wall Street for just a few months ago.

Are you pissed at Wall Street? Well, welcome to Wall Street done Washington-style. Backroom deals with zero accountability or oversight in which tens of billions of taxpayer dollars are shuffled based on political, not economic, concerns. Earlier Monday the government unveiled its new plan to bail out AIG (AIG), boosting the total cost of the package from the original $85 billion to $150 billion. Ironic considering the vast majority of taxpayers wanted nothing to do with AIG in the first place.

For the life of me, I still don't understand how violating the rights of certain citizens (taxpayers) to benefit others (CEOs, unions and auto workers) benefits the public good. Do we still have a free market or not?

Since the government began intervening in the financial markets earlier this year , the principles of capitalism and individual rights have been literally tossed aside. Now, the message is that if you fail, you get a bailout. If you don't pay your mortgage, if you don't save for a rainy day, if you mismanage a company or don't live within your means, the responsible members of society are there, albeit unwillingly, to pick up the pieces. No wonder insurance companies, community banks and mortgage backers desperate for cash are lining up for their taxpayer-funded giveaway!

Democrats Pelosi, Reid and Rahm Emanuel, President-elect Barack Obama's chief of staff, have all referred to the auto makers as "essential" to the U.S. economy. Yet it was back in the late 1800s when as much as 50% of the population was employed in agriculture. Now less than one-half of 1% of the nation's jobs are directly tied to agriculture. Can you imagine if our leaders at the time had proclaimed agriculture jobs in the United States as "essential"?

Auto makers don't have a right to cash they haven't produced. Individuals who create wealth deserve it and have a right to it. Period. But one doesn't acquire rights to things by failing to earn them.

This country has gotten by just fine without Studebaker and Packard. We've survived and prospered without Pullman Porters, elevator operators and a vibrant electronics industry.

In a truly free market, old jobs are lost and new ones are created. Indeed, liberty and capitalism work when you let them. In a misguided rush to save the auto makers, our lawmakers are driving this country's economy far off track. Capitalism is out, socialism is in.