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COLUMN

Kevin Leininger: Bathtub gin and auto bailouts

How the government's doing one thing generally screws up something else.

Saturday, December 20, 2008 - 11:16 am

What do the city's no-smoking law, new central-city homes, school busing and bathtub gin have in common with President Bush's $17.4 billion Christmas present for American automakers?

Quite a bit, when you think about it - which we should start doing before it's too late, if it isn't already.

One of the things I like about this job is talking to interesting people about interesting things, even if I don't expect the conversation to yield a column. In journalism, no information or insight is ever truly wasted. So when a local developer called this week asking to share several of his concerns with me, I was happy to oblige.

It was a fascinating conversation laced with historical insights made instantly relevant by Bush's decision Friday to make billions of dollars in loans available to General Motors and Chrysler in exchange for a promise to correct the unsustainable business practices that led to their plight.

The man, who didn't want to be named because his profession puts him at the mercy of local officials, said he has lost millions of dollars in real estate value because of the economic meltdown. “But do I want a bailout? Hell no,” he said emphatically.

The reason begins to answer the seemingly bizarre question with which I opened this column.

His thesis is that, when governmental good intentions attempt to thwart the often-cruel but inexorable power of the free market, unintended consequences inevitably result. Prohibition led otherwise honest folks to make or drink illegal booze, and turned dishonest people into gangsters. Court-ordered efforts to integrate public schools caused some people to flee cities for the suburbs. The city's Renaissance Pointe housing project is lagging, causing officials to consider adding 50 “rent-to-own” homes, and the smoking ban has been blamed for the death of Fort Wayne bars - and the prosperity of others outside the city limits.

“We all tried to tell the city Renaissance Pointe wouldn't work. But they wouldn't listen to anyone because they were getting federal grants,” the developer said, linking the attempt to make homeowners out of people who can't qualify for traditional loans to the sub-prime mortgage problems that precipitated the current crisis.

Now, you and I may quibble with a few of his assertions. The problems faced by Fort Wayne Community Schools and other urban districts go far beyond busing. In fact, the effort to achieve racial balance through school choice may have made FWCS more attractive to many parents.

But there's no denying the fact that winners and losers in America's supposed system of “free” enterprise are increasingly influenced by government, not the marketplace. In fact, government often tries to counter-balance market conditions deemed too damaging socially, economically or politically.

What would America be like today had politicians protected canal owners from the railroads or railroads from the airlines? Buggy manufacturers from cars? Worthless snake oil from life-saving pharmaceuticals? Newspapers from the Internet?

Well, I kind of like that last one, but you get the point: Jobs might have been saved, or at least prolonged - but only at the cost of progress, which ultimately benefited far more people than it hurt.

Who says? The free choices made over decades and centuries by countless millions of consumers like you, that's who.

Consumers make choices when buying automobiles, too. The dire condition of America's “Big Three” is not entirely due to customer preference, of course, but any effort to bail them out without correcting their internal problems is not only futile but counterproductive. Without change - better management, lower labor costs - the financial problems will remain even after Bush's bucks have been frittered away.

And the nation's staggering debt load will have grown even more obscene, crushing future generations in the most cowardly and selfish form of taxation without representation imaginable.

If the bailout forestalls a wider economic collapse and results in the necessary reinvention of domestic automakers, fine. But history is full of warnings to the contrary, and it would be nice if more people noticed, or even seemed to care.

This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel.
E-mail Kevin Leininger at kleininger@news-sentinel.com, or call him at 461-8355.