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Zombie-company welfare machines

SEATTLE, Washington - Many people seem to be forgetting (or never got around to learning, or refuse to accept) the purpose of a business - it is to provide goods or services to consumers or other businesses. The fact that many businesses employ people is merely incidental - it is not the reason for the existence of any business.

But tell that to the bailout cheerleaders. It's not helping matters that everyone's personal savior was just elected President. One group of eagerly expectant beneficiaries of the Messianic Powers is the employees of Republic Windows and Doors, an Ohio manufacturer that's been in the news because the workers occupied the plant after the company ceased operations. The workers want accumulated pay and benefits that they say they've been stiffed on.

RW&D is selling the line that they closed quickly because Bank of America pulled their line of credit, making a Big Bad Bank the bogeyman:

The BofA said that the cancellation was routine business practice, caused by Republic's cash flow problem in the wake of declining sales in the nation's housing construction downturn.

"When a company faces such a dire situation, its lender is not empowered to direct the company's management how to manage its affairs and what obligations should be paid," declared the North Carolina-based BofA in a statement. "Such decisions belong to the management and owners of the company."

The BofA's antiseptic statement reflected the kind of cold-blooded market fundamentalism that has led a growing number of Americans to demand more government regulation of big business.
Amazing. By most accounts we have a glut of housing in this country right now (brought on by one bad government policy after another, a topic for another time). There damn fucking well better be housing-related companies like RW&D scaling back or going out of business. BofA is doing the right thing, noting this trend and not supplying credit to ready-to-fail companies like RW&D.

But to the author of the story above, not throwing credit at failing companies is "cold-blooded market fundamentalism".

So, assuming BofA kept this failing company afloat even though there's not enough demand for their product - who would buy the product? Why, Barack Obama himself, more or less:
"The workers want Bank of America to keep the plant open and the workers employed," said UE President Carl Rosen. "There is always a demand for windows and doors. But with Barack Obama's stimulus proposal, there will be even greater demand for the products made by Republic's workers. It doesn't make sense to close this plant when the need is so obvious."
Amazing. The government should just keep artificially stimulating housing demand, because dammit, we have some people here making windows. We'd be better off paying these people to dig useless holes in the ground, as that would at least free up the raw materials of windows and doors to be put to better use.

Alternatively, we should just order every company in America to make windows and doors - after all, according to Mr Rosen there is "always a demand for windows and doors."

At least Barney Frank is shameless enough to openly and explicitly admit that companies should be turned into taxpayer-funded zombie-company welfare dispensers even if they don't provide a competitive product. As far as I can recall, Frank is the only politician I've ever praised by name (for his work on marijuana and online gambling), but even then I noted that I'd find his overall record and worldview distasteful if I looked into it. Frank appeared on 60 Minutes and cheerily discussed his zombie-company theories:
"No. We’re not propping up companies. That’s your mistake," [Frank] tells Stahl, who had asked him about taxpayer money going to prop up companies that had made bad decisions. "We’re propping up individuals. The world doesn't consist of companies. The world is people. The country is people."

When Stahl points out that Frank is then talking about welfare, he responds, "Yeah, I’m for welfare. You’re not? Are you for letting people starve?"

Some argued that bankruptcy was the way for Detroit to work out its troubles and reformulate their businesses. Frank is against that as well because it also hurts the individual. "There's only one thing you can do in bankruptcy: break your word, break your deals," says Frank. "It allows you to say to the small businesses who have been catering lunches for you...the workers, 'Sorry, we’re not paying you,'" he tells Stahl.
And lest someone think that I'm snugly insulated from the problems of the auto companies and thus can heartlessly advocate bankruptcy for the Big 3: I happen to work at a company that is very sensitive to the fortunes of the auto industry, a company that many analysts think will go bankrupt if the auto industry continues to struggle. I'm still 100% against any bailout. The auto industry does not exist to provide a job for me.

(links from Drudge Report and Reason Hit & Run)


Love Sheep said...

I had an email exchange with a PhD at work this week about the failed Detroit bailout. He insisted that the Senate Republicans were an "elitist" party of the wealthy for blocking the deal. Maybe they are, but I'm still damn glad they did it.