To read the mainstream coverage of the GM bankruptcy, you would
think President Obama's main enemy--and indeed the enemy of progress
for the whole country--is a unionized labor force in the auto industry.
Good thing Obama and his one-person task force on dismantling the auto industry--31-year-old Yale Law School student Brian Deese are ready to stand up to the automakers and the union, we are told.
How could Paul Krugman, winner of the
Nobel Prize in economics and author of generally excellent columns in
The New York Times, get it so wrong? His column last Sunday-"Reagan Did
It"-which stated that "the prime villains behind the mess we're in were
Reagan and his circle of advisers," is perverse in shifting blame from
the obvious villains closer at hand.
Last week we got a whole series of
bad reports on the state of the economy. New and existing home sales
both remain near their lowest level for the downturn, as house prices
continue to drop at the rate of 2% a month. New orders for capital goods, a key measure of investment demand, fell by 2% in April. Excluding the volatile transportation sector, new orders were still down by 1.5%.
In the banking panic of 1907, J. Pierpont Morgan personally organized a
syndicate of financiers to provide $25 million to collapsing banks. It
was this panic that finally persuaded Congress in 1913 to create the
Federal Reserve System -- not a single central bank but 12 regional
reserve banks and a weak board of governors in Washington. The New York
Federal Reserve Bank, with its intimate links to Wall Street, quickly
became the reserve system's most influential player.
"This bill is the most important legislation for financial
institutions in the last 50 years. It provides a long-term solution for
troubled thrift institutions. ... All in all, I think we hit the
jackpot." So declared Ronald Reagan in 1982, as he signed the Garn-St.
Germain Depository Institutions Act.
I write this on the morning of the end of the once-mighty General
Motors. By high noon, the President of the United States will have made
it official: General Motors, as we know it, has been totaled.
As I sit here in GM's birthplace, Flint, Michigan, I am surrounded by
friends and family who are filled with anxiety about what will happen
to them and to the town. Forty percent of the homes and businesses in
the city have been abandoned. Imagine what it would be like if you
lived in a city where almost every other house is empty. What would be
your state of mind?
