03.31.2009 0

The Pit and the Pendulum

  • On: 04/14/2009 09:54:36
  • In: Economy
  • By Isaac MacMillen

    The Pit and the Pendulum, a short story by Edgar Allen Poe, contains a scene in which the protagonist finds himself tied to a board, with a scythe-shaped pendulum slowly inching its way downward towards his heart. In a similar fashion, General Motors now finds itself bound to the federal government, a result of its ill-starred decision to accept billions in bailout monies, condemned to die a slow death inflicted by government control.

    Not content to simply determine who heads up General Motors, the Obama Administration is now ordering the giant automaker to prepare to file for bankruptcy—just in case. Which, of course, is exactly what GM should have done before wasting billions of taxpayer dollars.

    The Obama oversight task force contends that its job is to ensure that the money is spent wisely. The task force today announced that it had given GM 60 days to develop a plan for bankruptcy, in case its financial problems continue unresolved.

    By this time, saner heads (if there are any) at GM must be kicking themselves for letting the situation transpire as it did. Last fall, when faced with bankruptcy, the auto giant appealed for federal funds, which it ultimately received. Now, nearly 5 months later, it is again preparing for bankruptcy—having lost the ability to call the shots itself.

    Taking taxpayer money may have prolonged GM’s life, but the government control associated with it will inevitably simply make its death slow and painful. Like Edgar Allen Poe’s character in The Pit and the Pendulum, GM is forced to relinquish control and await a torturous demise. It’s no wonder then that Ford, the most economically-viable of the Big Three (and that’s not saying much), refused to take the government money back in December.

    Not surprisingly, when the Treasury Department issued the bankruptcy preparation orders to GM yesterday morning, GM experienced a significant drop in stock prices. Overall, shares dropped by more than 16 percent in yesterday’s trading after the government issued its latest demands.  And one has to wonder: If the federal government was publicly traded on stock markets, when they come out with their $1.8 trillion projected deficit for the year, what would investors do if they had stakes in it—and were given any choice as how to respond? Clearly, when a company is publicly traded, and is not operating efficiently, the public determines the final outcome. Why is why GM should already be bankrupt.

    Writing for National Review Online, Henry Payne praises the Presidential Task Force on the Auto Industry for finally realizing what seemed so obvious back in December: GM needs to file for bankruptcy. Mr. Payne is certainly correct in pointing out that the task force did well when it pointed out the inefficiency of GM’s “green” auto programs.

    But Mr. Payne is also right when he quotes Tennessee Senator Bob Corker (R), who stated that “the delay of several months has increased the severity and sent billions of taxpayer dollars down the drain.” And that’s why many conservatives had pushed for bankruptcy back in Fall. ALG itself floated a petition which garnered the support of 17 other conservative organizations, urging that Congress kill the proposed auto bailout and allow GM (and Chrysler) to file for bankruptcy and reform.

    Unfortunately, $17.4 billion of the taxpayers’ money had to be wasted on GM and Chrysler before the federal government’s failed social engineers finally realized what many Americans had for months on end. Somehow, looking now at that mountain of debt pile up, “I told you so” simply falls flat.

    The lesson in all of this is not simply that government is inept and contaminates its own house time after time and again. Everyone already knows that. But many people now need to realize that government will also hurt those who come to it for help, too—and even those government claims it is actually trying to help. By putting its trust in the federal government, GM has found itself worse off than if it had taken the painful, but tried-and-true route of bankruptcy.

    Instead, however, it trusted Big Government. And instead of freedom, it woke up to find itself firmly bound by government regulation, much like Poe’s protagonist. As GM awaits the inevitable end, it can find little solace in the fact the American taxpayer may share the selfsame fate: a slow and painful demise bound to the plank of Big Government and awaiting its pendular death of control.

    Isaac MacMillen is a Contributing Editor to ALG News Bureau.

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