It used to be said that the government would rush in to save companies that were too big to fail. Citigroup, AIG and General Motors come to mind.
That meant that the companies were too intertwined with the national economy to be allowed to declare bankruptcy.
That, of course, is a myth. No company (or government) is too big to fail.
In fact, you can make the case with General Motors that it was too big to succeed.
Indeed, it is still too big to succeed. It makes too many cars that people don’t want to buy. It has too many middle managers who have nothing to manage. It has too much bureaucracy that strangles innovation.
For far too many years, it had an attitude that it could continue along its merry way, making crappy cars, paying union employees ridiculously high wages, paying the healthcare and pensions of retirees at an unaffordable rate. Well, that attitude finally caught up with them, and now they have finally done the inevitable. They declared bankruptcy.
Unfortunately, a bunch of politicians have now rushed in to fix the problem. What a joke! Can you imagine Washington fixing chronic problems of bureaucracy, waste and complacency?
The taxpayers, of course, are on the hook for all of this mess now.
But aren’t there better things that the taxpayers could be investing in?
How about future technologies that will create the American jobs of tomorrow?
Why don’t we cut taxes on investment in industries like biotechnology, microtechnology, battery technology and communications technology?
For example, there is an absolute drought when it comes to investment in the biotech world. Investors don’t want to risk putting money into investment that might not produce results for a decade or more. With the Obama administration so hell-bent on taxing investors of every kind, many entrepreneurs are looking for ways to protect their income, not grow it.
But biotech, nanotech and battery tech represent the real future of American manufacturing.
Why not allow the private sector to work with tax rules (and stimulus money) that reward the investor with the promise of profits (and yes, perhaps big profits) in the future?
The Chinese and the Indians are investing billions of dollars in biotech, because they see that as the future.
We shouldn’t let them take over the leadership in this emerging manufacturing sector.
But because of the current investment drought, it’s in big trouble today.
Instead of throwing money into an enterprise (General Motors) that is too big to succeed, the Obama administration should be investing in industries that are too important to our collective economic future to fail.
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