Examples of President Obama's Stimulus

Long ago, I wrote that there are severe problems with the stimulus and bailout mentality that the Obama Administration has embarked on. Foremost among those concerns are the problems of opportunity cost. By pushing stimulus and bailing out defunct firms the government is "messing" with the way we value things. At best, this makes our decisions arbitrary.  At worst, it inspires us to make poor decisions:

"Yes, it's true that federal programs will provide jobs for the construction worker. But that money has to come from somewhere, right? Could that money have been better spent on some other enterprise? Better spent on some other investment? We'll never know, because the market couldn't evaluate the expenditure."

Two recent events--only four weeks after the massively expensive stimulus package was passed!--highlight this problem in very practical terms.

The first is another Federally funded bridge.  While not the infamous "bridge to nowhere" (this bridge connects parking lots across a busy highway), the Microsoft Bridge in Redmond, WA is an example of how "stimulus" wastes taxpayer money. (It is also quite fancy as the picture to the left shows.) Microsoft wanted to build a bridge connecting their various campuses.  Microsoft has an estimated $20 billion cash on hand and is capable of building a bridge on their own.  In fact, they've already footed the bill for the studies, designs and plans necessary to build. Yet, despite these financial resources and the demonstrated commitment to the project, the stimulus bill has alloted $40 million dollars to the construction of this bridge.  

We borrowed money from China to pay for a bridge that will be predominantly used by a private company.  This private company has enough money to build that bridge easily.  However, we foot the bill for this profitable company because it will provide 400 jobs for the next 18 months?  Correct me if I'm wrong, but if the bridge was really this important, Microsoft would build it on its own. Furthermore, regardless of who pays for it, those jobs would still exist.

It simply makes no sense for the public to foot the bill for something a private company has expressed a willingness, even a desire, to pay for.

What makes less sense that supporting profitable companies is picking "winners" and "losers" among failing businesses.  The Auto bailout, and President Obama's recent proclamation that Chrysler has 30 days to turn it around "or else" while GM retains a "longer rope" has prompted cries that President Obama is being unfair in his treatment of failed auto industries.

To defend President Obama (a first!), you don't look a gifthorse in the mouth.  To complain about the terms of being bailed out is simply illegitimate. The drowning person shouldn't complain about the color of the rescue boat.

However, to critique President Obama, this is exactly why we shouldn't be bailing these firms out. You were not elected to determine the cars Americans like to drive.  You were not elected to mandate the future for the American Auto market.  Indeed, unless you audited classes on Automotive Engineering that we don't know about, you have no expertise or wisdom in this area whatsoever. 

Arbitrarily deciding that GM may live while Chrysler may die is the consequence of a "bailout" mentality. It is a political decision as opposed to an economic, or value-based decision. Delineating between bailouts in an industry and arbitrarily finding that the Auto Industry bailout has limits while the Financial bailout is limitless is without merit and it is decidedly unjust.

Further "bailouts" and "stimulus" will only result in a waste of public funds and an arbitrary determination of "winners" and "losers".  Intervention by government props up failed industries (which failed for good reasons) and prohibits new innovation. It hurts all of us by increasing the national debt while substituting one man's opinion of the economy for the consensus of the market.  For these reasons, alternatives should be pursued at all costs.