Unemployment: U.S. vs. Europe

People on the left are always touting European socialism as something the U.S. should emulate. They like to talk about all the goodies socialist governments give out (but don’t like to talk about the tax burden).

But another thing they don’t like to talk about is unemployment. It is chronically lower in the U.S.

Current unemployment rates among industrialized countries can be found here, courtesy of the OECD.

Notice something? The U.S. is lower than all countries besides Germany, the Czech Republic, Iceland and the Netherlands.  The numbers vary a bit year by year, and quarter by quarter, so they might be a bit different if you check the link six months or three years from now.

Of course, comparing a large diverse country like the U.S. to much smaller and homogeneous countries is unfair. It’s like comparing the city of Milwaukee to Whitefish Bay. On about any indicator you can think of, Whitefish Bay looks better, being homogeneous and affluent.

This logic would suggest that the U.S. should be compared to all the countries in the European Union, or at least to all the countries that use the Euro as their currency. That would deprive supporters of European socialism of the opportunity to pick their favorite little homogeneous country to compare to the U.S.

But in spite of this, all their favorite little homogeneous countries fare worse than the U.S. Unemployment, which is 3.8 percent in the U.S., is 6.44% in that paragon of socialist righteousness, Sweden. And it’s 4.87% in Bernie Sander’s dream country, Denmark.

Germany

Even the low number for Germany (which has a highly touted “industrial policy”) conceals a less benign reality.

We see that when we look at long-term unemployment. This is defined as the percentage of those who are unemployed who have been unemployed for twelve months or more.

The data on that are here, and they show that 41.9% of the unemployed in Germany have been out of work for a year or more, while only 15.1% of the unemployed in the U.S. are in this category. The number for the Czech Republic is 36%.

For Iceland the number is a low 9.2%, but for the Netherlands it is 40.7%.

The love of the American left for European socialism is not based on a superior ability of that system to give people jobs. It’s based on the perception that people like them are in power, unlike in the U.S.

Off the Cliff!

You Get What You Deserve / Unfortunately

2011: Bernie Sanders Lauds Venezuela for Closing Income Gap

That’s right, he did so in a statement on his Senate website. The statement is still there as of this writing..

Sanders said:

These days, the American dream is more apt to be realized in South America, in places such as Ecuador, Venezuela and Argentina, where incomes are actually more equal today than they are in the land of Horatio Alger. Who’s the banana republic now?

Yes, incomes are likely to be equal where everybody is poor. Except, of course, for the elite socialists whose incomes may not be huge, but who have privileged access to the scarce goods and services that ordinary citizens don’t.

That’s the dirty little secret of the socialists. They expect to be among those who get the good doctors under a single payer system of socialized medicine. They expect to get the desirable flats when government assigns people housing. They expect to have the connections and political clout to get the better consumer goods and services. While enjoying all of this, they expect to bask in the righteous feeling that social justice has been achieved.

Inside Socialist Venezuela

AP correspondent Hannah Dreier has been doing some excellent investigative journalism in that misbegotten socialist experiment of a country, and you can see her articles at her Twitter feed. Score one for the mainstream media.

Zombie Ideology Emerges

We Already Told You Son, It’s Not Really Gonna Be Free

It’s Not Really Free, Son

The Socialist Welfare States That Bernie Sanders Loves are Funded by Fossil Fuel Production

From Somewhat Reasonable at the Heartland Institute:

Democratic presidential candidate Bernie Sanders has often talked about his desire for the United States to emulate the socialist welfare states of Denmark, Norway, and Sweden by providing free college and health care and expanding Social Security. Sanders also wants to ban oil, natural gas, and coal production on lands owned by the federal government, and he has called for a ban on hydraulic fracturing, which has dramatically increased production of oil and natural gas in the United States.

Although many would-be Sanders voters may rejoice at all of these notions, someone really ought to inform the senator and his followers that the socialist spending sprees of Denmark and Norway are bankrolled by oil: Big Oil, to be specific.

The whole notion of the socialist welfare state is based on the notion that people can have lots of goodies, delivered by government, at somebody else’s expense.

Of course, eventually socialists run out of other people’s money. But they can keep the scam going for a while longer if they fully exploit fossil fuel production.

Read the whole thing.

The Truth About Scandinavian Socialism

It seems Democrats have come out of the closet as socialists, proclaiming their faith in European socialism. Of course, they don’t invoke socialism in Greece, or Italy, or France or even the U.K. It’s Scandinavian socialism they always cite. But the notion that it should be imported to the U.S. is naïve.

From Jeff Jacoby:

Liberals have had a crush on Scandinavia for decades. “It is a country whose very name has become a synonym for a materialist paradise,” observed Time magazine in a 1976 story on Sweden. “Its citizens enjoy one of the world’s highest living standards. . . . Neither ill‑health, unemployment nor old age pose the terror of financial hardship. [Sweden’s] cradle-to-grave benefits are unmatched in any other free society outside Scandinavia.” In 2010, a National Public Radio story marveled at the way “Denmark Thrives Despite High Taxes.” The small Nordic nation, said NPR, “seems to violate the laws of the economic universe,” improbably balancing low poverty and unemployment rates with stratospheric taxes that were among the world’s highest.

Such paeans may inspire Clinton’s love and Sanders’s faith in America’s socialist future. As with most urban legends, however, the reality of Scandinavia’s welfare-state utopia doesn’t match the hype.

To begin with, explains Swedish scholar Nima Sanandaji, the affluence and cultural norms upon which Scandinavia’s social-democratic policies rest are not the product of socialism. In Scandinavian Unexceptionalism, a penetrating new book published by the Institute of Economic Affairs, Sanandaji shows that the Nordic nations’ prosperity “developed during periods characterized by free-market policies, low or moderate taxes, and limited state involvement in the economy.”

For example, Sweden was a poor nation for most of the 19th century (which helps explain the great wave of Swedish emigration to the United States in the 1800s). That began to change as Stockholm, starting around 1870, turned to free-enterprise reforms. Robust capitalism replaced the formerly agrarian system, and Sweden grew rich. “Property rights, free markets, and the rule of law combined with large numbers of well-educated engineers and entrepreneurs,” Sanandaji writes. The result was an environment in which Swedes experienced “an unprecedented period of sustained and rapid economic development.” In fact, between 1870 and 1936 Sweden had the highest growth rate in the industrialized world.

Scandinavia’s hard-left turn didn’t come about until much later. It was in the late 1960s and early 1970s that taxes soared, welfare payments expanded, and entrepreneurship was discouraged.

But what emerged wasn’t heaven on earth.

That 1976 story in Time, for example, went on to report that Sweden found itself struggling with crime, drug addiction, welfare dependency, and a plague of red tape. Successful Swedes — most famously, Ingmar Bergman — were fleeing the country to avoid its killing taxes. “Growing numbers are plagued by a persistent, gnawing question: Is their Utopia going sour?”

Sweden’s world-beating growth rate dried up. In 1975, it had been the 4th-wealthiest nation on earth (as measured by GDP per capita); by 1993, it had dropped to 14th. By then, Swedes had begun to regard their experiment with socialism as, in Sanandaji’s phrase, “a colossal failure.”

Denmark has come to a similar conclusion. Its lavish subsidies are being rolled back amid sharp concerns about welfare abuse and an eroding work ethic. In the last general election, Danes replaced a left-leaning government with one tilted to the right. Loving Denmark doesn’t mean loving big-government welfarism.

The real key to Scandinavia’s unique successes isn’t socialism, it’s culture. Social trust and cohesion, a broad egalitarian ethic, a strong emphasis on work and responsibility, commitment to the rule of law — these are healthy attributes of a Nordic culture that was ingrained over centuries. In the region’s small and homogeneous countries (overwhelmingly white, Protestant, and native-born), those norms took deep root. The good outcomes and high living standards they produced antedated the socialist nostrums of the 1970s. Scandinavia’s quality of life didn’t spring from leftist policies. It survived them.

Sanandaji makes the acute observation that when Scandinavian emigrants left for the United States, those cultural attributes went with them and produced the same good effects. Scandinavian-Americans have higher incomes and lower poverty rates than the US average. Indeed, Danish-Americans economically outperform Danes still living in Denmark, as do Swedish-Americans compared with Swedes and Finnish-Americans compared with Finns. Scandinavian culture has been a blessing for native Scandinavians — and even more of one for their cousins across the ocean.

No, Scandinavia doesn’t “violate the laws of the economic universe.” It confirms them. With free markets and healthy values, almost any society will thrive. All socialism does is make things worse.

Class of 2015: Some Frank Talk

Of course, only a minority of the Class of 2015 are politically correct yahoos. But they have disproportionate power, because they are the pets of university administrations, and of the faculty.

The Fruits of European Socialism: Homelessness in France

From Reuters:

When the first of 16 families entered a vacant four-storey office block in Paris one night last December, they placed repeated food orders so the neighbors could see from the comings-and-goings of delivery men that the address was occupied. Under French law, witness accounts of residency make eviction harder.

But it was their next act that really had the building’s owner shaking his head in disbelief.

“What amazed me was when they invited in the housing minister a few days later,” said Spanish property developer Ignacio Lasa Georgas, who has temporarily lost control of his 7- million-euro ($9 million) office block between the Gare du Nord and Gare de l’Est railway stations.

“And over she came to give them her support.”

The squat at Number 2 rue de Valenciennes is both a political battleground and a symbol of France’s dysfunctional housing market. Activists helped the families move in to draw attention to how Europe’s second biggest economy, which prides itself on its welfare system, is struggling to provide basic shelter for many of its 65 million citizens. The problem is not unique to France, but the reasons for it are both aggravated by, and feed into, the country’s wider economic woes.

The housing shortage is further fueled by long-standing policies to protect tenants that discourage many owners from putting properties up for rent. Housing experts say as many as 7 percent of all apartments in Paris are vacant.

Protecting people from the evil, rapacious landlords is a notion to warm the hearts of every leftist and socialist. But that has consequences.

The red tape that clogs up bids for planning permission, as well as a steadily growing list of regulations on everything from safety to parking spaces, has also discouraged new building. Strict rules on building figure prominently in the total 400,000 regulations in France’s law books. In Le Mans, a city famed for its motor races, plans for a new school have hit trouble because authorities are insisting it be earthquake-proofed — despite a government report stating there has never been any evidence of seismic activity in the region.

Again, the idea is to protect people. But politicians and bureaucrats can always find the need to “protect” people from dangers that aren’t significant, or if they are significant, the protection turns out to be vastly worse than the hazard.

The shortage is plain on the streets of the capital. An early morning walk reveals huddles of cardboard and blankets in doorways, the makeshift abodes of some of the 33,000 people estimated by housing charity Abbe Pierre Foundation to be living rough in France — a figure that rises to 274,000 including those in shelters, short-term bedsits and improvised homes on campsites or the like.

That is nearly half the 633,782 people officially recorded as homeless on a single night last year in the United States, a country whose population is almost five times that of France. Exact comparisons are difficult because the countries use different methods, but both measures include people who are living rough or in temporary shelters.

Add to the homeless those living in acute overcrowding or moving from sofa to sofa, and Abbe Pierre, the charity, estimates a total of 3.6 million people in the country lack decent housing. The group puts the shortfall of affordable housing at more than 800,000.

Doesn’t sound like the stereotype of European socialism found among liberal U.S. journalists, or leftist American professors.

Under French law, squatting is a civil offence and evictions not simple. In France, no one can be evicted in winter. Data on squatting is hard to find, but the latest estimates suggest it has risen sharply in Paris — helped by increasingly organized activists — to around 20,000 squatters from about 3,000 in 2002, said Hans Pruijt of Erasmus University in Rotterdam, who has studied the practice across Europe.

Lasa Georgas, owner of the rue de Valenciennes building, has launched legal action to regain control of his building. Its last tenant — jewellery shop “Histoire d’Or” — moved to a more upmarket site before its lease ran out in March 2012. Lasa Georgas says he had new takers lined up including a private college, and an investor who wanted to buy the building to convert into a hotel. They even made a formal offer, but both projects are now on ice while he sorts out the squatters. Given the local government has intervened to support the families, that may take some time.

Despite his legal claim, Lasa Georgas is unsure when he will have access to the place, if ever. Hollande’s Socialist allies at Paris City Hall announced in April they would make an offer on the building, with a view to buying it to convert into social housing.

In France, local authorities have a pre-emption right to bid for buildings for the wider public good. This does not mean they can force a sale, but it obliges owners to either enter negotiations or challenge them in court, which can take years.

Jean-Yves Mano, the Paris deputy mayor in charge of housing, said City Hall made a “symbolic” gesture to buy the building. He declined to say how much it had offered, but called the price a “significant mark-down” on the market value which a government agency had put at 7 million euros.

He says City Hall uses its pre-emption right on up to 30 buildings a year and has no qualms about bidding low. “After all, we are responsible for looking after the money of the people of Paris,” he told Reuters at his office.

Lasa Georgas said the city’s offer was 4.3 million euros, which he rejected. He is angry. “I invested in France back in 2005 because at that point Spanish property prices were already sky-high and I thought French law would give me protection. But the authorities seem to have a clear aim of taking away my building.” A hearing on the case in early May was postponed on procedural grounds.

So leftists in France (and even right-of-center governments have to make concessions to a socialist culture in Europe) fail to protect an owner’s property rights. They allow squatters to occupy his property, and then threaten to de facto confiscate it at far less than fair market value. Redress in the courts is questionable.

The consequence of these sort of policies is obvious: people don’t invest when their investments are not secure.

So France has a much larger per capita population of homeless people than the U.S.

A naïve view would say that this is idealism gone wrong. But socialism has never been based on idealism. It has been based on the selfishness and envy of the poor and working class people in Europe, and the lust for power of the leftist elites: the political activists, union officials, college professors, intellectuals, journalists and government bureaucrats.

And under Obama, the U.S. is moving in the same direction.

Get More Income by Soaking the Rich?

At the moment, Obama and the Democrats seem to be hanging tough on demanding that tax rates on high earners be increased.

This in spite of the fact that the president’s own commission (Simpson/Bowles) recommended reducing top tax rates, and gaining revenue by closing loopholes.

But the notion that higher rates will produce more revenue is just grossly simplistic. Some evidence comes from the United Kingdom.

Almost two-thirds of the country’s million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax, figures have disclosed.

In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

Since the announcement, the number of people declaring annual incomes of more than £1 million has risen to 10,000.

However, the number of million-pound earners is still far below the level recorded even at the height of the recession and financial crisis.

Last night, Harriet Baldwin, the Conservative MP who uncovered the latest figures, said: “Labour’s ideological tax hike led to a tax cull of millionaires.

Far from raising funds, it actually cost the UK £7 billion in lost tax revenue.

“Labour now needs to admit that their policies resulted in millionaires paying less tax and come clean about whether they would reintroduce this failed policy if they were in power.”

A less journalistic analysis of the effect of the high tax rates reaches generally the same conclusion.

• The 50 per cent additional rate of income tax was introduced on 6 April 2010. It was the first increase in the highest rate of tax in the UK for over 30 years, and was expected to yield around £2.5 billion. However, because of the uncertainty regarding how those affected would respond, and its impact on the economy, the yield estimates were highly uncertain.
• This report provides the first comprehensive ex-post assessment of the additional rate yield using a range of evidence including the 2010-11 Self Assessment returns. The analysis shows that there was a considerable behavioural response to the rate change, including a substantial amount of forestalling: around £16 billion to £18 billion of income is estimated to have been brought forward to 2009-10 to avoid the introduction of the additional rate of tax.
• The modelling suggests the underlying behavioural response was greater than estimated previously in Budget 2009 and in March Budget 2010, decreasing the pre-behavioural yield by at least 83 per cent. This result is also consistent with that contained in the Mirrlees review, and suggests the additional rate is a highly distortionary form of taxation.

Bottom line: the increase in the tax rate distorted people’s behavior, causing them to arrange to reap income when the tax rate was lower, and had a major disincentive effect, causing people do things (work less, retreat to tax shelters) that reduced the yield by 83 percent compared to a “static scoring” (one that assumes that people faced with a higher tax rate act exactly as they would if faced with a lower rate).

But the truth is, the demand for higher tax rates has nothing to do with raising revenue.

It’s an attack on the social class that can earn high incomes in markets. And it is mounted not by the poor, but by the New Class: people such as academics, journalists, political activists and government bureaucrats who prosper as government grows.

Since their orientation is not toward producing for the market, and their incomes are lower than those who are similiarly qualified and educated and do produce for the market, they resent people who earn, in markets, higher incomes than they do.

So they demonize them (“vulture capitalists”) and try to seize their income. But the point is not really to seize their income and put it to uses the New Class prefers. It is much more simply to level down a rival social class.

A Catholic Theologian Not Enamored of Obama

While left-leaning “Catholic” theologians have signed on to support the Obama reelection campaign, other voices in the profession are not so taken with our incumbent president.

One of those is Marquette theologian Mark Johnson, who has posted a detailed deconstruction of Obama’s Democratic Convention speech.

One particularly cogent passage:

Charity, in the Catholic context in particular, is the love we have directly for God first and foremost, and for his Images (i.e., us humans) precisely in our likeness, our family resemblance, to him. It is this devotion towards God’s human creatures that commands us care for their basic needs: whatsoever you do...

But this vocabulary and these virtues I learned in church and through the myriad ​rivulets of my Catholic religion. It is not the task of government to instruct me on the proper love of God, or of God’s people. My priest does that, your rabbi or imam does that.

The President is not my pastor.​

My ultimate concern is that, in President Obama’s take on things, nothing seems to lay outside the scope and possible command of the federal government​. The federal government is in charge of protecting the American personality, of protecting “who we are” (the President’s trump card when he is at a loss in arguing for why we should not allow something: “it’s not who we are”). The federal government is the protector of charity and love. What’s left for those of us who aren’t in the government?

As Johnson is aware, Obama is guilty of the same misbegotten notion that the leftist theologians now getting signatures for a letter attacking Paul Ryan are: the notion that charity is the purview solely of the Federal government, and not other levels of government, nor the Church, nor families, nor neighborhoods nor friendship groups.

It’s a notion that embodies the “one-sided centralization” that Catholic Social Thought has always condemned.

It’s a misbegotten notion typical of secular leftists, which is what the anti-Ryan theologians are, notwithstanding any religious rhetoric they may spout.

Obama’s “You Didn’t Build That” Gaffe

Obama’s now famous “You didn’t build that” comment, which seemed to denigrate entrepreneurs, has been the subject of much comment. Marquette theologian Mark Johnson recently published an analysis of the statement. It’s excruciatingly fair-minded (we would be inclined to simply say that Obama doesn’t like business), but ultimately comes down against the president.

A key passage:

In 2003 a young man named Anthony Casalena was at the University of Maryland with a desire to build a website for himself that could be easily updated—a “content management system” (CMS), the tech-phrase is. He grew weary of the paltry offerings out on the Internet and decided to develop his own website-creation software, from complete and total scratch. The result was a web-publishing platform he called ‘Squarespace,’ whose existence he quickly shared with people he knew. He got the sense that his idea “had legs,” and so he sought some financial help to make it possible for him to develop his idea full-time. He went to his father for a $30,000.00 loan, and was able to use the funds to purchase hardware and infrastructure from private companies. He ran the product on his own—he was “tech support.”

In November of 2004 I was looking around for some help in my personal project of creating a website devoted to the academic study of St. Thomas Aquinas. I had learned computer programming, and had myself started developing a platform for my website (thomistica.net), but found the going hard, time-consuming, and possibly costly; besides, I need to teach and research on Thomistic theology. So I searched the Internet and saw some glowing reports in various forums about a brand-new product called “Squarespace,” where one could get a free trial website, and instant customer support: the answer to my prayers. I loaded up some test content on the site, grew to love its easy interface for web-publishing, and was almost tearful in my gratitude for how quickly this young man, Anthony Casalena, would respond to my support queries. I decided that I was “all in” on this new platform, and purchased a subscription to it. Since then, for both for my academic baby (thomistica.net) and my personal site (markfjohnson.net), Squarespace has been my home. Anthony has built this thing from the absolute ground up. Over time he added two employees, moved from Maryland to Manhattan, NYC, and managed the company with such frugality that it has been profitable since the beginning (thanks to the investment of his intellectual power, his sweat, and his father’s money—whom he has paid back, I’ve heard tell, manifoldly). In order to share his vision and guarantee the quality of his product he recently raised some venture capital funding, and used the money to hire more employees. Squarespace is now ninety employees large.

So please forgive me if I suffer consternation at the President’s ambiguous “somebody else built that,” for I can think of at least one person who deserves the lion’s share of credit for in fact “having built it.” Tony Casalena. And he now has ninety-plus employees (i.e., tax-payers, and wealth-coproducers) who daily “build it,” too. It may “take a village,” but the village is populated with individual people of all colors, shapes, and sizes, who work hard each day to make their way.

So, sorry. Tony Casalena did build that, or it.

The Perverted Culture of the European Welfare State

From the Associated Press:

MARSEILLE, France (AP) — Battling for benefits is a tradition in the Gilly family, passed from generation to generation — as it is for families across the country. And that goes some way toward explaining why the protests against plans to raise France’s retirement age have shown such determination and ferocity.

For Gilly and many other Frenchmen and women, social benefits such as long vacations, state-subsidized health care and early retirement are more than just luxuries: They’re seen as a birthright — an essential part of the identity of today’s France.

The protest against a government plan to raise the retirement age to 62 has special meaning for five members of the Eric Gilly clan who are demonstrating in the streets of Marseille.

“We want to stop working at 60 because it’s something our parents, our grandparents and even our great-grandparents fought for,” says Gilly, 50, a union representative at Saint-Pierre Cemetery, the largest in this bustling Mediterranean port city.

“And over the years ... you can see that we’re losing everything they fought for. And that’s unacceptable.”

In Marseille, strikes to protest President Nicolas Sarkozy’s planned retirement reform have shut down docks, left tons of garbage putrefying on sidewalks and drawn tens of thousands into the streets for each of six protest marches since early September.

Gilly, with huge drums strapped over his shoulders, led the parade for the Workers’ Force union Monday. His sister, two daughters and a nephew weren’t far behind.

“Unionism, it’s in the skin,” Gilly said in an interview with Associated Press Television News. “It’s more than a passion. When something is wrong or things aren’t right, they have to be changed.”

Retirement benefits are coveted, by some, perhaps even more than a higher salary, making the issue particularly sensitive. Sarkozy’s plan to raise the retirement age hits a nerve deep in the French psyche.

Just savor, for a minute, how absurd this is. The French are proud of not working.

They demand more and more benefits. But of course, they have to pay for those benefits.

The origin of the European welfare state was socialist politicians appealing to the working class, telling them (in effect) “vote us into power, and we will take money from the rich and give it to you.” The whole edifice, in other words, was built on the selfishness of socialist politicians and low income workers.

But of course, soon enough the bill has to be paid by ordinary workers. But the old notion that you can just make demands on government and get goodies for free persists.

The fundamental problem is that the culture of Europe is not rooted in capitalism, but in feudalism — as political scientist Louis Hartz famously insisted.

For peasants, bettering yourself by working harder just wasn’t possible. You only became better off by being given something — by the Lord of the Manor, or by the King, or by the parliament. It’s a culture of dependency, not of work, responsibility and achievement. It’s a backward culture, and part of the greatness of America is that we have resisted it.

School Choice from an Economics 101 Perspective

The Problems With a Nationalized General Motors

From David Brooks in the New York Times, a catalogue of the ways in which government ownership will make GM a worse company.

First, the Obama plan will reduce the influence of commercial outsiders. The best place for fresh thinking could come from outside private investors. But the Obama plan rides roughshod over the current private investors and so discourages future investors. G.M. is now a pariah on Wall Street. Say farewell to a potentially powerful source of external commercial pressure.

Second, the Obama plan entrenches the ancien régime. The old C.E.O. is gone, but he’s been replaced by a veteran insider and similar executive coterie. Meanwhile, the U.A.W. has been given a bigger leadership role. This is the union that fought for job banks, where employees get paid for doing nothing. This is the organization that championed retirement with full benefits at around age 50. This is not an organization that represents fundamental cultural change.

Third, the Obama approach reduces the fear that impels change. The U.S. government will own most of G.M. It would be politically suicidal for the Democrats, or whoever is in power, to pull the plug on the company — now or ever. Therefore, the current managers can rest assured that they never need to fear liquidation again. There will always be federal subsidies for their own mediocrity.

Fourth, the Obama plan dilutes the company’s focus. Instead of thinking obsessively about profitability and quality, G.M. will also have to meet the administration’s environmental goals. There is no evidence G.M. is good at building the sort of small cars the administration demands. There is no evidence that there is a large American market for these cars. But G.M. now has to serve two masters, the market and the administration’s policy goals.

Fifth, G.M.’s executives and unions now have an incentive to see Washington as a prime revenue center. Already, the union has successfully lobbied to move production centers back from overseas. Already, the company has successfully sought to restrict the import of cars that might compete with G.M. brands. In the years ahead, G.M.’s management will have a strong incentive to spend time in Washington, urging the company’s owner, the federal government, to issue laws to help it against Ford and Honda.

Sixth, the new plan will create an ever-thickening set of relationships between G.M.’s new owners — in government, management and unions. These thickening bonds between public and private bureaucrats will fundamentally alter the corporate culture, and not for the better. Members of Congress are also getting more involved in the company they own, and will have their own quaint impact.

The end result is that G.M. will not become more like successful car companies. It will become less like them. The federal merger will not accelerate the company’s viability. It will impede it.

Five and six are the most scary. It’s not just that the socialized GM will lose money and be a drain on the taxpayers. It’s that the political class, Republicans as well as Democrats, will have an incentive to hamper competition to prevent their nationalized firm from requiring bigger subsidies or go out of business. Look, for example, for a drive to force unionization on auto plants in the South — plants that are now efficient and profitable. Look for plant closures to be in locations were people vote Republican, and not where powerful Democratic politicians live. Look for government “stimulus” and “incentive” plans skewed to help GM at the expense of Ford and the foreign makers.

Look, in other words, for the entire U.S. auto industry to be corrupted.

Dressing Down Gordon Brown

Things that happen in Europe typically don’t penetrate the American media or American public opinion, but here is a classic political speech in which British Prime Minister Gordon Brown is taken to task.

The key question: is anything that is said here not equally applicable to Barack Obama?

So It May Be Moot