ARCHIVE: Obama attempts to “railroad” the automobile industry…

The Constitutional Alamo ^ | 05/02/09 | Michael Naragon

[Publius772000]

“Any honest reading of history suggests that the federal government has quite an impressive record of rescuing institutions considered too big to fail,” suggests an article in the March/April 2009 issue of Washington Monthly.

The first two examples cited by author Phillip Longman are Lockheed and Chrysler, which both received emergency loans from the government in 1971 and 1980, respectively. Both companies paid back their loans, with interest, and the government made no attempt to take a controlling interest in the institutions.

In one of the largest industrial bailouts in recent history, however, the federal government took over the failing Penn Central Company and formed the Consolidated Rail Corporation, or Conrail. According to Longman, the protagonists of the story were the bureaucrats who reorganized the company and rebuilt its failing infrastructure–railcars, engines, and track– at a price tag of over $7 billion.

At this point, while Conrail was losing over $1 million daily, the heroic bureaucrats found what the source of the problem was: government. As the federal money swirled down the Conrail drain, the politicians had an epiphany.

The policies of then-President Jimmy Carter had further immersed the nation into an economic doldrum, so, in the interest of stimulating the entire railroad industry, Congress passed the 1980 Staggers Act. According to Economicexpert.com, the act “significantly loosened the Interstate Commerce Commission’s rigid economic control of the rail industry. This allowed Conrail and other carriers the opportunity to become profitable and strengthen their finances.”

What happened, in essence, was that the federal government realized it was in its own way. The Interstate Commerce Commission had long exercised tough regulatory control over the railroad industry. The Staggers Act allowed the entire industry, including the government’s own rail line, to set their prices according to the market value, not according to government mandate.

[Publius772000]

Want more evidence of the federal government's ineptitude and inability to "rescue" the health care industry? For your consideration, I humbly present the Conrail debacle.