King Barack the Mild

Holman W. Jenkins, Jr. penned an interesting opinion piece in the Wall Street Journal last week, in which he characterized President Obama as “King Barack the Mild.”

Ninety-nine times out of a hundred, name-calling falls in the category of mere ad hominem, and is thus actually counterproductive to an argument.  However, occasionally a clever appellation can make a point more vividly and concisely than could an entire essay.  I am sympathetic to Mr. Jenkins’ comparison; he strikes an apt parallel between Mr. Obama’s administration and the heavy-handed, arbitrary, and often contradictory decrees that one would expect from an omnipotent monarch.  

So, if the royal shoe fits...

image credit to The Wall Street Journal, Ismael Roldan

The straightforward enumeration of “King Barack’s” policies related to Chrysler and General Motors serves to demonstrate the dictatorial nature of the administration.  In particular, Mr. Jenkins shows the illogic of juggling the various contradictory political considerations - as “[k]ingly prerogative... conflicts with kingly prerogative” - none of which takes any real account of market requirements or individual freedom.[Note 1.]

Consider the pressures imposed by the Obama administration upon creditors.  As “King Barack the Mild... tries to dictate terms of what amounts to an out-of-court bankruptcy for Chrysler and GM,” Jenkins writes:

He wants Chrysler’s secured lenders to give up their right to nearly full recovery in a bankruptcy in return for 15 cents on the dollar.  They’d be crazy to do so, of course, except that these banks also happen to be beholden to the administration for TARP money.[Note 2.]

This is exactly the kind of government force that I’ve warned about in previous posts.  The government seizes the earnings of private citizens, distributes it to corporations, then uses that “gift” as a lever to exact obedience, compelling the companies to make concessions or decisions that they would not have otherwise made.  

As for GM’s creditors, the Treasury Department’s advisor Steven Rattner “has delivered word that the king’s pleasure is that these unsecured creditors give up 100% of their claims in return for GM stock.”  The article points out the absurdity of this charade.  Why would GM’s creditors accept as payment, instead of the dollars that they are owed, the stock of a company that “the king’s own policies mean they’d be loony to buy?”  Why indeed, except that implicit or explicit compulsion is behind it.

Naturally, political agendas trump the logic of running a company.  Jenkins notes that it is “the king’s pleasure” that GM discontinue its GMC-brand SUV’s and pickups despite the fact that they earn the company’s highest profit margins - a suicidal position that can be comprehended only in the shadow of the president's environmentalist policy.  And with that same illogic, Mr. Obama has refrained from advising GM to discard the “profitless black hole” that is the Chevy Volt because such programs are the darlings of the environmentalists.

Concludes Jenkins:

There’s a reason royal discretion has long been outmoded as a way to run an economy: Things just work better if a realm’s subjects are left to resolve their own disputes and interests through the impersonal mechanism of the markets and the law.

This point is well taken, though of course there is an even deeper reason than markets simply “working better” under capitalism.  At the heart of the matter is the moral foundation of capitalism.  In her essay “What Is Capitalism?” Ayn Rand wrote: 

The “practical” justification of capitalism does not lie in the collectivist claim that it effects  “the best allocation of national resources...”

The moral justification of capitalism does not lie in the altruist claim that it represents the best way to achieve “the common good.”  It is true that capitalism does - if that catch-phrase has any meaning - but this is merely a secondary consequence.  The moral justification of capitalism lies in the fact that it is the only system consonant with man’s rational nature, that it protects man’s survival qua man, and that its ruling principle is: justice.[Note 3.]

NOTES

1.  To write “market requirements or individual freedom” is a redundancy.  What the market requires is the liberty of individuals.

2.  Holman W. Jenkins, Jr., “GM Is Becoming a Royal Debacle,” The Wall Street Journal, 22 Apr 2009, p.A13.  All other quotes of Mr. Jenkins are from this article as well.

3.  Ayn Rand, “What Is Capitalism?” from Capitalism: The Unknown Ideal, Penguin Books, New York, NY, p. 20.  Article reprinted from The Objectivist Newsletter, November and December, 1965.