Something hit me today about a statement that Senate Majority Leader Harry Reid (D-NV) made recently regarding the automaker bailouts. The quote and video, from Real Clear Politics:

“Isn’t it a good thing today in America that we have an automobile manufacturing sector? If it had been up to them [Republicans], General Motors would be gone. If it were up to them, Ford Motor Company would probably be gone. Chrysler definitely would be gone.”

Allow me to address something — and no, not the fact that Reid was incorrect and that Ford didn’t take bailout money, but a very important (and erroneous) assumption that Harry Reid was making: that nostalgia justifies legislation.

Allow me to sum up the automaker bailouts as simply as I possibly can (read more here if you want). Companies like GM and Chrysler basically imploded upon themselves thanks to a number of bad decisions and a failing economy. The companies that were failing were valuable, just very, very mismanaged, and they quickly fell apart when faced with a new consumer focus on fuel efficient cars (which had supposedly been their loss leaders, whereas SUVs and big trucks were their main profit line). For some indiscernible reason, in an act generally explained away as an attempt to avoid total economic collapse and the mass hemorrhaging of jobs, the U.S. Government provided a huge bailout to these companies, to the tune of over $30 billion (in two main loans, one under Bush, the other under Obama) divided predominantly between GM and Chrysler. Both of these companies went bankrupt anyway. As of recently, these companies have allegedly paid back a good amount of these loans, though reports reveals that they are paying the money back with other forms of federal grants, meaning that a very significant amount of government money continues to be held by largely insolvent car companies today.

So the long story short? The government directly involved itself to prevent the economic destruction of companies that should not have survived. In a sense, these companies were rewarded for their poor decision-making with a coddling from the government, whereas other foreign companies managed to do remarkably well (though they indeed lost sales) due to good old fashioned smart, safe business (and were subsequently not coddled for it). For all intents and purposes, GM and Chrysler deserved to die outright, for their ridiculous business practices, mediocre offerings, and ridiculously huge number of arcane brands (with the same cars just re-branded). Naturally, had the government simply let nature run its course, GM and Chrysler would have quickly become bankrupt (like they did anyway), and other car companies (be they local or foreign) would have picked apart the two carcasses, redistributing parts of the companies to more intelligent owners. It’s highly likely that both brands would still be around, with many workers still able to keep their jobs, the only difference being that the company would be owned by different people who could manage better.

Still, Harry Reid wants you to know the world is better. The US Government now owns a lot of these companies for no real reason, and we’ve effectively managed to keep bad business afloat for no other reason than we feel that it’s a “good thing”. Spoiler alert: in both business and the animal kingdom, it is survival of the fittest, and GM and Chrysler did not survive. If we are to take Reid’s word for it, Republicans would have understood this fact and let nature run its course in destroying mismanaged companies that could not survive — a fate much more reasonable and realistic than keeping these companies on life support. Other than idiotic nostalgia for low-tier brands, there was no reason to keep GM and Chrysler alive — the business world could have handled their destruction perfectly and kept on going. The artificial intrusion into the natural business world that was the involvement of federal funds was a terrible idea. No matter how emotional you get about it, business is business.

So no, Senator Reid, the auto bailouts were not a “good thing”. They were a terrible thing. The government has sent the message that it is willing to reward companies who do not do business reasonably and carefully. It has revealed itself as overly emotional and capricious with its money, ironically in a time when most of its citizens don’t have a time to spare. They are far from a “good thing”.