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Wednesday, December 10, 2008

A Thought Experiment on a Newspaper Bailout: Some Context on Government Intervention

In the last couple weeks, some conservative blogs here and there have suggested that the bailout would get so ridiculous that even newspapers would eventually receive a bailout.

Back in October, I joked that it wouldn’t be long before the junk-bond New York Times was lining up for a government bailout. Last month, I followed up with the launch of the Newspaper Bailout Countdown Clock in a post about Tribune Media’s financial woes.

Well, it has come to pass: Democrats have proposed a newspaper bailout in Connecticut:

Of course, there is just one problem with a newspaper bailout. That problem is the first amendment.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

So far, each and every bailout has eventually lead to a government take over of said industry or company. That appears to be where the auto bailout is going. The government already owns Fannie Mae and Freddie Mac, and they have substantial stakes in many of the banks getting a part of the bailout. Obviously, the government couldn't take any stake in any newspaper because that would be a clear violation of the first amendment. In fact, any sort of a bailout of any media can and should be viewed as a violation of the first amendment. You never get something for nothing and so any money comes with strings. Any government money to any newspaper should be viewed immediately as the government attempting to control the flow of news.

That's why the public would never stand for any bailout of any media. That would be a clear violation of our Constitution. Yet, we stand by while the government takes over cars, banks, and mortgage giants. We would never stand by while the government took over our media because we don't want the government telling us what to think. Yet, why do we want the government telling us what cars to drive, how to bank, and how to get a mortgage? That's what has happened while the government has taken over industry after industry.

The landscape is filled with pitfalls when the government interferes in any industry. If the government takes over the media, the media becomes nothing more than a mouthpiece for the government. That's why our Constitution strictly forbids the takeover of the media by the government. Yet, when our government begins to meddle in other industries, the danger is that incompetent, naive, and arrogant politicians begin to direct businesses they have no understanding of.

So, now we are on the brink of having an auto bailout. With this bailout, we will have a car czar. What is a car czar? It's the government's automaker's CEO. Since the automakers will now be running on government money, the government will tell the automakers how to spend it. Does anyone really believe that Nancy Pelosi, Harry Reid, and whoever is the car czar have the first clue how to run a car company? If the government appointed a newspaper czar, that would violate the first amendment. Yet, a car czar is seen by most as "prudent".

Last week, I pointed out that Fannie and Freddie were manipulating mortgage rates. While I can't know for sure why this is happening, I would be willing to make a healthy wager that this came as a directive from a government bureaucrat that thought mortgage manipulation was a good idea. This is the sort of thing that happens when government runs mortgages. Imagine if a government bureaucrat put a quota on the number of stories newspapers should cover on any given topic. That would be viewed, correctly, as a violation of the first amendment. Yet, when the government manipulates another business in a similar fashion we all shake our heads and move on.

Government has enough trouble doing its own job. The last thing we need is for government to try and do everyone else's job. That's what is happening as a result of all these bailouts. The government is now also a banker, a mortgage company, and the CEO of all the automakers. There is a reason we would never stand for this in the newspaper business, and that reason has plenty of application in their current roles as well.

1 comment:

Mberenis said...

Obama did it for us! There is a bailout for the people. Everyone qualifies. I got $750,000.00USD in grants for my bailout.

Claim your free Bailout Grant