The Chrysler Bail-Out Bust

Publication Date: July 1983

Publisher: Heritage Foundation (Washington, D.C.)

Author(s): James K. Hickel

Research Area: Manufacturing and industry

Type: Report

Abstract:

The problem with the Chrysler bail-out--in fact, the problem with all "industrial policy"--is that it is necessarily political in nature; the loudest interest groups get the greatest reward, while the scattered and fragmented "invisible constituency" is largely ignored. But a free market is a tangled web of infinite and subtle interaction, in which the full impact of intervention is not always recognized until too late. In the case of the Chrysler bail-out, a big chunk of taxpayer money was committed to a shaky and inappropriate venture. Every American became an involuntary and uncompensated partner in a company whose future is still in doubt. The precedent established is extremely dangerous. On top of this, the bail-out even failed in its purpose.