We Now Reward Failure
Steve Chapman writes at reason on the bizarre turn we've taken in rewarding the Big Three Automakers for sucking:

Their high costs and inferior reputation for quality have hindered them in competition for some 30 years. So in good times and bad, they lag behind more efficient rivals.

The financial losses they've compiled recently convey an unmistakable message from consumers: We are no longer willing to buy your vehicles at a price that pays you to make them--if we are willing to buy them at all. The Big Three had a fat inheritance, and they managed to blow it.

Their overseas competitors, by contrast, had to start from zero selling cars in the United States, find customers, prove the worthiness of their vehicles and dealers--even, in many cases, build factories here and train American workers to meet their standards.

Some companies, foreign and domestic, couldn't hack it. You don't see dealers selling Ramblers, Fiats, or Renaults anymore. But many did exactly what our capitalist system requires them to do, only to be rudely informed that the requirements have changed. Instead of being rewarded for their achievements, they now watch as the government rewards failure.

Helping these two automakers means harming the rest. The market for new cars has shrunk and it's not going to regain its old size anytime soon. By rescuing GM and Chrysler, the government is taking future sales away from competitors. If one automaker gets the fatted calf, another one will have to do without.

In a normal market economy, things would proceed differently. The weak firms would file for bankruptcy and be forced to take drastic measures to cut their costs. They would shrink even more than they proposed last week and might even shut down.

These developments would be a bad thing for their shareholders and employees but a good thing for consumers. Competing carmakers would have the chance to hire their workers, purchase their factories, take over their dealerships, and attract their customers. The economy would also benefit, because resources Chrysler and GM were wasting would be used more productively.

Instead, the government has impeded this process--managing a neat combination of bad economics and blatant unfairness. In 21st-century America, it's good to be the prodigal son.