Most people seem to think having written a book as stridently anti-corporate as mine qualifies me as a lefty. While I might be left-leaning, I find myself disagreeing with pro-market publications only about as often as I disagree with pro-labor or progressive ones.
Pro-market advocates often forget that the corporations whose interests they're championing are actually the beneficiaries of government policies and rule sets developed to favor the activities of giant, centralized, conglomerates; they argue against regulation, when it's regulation that have built the monopolies preventing truly free commerce from taking place. Anti-market arguments, on the other hand, too often rely on the false promise of central planning or equally large institutional forces to address societal ills. They may hate corporations, but they see them as necessary employers of the masses. Or, like today's fiscal stewards, they fail to understand finance as a game with fixed rules, and their interventions as unfair to those who have come in expecting the rules they signed up for to be enforced by government, rather than rewritten.
In today's Economist, however, the editors correctly dissect what is so misguided about the Obama administration's tactics in funding the automakers, particularly GM. The people who bought GM bonds over the past few years were bailing out GM's health plan for very low returns - but a high level of security. Now, as government continues to bail out the auto giant, those consumer-grade debtors are being pushed to the back of the line. They'll not only pay for GM's bailout through their bond investments, but through their taxes as well.
But, as the Economist puts it, the bigger risk is to the sanctity (if we can put it that way) of the instrument formerly known as the bond:
America's government, keen to protect workers, is providing taxpayers' cash to keep the lights on at both firms. But in its haste it has vilified creditors and ridden roughshod over their legitimate claims over the carmakers' assets. At a time when many businesses must raise new borrowing to survive, that is a big mistake.
Bankruptcies involve dividing a shrunken pie. But not all claims are equal: some lenders provide cheaper funds to firms in return for a more secure claim over the assets should things go wrong. They rank above other stakeholders, including shareholders and employees. This principle is now being trashed.