Lawrence W. Reed, president of the Foundation for Economic Education gave the keynote during the Midwest Students for Freedom Conference at the University of Michigan.  Here’s part one of the speech, entitled, “My favorite president”:

From today’s Wall Street Journal editorial page:

Nationalizing Detroit

In the Washington mind, there are two kinds of private companies. There are successful if “greedy” corporations, which can always afford to pay more taxes and tolerate more regulation. And then there are the corporate supplicants that need a handout. As the Detroit auto makers are proving, you can go from being the first to the second in the blink of an election.

For decades, Congress has never had a second thought as it imposed tighter emissions standards on GM, Ford and Chrysler, denouncing them for making evil SUVs. Yet now that the companies are bleeding cash, and may be heading for bankruptcy, suddenly the shrinking Big Three are the latest candidates for a taxpayer bailout. One $25 billion loan facility has already been signed into law, and Senator Debbie Stabenow (D., Mich.) wants another $25 billion, this time with no strings attached.

Speaker Nancy Pelosi and Senate Majority Leader Harry Reid met last week with company and union officials, and they later sent a letter urging Treasury Secretary Henry Paulson to bestow cash from the Troubled Asset Relief Program (Tarp) on the companies. Barack Obama implied at his Friday press conference that he too favors some kind of taxpayer rescue of Detroit, though no doubt he’d like to have President Bush’s signature on the check so he won’t have to take full political responsibility.

We hope Messrs. Bush and Paulson just say no. The Tarp was intended to save the financial system from collapse, not to be a honey pot for any industry running short of cash. The financial panic has hit Detroit hard, but its problems go back decades and are far deeper than reduced access to credit among car buyers. As a political matter, the Bush Administration is also long past the point where it might get any credit for helping Detroit. But it will earn the scorn of taxpayers if it refuses to set some limits on access to the Tarp. If Democrats want to change the rules next year, let them do it on their own political dime.

A bailout might avoid any near-term bankruptcy filing, but it won’t address Detroit’s fundamental problems of making cars that Americans won’t buy and labor contracts that are too rich and inflexible to make them competitive. As Paul Ingrassia notes nearby, Detroit’s costs are far too high for their market share. While GM has spent billions of dollars on labor buyouts in recent years, they are still forced by federal mileage standards to churn out small cars that make little or no profit at plants organized by the United Auto Workers.

Rest assured that the politicians don’t want to do a thing about those labor contracts or mileage standards. In their letter, Ms. Pelosi and Mr. Reid recommend such “taxpayer protections” as “limits on executive compensation and equity stakes” that would dilute shareholders. But they never mention the UAW contracts that have done so much to put Detroit on the road to ruin. In fact, the main point of any taxpayer rescue seems to be to postpone a day of reckoning on those contracts. That includes even the notorious UAW Jobs Bank that continues to pay workers not to work.

A Detroit bailout would also be unfair to other companies that make cars in the U.S. Yes, those are “foreign” companies in the narrow sense that they are headquartered overseas. But then so was Chrysler before Daimler sold most of the car maker to Cerberus, the private equity fund. Honda, Toyota and the rest employ about 113,000 American auto workers who make nearly four million cars a year in states like Alabama and Tennessee. Unlike Michigan, these states didn’t vote for Mr. Obama.

But the very success of this U.S. auto industry indicates that highly skilled American workers can profitably churn out cars without being organized by the UAW. A bailout for Chrysler would in essence be assisting rich Cerberus investors at the expense of middle-class nonunion auto workers. Is this the new “progressive” era we keep reading so much about?

The car makers say that bankruptcy is unthinkable and “not an option.” And bankruptcy would certainly be expensive, not least for Washington itself, which could be responsible for 600,000 or so retiree pensions through the Pension Benefit Guaranty Corp. In that sense, the bailout is intended to rescue the politicians from having to honor that earlier irresponsible guarantee. But at least that guarantee would be finite. If Uncle Sam buys into Detroit, $50 billion would only be the start of the outlays as taxpayers were obliged to protect their earlier investment in uncompetitive companies.

* * *

If our politicians can’t avoid throwing taxpayer cash at Detroit, then they should at least do so in a way that really protects taxpayers. That means handing a receiver the power to replace current management, zero out current shareholders, and especially to rewrite labor and other contracts. Anything less is merely a payoff to Michigan politicians and their union allies.

Great little video featuring economist Gordon Tullock on why your vote doesn’t matter.  As my friend Terrence Watson said, “If you want to make a difference in the world instead of voting, make sandwiches for homeless people.”

As the election draws ever nearer, I thought I’d offer a post with some links to some articles and quotes that help put elections in perspective.

Should you vote for the “lesser of two evils”? - great article by the late Leonard Read

Lorna Doone and the 2008 Election - on why it’s sad that who wins has to matter

Shut up and vote! - on why voter encouragement is stupid

The Election Doesn’t Matter - on why there are better ways to fight for freedom (probably not for statism though)

The Four Boneheaded Biases of Stupid Voters - by Bryan Caplan on why voters make bad decisions

Stopy Worrying About the Election - on how you can always be free, regardless of who’s in power

Some quotes:

“I am really sorry to see my Countrymen trouble themselves about Politics. If Men were Wise the Most arbitrary Princes could not hurt them. If they are not Wise the Freest Government is compelled to be a Tyranny. Princes appear to me to be Fools. Houses of Commons & Houses of Lords appear to me to be fools, they seem to me to be something Else besides Human Life.” - William Blake

“I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing. Unless it is politically profitable for the wrong people to do the right thing, the right people will not do the right thing either, or if they try, they will shortly be out of office.” - Milton Friedman

“Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule - and both commonly succeed, and are right.” - H.L. Mencken

“And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works.” - Frederic Bastiat

“An election is nothing more than the advanced auction of stolen goods” - Ambrose Bierce

“Aristotle said that some people were only fit to be slaves. I do not contradict him. But I reject slavery because I see no men fit to be masters.” - C.S. Lewis

“Free election of masters does not abolish the masters or the slaves.” - Herbert Marcuse

“An election is coming. Universal peace is declared and the foxes have a sincere interest in prolonging the lives of the poultry.” - T.S. Eliot

“Sed quis custodiet ipsos custodes?” - Juvenal

By SFE Blogger Jonny Slemrod for the Michigan Daily:

I have a simple and honest talking point that both Barack Obama and John McCain can use this campaign season: “I will exponentially grow the size and scope of government.” Indeed, politics of personality and feel-good adjectives such as “change,” “hope” and “reform” have replaced any substantive discussion of the reality that neither candidate will fight our country’s real problem: big government.

Anyone familiar with the tax-spend-regulate-repeat mantra of the Democratic Party knows that Obama’s notion of “change” is feeble. His platform of increasing taxes on everything from energy to investment will surely satisfy big-spending politicians in Washington, D.C., eager to delve into the hundreds of billions in new government spending he has proposed.

Obama regularly attacks “Big Oil,” conveniently avoiding the fact that he voted to give $85 billion in tax breaks and subsidies to the energy industry in the Energy Policy Act of 2005. His ideology injects more government into health care, bails out everything from Fannie Mae to Detroit automakers and willingly grabs the “excessive” profits of oil companies for new spending programs.

This is not to say that McCain is a saint. His “maverick” affinity for bipartisanship has led to sweeping restrictions on free speech through campaign finance reform and an increasingly interventionist and costly foreign policy.

McCain joined Obama in supporting the Foreign Intelligence Surveillance Act, which legitimizes the illegitimate act of warrantless wiretapping of American citizens. McCain’s opposition to earmarks and wasteful spending deserves praise, but like Obama, he supports an enormously burdensome cap-and-trade scheme that will substantially increase energy prices and damage our economy while having little, if any, effect on carbon emissions.

The rapid growth of government endorsed by both candidates is not a sustainable path for our country. With a national debt nearing $10 trillion, Obama and McCain seem to have determined that the only logical solution to our long-term problems is to spend even more.

A responsible platform that truly embodied change and reform would focus on the big issues that threaten to bankrupt our country: Social Security, Medicare and Medicaid.

The trustees of Social Security and Medicare estimated a couple years ago that Social Security will begin paying out more than the amount of revenue it receives in 2017, necessitating a solution that puts citizens, not politicians, in charge of their futures.

Obama has proposed (you guessed it!) a tax hike to solve the problem, while McCain has reluctantly endorsed a more favorable approach that allows workers to designate a fraction of their contributions for private accounts.

Common sense, free-market solutions to the entitlement crises exist, but neither candidate has stepped up to the plate to consider them.

Instead, Obama and McCain prefer to argue over the babies of the daughters of vice presidents, what someone’s wife said and who is more patriotic. I submit this: A true patriot — Democrat or Republican — desires to expand individual liberty, tackle the out-of-control growth of government and ensure that future generations have the same opportunities we have been afforded. The long-term challenges we face as a country won’t be solved by higher taxes, more wasteful spending and increased government regulation, regardless of how politically popular these solutions may be this week. Reducing the size of government allows the free market to flourish, increasing freedom and prosperity for all.

Any other approach is like putting out fire with gasoline.