by Daniel Griswold
Investor's Business Daily, June 10, 2009.

As President Obama seeks to boost the U.S. economy and build stronger ties with our friends abroad, he could advance both goals at once by urging Congress to pass the pending trade agreement with our South American neighbor Colombia.

The U.S. and Colombia signed the free-trade agreement in November 2006, and every month that it languishes in Congress is another month of lost opportunities to export more U.S. goods and build ties to a key Latin American ally. [read more]

The Obama administration's pre-packaged bankruptcy plan for General Motors is a recipe for disaster. Even if President Obama were sincere in his claim that he doesn't want to run a car company, it will be impossible for him to eschew policies that distinctly benefit GM. With taxpayers on the hook for $50 billion (just for starters), the administration will do whatever it takes to demonstrate the wisdom of its intervention.

That will require, at a minimum, a positive return on the coerced investment. But to merely break even on taxpayers' 60% stake, GM will have to be worth $83 billion (60% of $83 billion is $50 billion). How and when will that ever happen? At its peak in 2000, GM's value (based on its market capitalization) stood at $60 billion. Thus, the minimum benchmark for "success" will require a 38% increase in GM's value from where it was in the heady days of 2000, when Americans were purchasing 16 million vehicles per year. U.S. demand projections for the next few years come in at around 10 million vehicles. Taxpayer ownership of GM is something we should all get used to, and the "investment" is only going to grow larger. Think Amtrak.

I abhor paternalistic industrial policy, in which decisions about who makes how much of what are made in Washington think tanks and government offices by public policy "experts" who fancy themselves social engineers. That is a dangerous and condescending worldview, which seeks to homogenize individual preferences into some Orwellian conception of the "social good" or the "national interest."

It has been suggested that I view GM's fate as a matter of national indifference. That's correct, because I have not made the mistake of conflating GM's condition with that of the U.S. auto industry. Whether or not there are so-called "national interests" in maintaining a healthy auto industry (and I'm not convinced there are), I happen to believe that health comes through an evolutionary process in which the companies that have made the right decisions survive and grow, and those that have made bad decisions contract and sometimes even disappear.