Dear WSJ: People Won't Buy Cars from Bankrupt Companies

Editor, The Wall Street Journal

200 Liberty Street

New York, NY 10281

To the Editor:

You rightly dismiss the argument that a government bailout of GM, Ford, and Chrysler is justified by the concern that people won't buy cars from companies in Chapter 11 ("Mitch McConnell's Finest Hour," Dec. 13).

People will indeed not buy cars from companies that might not be around in a few years. But this fact argues against, not for, a bailout. Precisely because – unlike Chapter 11 – a bailout postpones the need for these companies to restructure themselves into more-competitive producers, it makes their long-term survival much less likely than would Chapter 11.


Donald J. Boudreaux

Don Boudreaux is the Chairman of the Department of Economics at George Mason University and a Business & Media Institute adviser.