Friday, December 5, 2008

Russian Roulette?

The following quote is from this AP article:
But Dodd also said that doing nothing "plays Russian Roulette with the entire economy of the United States."
I think this is a bad analogy. I understand it makes good theater for a Congressional hearing, but I think it is overstated. There will certainly be negative effects, and it will hurt, but we aren't going to die. The banks were not in as bad a shape as the auto makers, but if they had been, that would have been closer to Russian roulette. If all those banks collapsed, there would have been deadly effects felt everywhere.

But with the auto makers, a better comparison is Russian roulette with the gun pointing at your leg. We will definitely feel some pain, but some parts of the economy will feel it more than others. We might lose the leg, or a part of it, but the entire economy isn't going to collapse. Some of those who made bad decisions, whether they were management decisions, marketing decisions, or bad contracts with workers, will cease to exist, and the auto manufacturing landscape may be disfigured, but the country as a whole will recover.

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