Good Result for the Wrong Reason
I am not the right guy to play Scrooge this time of the year, but why is the resolution of the Republic sit down strike something to be applauded. I understand the plight of the employees. State law entitled them to notice and pay that they were not about to receive.
But this is hardly the fault of Bank of America. BOA has been politically pressured to make a loan that will never be repaid.
You may say “who cares?” BOA is a big bank and 1.75 million dollars is barely a crumb in its cookie jar. But, as the old saying goes, a million here and a million there, and pretty soon we are talking about real money. Neither BOA nor any other bank can survive by making, not merely a poor – but an insane “loan” in response to political pressure. In a free economy, businesses fail and various stakeholders – shareholders, employees and creditors – will be hurt by it. We can’t expect banks – even those who have had an influx of federal capital – to insure against it.
The Republic employees acted boldly and certainly benefited from being from the President-elect’s hometown. Maybe (although I would oppose it) the government should guarantee obligations under the plant closing laws. But shifting the costs to a firm’s lender based upon who can and cannot exert the requisite political pressure seems irrational and even dangerous.
I suppose that those who are committed to a greater collectivization of losses and gains, this is a fumbling step in the right direction. My own view is that, if you want to assume community responsibility for private obligations, it ought to be done directly so the community can assess the costs and benefits.
Crossposted at Shark and Shepherd and Prawfsblawg.
