Government bailouts are a problem, not the solution

November 23, 2008
The Tennessean
 
OPINION

Former Tractor Supply Co. Chief Executive Joe Scarlett cut his corporate teeth in the retail sector, but he has strong opinions about what makes American business thrive. Scarlett, who established the Scarlett Leadership Institute at Belmont University's business school, says bailout money for the auto industry would be highway robbery.

In the old days bank robbers went to jail. Today, the bankers and the robbers are one and the same, and they are being rewarded for incompetence with huge bags of extra money, courtesy of us taxpayers.

We have centuries of history that prove that markets don't go up forever. Bankers, more than almost any other group, should know this and if they do not, they should not be bankers. When bankers give mortgages to those who obviously can't repay, there is a serious shortage of basic common sense (or maybe just plain stupidity) as well as a lack of financial responsibility to stockholders and customers.

When you look at today's banking and real estate crisis, it is clear to even the least sophisticated among us that common sense has been lacking and basic ethics are out the window. Congress has now committed $700 billion to the very people who got us into this mess — a massive obligation belonging not to the politicians but to current and future taxpayers. Too late — it is a done deal.

Bankruptcy may help Big 3

Congress is now focused on bailing out the Big Three automakers who we all know have been on a downward spiral since the '70s or maybe earlier. The idea that GM, Ford and Chrysler would all of a sudden get smart after decades of being stupid is naive. It is conceivable that they might wake up after going through Chapter 11 bankruptcy, so let's give them that opportunity.

Suppose we do bail out the auto industry, then, what is next? How about the boat and yacht business, which I understand is now close to a standstill? And the homebuilders represent a huge portion of the economy and they are all in big trouble.

The restaurant business has been doing poorly since the spring and we certainly would not like to see our favorite spot close down. And then we don't want to forget all the retailers that are on the ropes.

Our free market capitalist economy is the envy of the world. There have been some excesses along the way, but our basic job- and wealth-creating machine is the best on the planet.

I have been in business all my life and never dreamt of any kind of government help. I figured that if we did the right things, worked hard and stayed in close touch with our customers, we would do well. And to the contrary, if we did not do well we would fail. That's business — let's not monkey with our principles.

We are at the top of a slippery slope that is leading us in the direction of socialism. Bailouts are a sickness; let's not get any sicker.


Joe Scarlett is the retired chairman of Tractor Supply Company and the founder of the Scarlett Leadership Institute. He can be reached at 
joe@scarlettleadership.com

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