I had come to expect more from Eliot Spitzer. But then, his real expertise is in criminal law, not the economics of capitalism.

His proposal is shallow and misguided.

Item: the competition he proposes bears no relation to the economic concept of competition. In economics, competition is won or lost in the marketplace. Spitzer's competition is won or lost at the hands of deciders - which is the very thing he warns against in his article.

Item: At the conclusion of Spitzer's selection process, there will be less economic competition in the market. Thus his choice of language - cloaking his proposal as pro-competition - is disingenuous.

Item: The "Big Three" are not equals, not even close to being equals. Ford has some cash reserves; so does Chrysler. They are suffering, but they are in less imminent danger than GM. GM is huge compared to either; Chrysler is the runt of the litter. The three are different in the extent of their overseas operations; Chrysler has almost none. They are different in their alliances with other automakers. Failure of Chrysler would reduce competition, a bad thing, but it would ripple less violently through the economy. Ford's failure would be more serious. GM's failure would likely be catastrophic, in economic terms. Speaking as if the three were roughly equal, and able to compete on an equal playing field in his little competition for bail-out money, with roughly equal national or global consequences for the failure of any one of the three, is preposterous on the face of it.

In other words, Spitzer's proposal suffers from the muddiest of muddy thinking.

Let's face facts. Leaving the marketplace to regulate itself has not worked. The idea is dead. It's time to leave it behind and move forward. We have things we need to do that the market, left to its own devices, cannot accomplish (jobs creation, global warming, and dependence on foreign oil). Government must take an active role in shaping the marketplace; there are simply no alternatives left.

Just handing taxpayer money to opaque banks and car companies to preserve them in their current postures won't do. There must be a quid pro quo if taxpayer money is going to be funneled to these companies. Taxpayers aren't willing to fund exorbitant executive salaries, nor guarantee that dividends flow uninterrupted to the richest stakeholders, nor permit bailed-out companies to serve only their own interests while ignoring the interests of the public, nor spend millions contesting government regulations. If you take taxpayer money, you get regulated.

I hope a time will come when we can ease off the regulation of automobile manufacturers and let these entities resume normal operations. That time will arrive when they are economically stabilized, when jobs are secure, and when our species is no longer threatened by climate change. Until then, there is only one way forward, and Eliot Spitzer's way isn't it.

Urgelt:

You saved me the time of writing something in answer to Elliot. Does it seem somewhat disingenuous for economic advice to be coming from someone who engages in $5,000 per visit call-women? Lets face it, he probably could have gotten something on the same order with a little bit of wine, a movie or two, nice talk, a gift of some sort, and whatever else it takes. Instead he goes to Washington, flies the woman out to nest with him in his hotel room, and loses his job. Setting that aside we have whoopi at home for under $1,000 or whoopi in Washington for $5,000 plus airfare and feeding her. Sounds like wise economic choices to me . . . yes?

Elliot also forgets who drove the economy off a cliff while engaged in a greed-fest. Automoyive and other companies didn't do it; it was the banks, investment firms, etc. endulging in the market place replete with knowledgeable investors, sound rating agencies, and the SEC. Which one failed? And where is the solution while we have the $700 billion in investment money, the buying up of commercial paper, trillions in Fed loans, and lowered discount rates. No one has made a move on the Gramm sponsored 2000 Commodity Futures Trade Modernization Act yet, the act that allowed Enron the ability to trade futures without transpareny and the derivatives market the same capability.

Bridge loans to automotive makes perfect sense in this economic collapse as brought to us by Wall Street. They are well on their way to recasting themselves into more capable and much smaller corporations.

Thank you for a well-reasoned response. The era of knee-jerk free marketeerism is, we can hope, thankfully over. The devil is in the details, of course -- how to regulate companies who get taxpayer money. Knocking down exorbitant executive salaries is a start, but the real devil is how to make enough profit off of more energy-efficient cars. EPA and CAFE standards may be as much hindrance as help at this point, for instance by keeping out cars such as the Smart diesel or the many fuel-efficient models that GM and Ford make for European audiences. The government needs to back off in some respects, but they also need to provide those things that the free market just isn't up to, such as policies which support a market for fuel-efficient cars and which force gas guzzlers to pay more the actual costs instead of giving them a free ride to externalize costs as they've done for so long...