I haven't followed everything that has been said about the proposed bail-out of the major American automobile manufacturers, and I don't know whether the principal point that I'm going to make below has been much noticed.

It is quite natural for people to hold that, if the manufacturers are given a major infusion of financial capital, then they should surrender some control to the creditors; that if the manufacturers are given a bail-out by Congress, then Congress ought to be able to impose some changes in practices and in policies, to ensure that tax-payers are in some way repaid.

But ownership is no more or less than a right of control, and to the extent that control is transferred, ownership is surrendered. What we are then discussing, however we might put it, is nationalization, albeït perhaps only partial nationalization, whether it is called this or not.

Once the automobile industry is nationalized, management of that industry becomes another government programme, with a large bloc of voters fairly directly dependent upon that programme for their incomes. A sizeable portion of this bloc will insist upon indefinite guarantees concering employment and income. The industry would likely become another third rail of the political system, virtually untouchable unless it is to expand the benefits received by the beneficiaries. Further, conceptualizing what amounts to a transfer programme (welfare) as a manufacturing programme will consume additional resources, which really ought to go into other projects. It would literally be more efficient to pay some or all of the automobile workers to stay home than to pay them to make some or all of the vehicles that they would make; but, by golly, the illusion of productivity will trump the reälity of waste.

Because the political significance of a transfer programme is positively correlated with its direct economic benefits to recipients, the stronger are the initial guarantees of employment and of income, the more powerful will be the abiding political effect of the programme. The Republican insistance that a bail-out provide for swift wage cuts probably speaks to some awareness that the bloc of voters in-question would more naturally align with the Democratic Party.

Meanwhile, the White House discussion of doing an end-run to provide a bail-out from other funds may be an attempt to head-off later action by Congress when the Democrats assume the more sizeable majorities from the last elections. Giving money to the manufacturers with fewer strings attached puts less of a programme in place.