I'm still finding myself conflicted on whether we should bail out the auto industry, but I think Matt's comparison of an auto industry bail out and the Iraq War is a bit backwards. What made the Iraq War such a bad idea is that doing nothing would have had few real consequences (depite what we were told at the time), while doing something was sure to make the situation either much worse, or at the least, much more complicated. Conversely, doing nothing to bail out the auto industry is pretty likely to lead to the sector's liquidation, which would mean the economy sheds three million jobs, further decimating demand and deepening an ongoing recession. Conversely, if we bail out GM and the company just limps along for four or five more years before collapsing, we'll have lost a substantial sum of money, sure, but it won't, in the grand sweep of American history, be that big of a deal. Put slightly differently, in the Iraq situation, the risk-averse position was to not act. In this situation, the risk averse position is probably to act.
