The US Congress is under enormous pressure to bail out the “Big Three” American automobile manufacturers. The Detroit Free Press screamed that Congress will have “blood on your hands” if it does not give thousands of millions of dollars to these mismanaged multinationals.

Despite this hysteria, and the arrogance of the CEOs who flew to Washington in their private jets to demand the money, it cannot be denied that there will be severe consequences if any or all of these companies go under. While the Big Three themselves might deserve all they get, their sub-contractors do not, nor do the businesses in communities that depend on the wages they pay. The fact that Michigan voted Democratic in November might swing the deal.

Yet, while it is essential that money is kept pumping through the US economy, there are better ways of injecting it than through the Big Three.

1   Morally, they do not deserve it. The Big Three have been in trouble for some time because they were not making cars people wanted to buy, even in the good times. They cannot blame the cash crisis. All private enterprise signs up to the same deal: we undertake to provide what people want at a price they can afford – we keep the rewards on condition that we bear the risk. There cannot be one rule for big business and another for the rest of us.

2   Practically, it is bad for the US economy. Any bail-out will not mean that the Big Three will start doing what they have failed to do before. To reward businesses that do not produce what people want to buy is to undermine the incentive to improve quality. That is why the Eastern Bloc had such a reputation for low quality consumer goods under Marxism. Any country that follows that strategy will become uncompetitive.

3   It is not worth the price that must be paid. Any money that goes to the Big Three must come from somewhere. In the short term, it must come from higher taxes or from higher deficits – which means higher taxes in the longer term. Either way, the money must be generated by other businesses. So viable businesses – and marginal businesses that might otherwise survive but will be finished by higher taxes – will be stripped to pay these badly-run behemoths. Such policies made Britain the “Sick Man of Europe” in the 1970s.

Ever heard of British Leyland?