Today’s society is turning into one of those portrayed in novels such as 1984 or Atlas Shrugged. There is a growing sense that failure is not acceptable. That one man’s collapse should be spread among millions so that instead of the devastation of one deserving person, millions of undeserving people are only slightly harmed. We have become a society where there are no guilty, so all guilt must be divided equally. We now believe that “All men are created equal” does not mean that all people have equal rights and opportunity, but have equal outcome. We have become despicable.
The State of Illinois further propagated this feeling today as it extorted Bank of America (recently “bailed out” by every American) into extending a line of credit to a non-creditworthy company.
Last week Republic Windows and Doors, a window and door manufacturer (tough to figure out by the name), notified its employees that it would be closing its doors (irony, anybody?) due to liquidity issues arising after Bank of America refused to extend debt to them. The approximately 300 employees decided that they were due something that was not theirs so they sat in the factory and refused to leave. They stated that they would not leave and that they ought to have the assets in the building in return for losing their jobs.
Let us make one thing very clear, employees do not own their companies unless they own the stock, the companies are owned by the stockholders. This would be no different than working in an office and being laid off because of tough times and claiming that you were taking your desk as severance. Furthermore, the assets in this factory were likely pledged to the company’s lenders as collateral for the loans in the same way that your car is the collateral for your loan if you are financing it. The employees of Republic Windows and Doors at no point had any claim to any of the equipment or inventory owned in that factory. As such, this in and of itself is extortion. They are refusing to give up physical control of these items without monetary compensation.
So why did Bank of America not provide the liquidity that was needed to keep the doors open at Republic? The same reason that any bank decides not to lend money, the risk was too high that the loan would not be repaid. Republic was not a profitable company and had been declining for some time. Bank of America had even worked with Republic to help them become profitable, but the manufacturing of windows and doors in a society that is overwhelmed with an inventory of homes and other buildings that have already been built is just not feasible. As such, Bank of America refused the loan and the natural course of action took place as Republic announced that it would be closing its doors and going bankrupt, as many companies do every year. Furthermore, it was not only Bank of America that would not lend to this company, but no other bank would either. Republic, simply put, was not worthy of a loan.
This, however, was completely unacceptable to not only the employees of Republic, but also to the Governor of Illinois, Rod Blagojevich, and Barack Obama. Yesterday the Governor stated that Bank of America would get no further business from the State of Illinois, a giant client, so long as credit was not extended to Republic. This, my friends, is pure, uninhibited extortion – by a Governor no less! The Governor blatantly threatened financial ramifications for Bank of America if it did not lend money to a borrower that was unlikely to repay its loan.
President Obama was quoted as saying at a press conference that the workers were “absolutely right” for demanding their severance pay. He went on to say, “These workers, if they have earned these benefits and their pay, then these companies need to follow through on those commitments.” Borrowing a line from John Stossel, “Give me a break!” Barack, this company is out of business, there is no money to pay the employees a severance. This was not a trimming of personnel so that the company could improve its bottom line; this was a “shut the doors we’re out of business” closing. Would this happen if a small company closed? Would they deserve severance from their bankrupted owner? By taking a job at a company you agree to the risks of that company. If the company fails it goes without saying that you lose your job and all of your pay. How many people do you know that have worked for companies that have collapsed who have been confused as to why they aren’t receiving paychecks anymore?
Unfortunately, Bank of America gave into the demands of Governor Blagojevich and extended credit to Republic Windows and Doors. Really, it had no choice. The money it would miss out on by losing the accounts of the State of Illinois would have far outweighed the amount they may lose if Republic does not repay its loans.
This is an unfortunate story. The most unfortunate part of this debacle is how much this is representative of the times we are living in. This transformation from capitalism to socialism has gone more rapidly than I had ever imagined possible. We are no longer individuals with individual tastes, aspirations, emotions, and talents, we are becoming the body of a group that is ruled by one head. We have entered a time when there are neither winners nor losers, there is only equality of outcome where everybody equally wins and loses. The prospect of personal advancement is dying before our eyes as we see the incentives for such advancement disappearing in this crusade to slaughter the productive so that the idle may lap up their blood. Soon those productive members of society will all be killed off (figuratively of course), and we will only be left with the beggars and the thieves. Karl Marx said, “Democracy is the path to Socialism.” I hope we can prove him wrong.
Some good news to note is that Governor Blagojevich was arrested today on unconnected charges of corruption. One of the two main charges are that he was selling Barack Obama’s vacant seat on the Senate (governors are responsible for replacing vacant Senators). Mr. Blagojevich was quoted as saying, “A Senate seat is a fucking valuable thing, you don’t just give it away for nothing!” Additionally, Mr. Blagojevich was charged with refusing financial assistance to the Chicago Tribune from the sale of Wrigley Field unless the Tribune agreed to fire a number of employees that the Governor did not enjoy; probably a result of negative stories about him.