Categories
free trade & free markets national politics & policies

Twinkies in Zombieland?

Hostess is dead. The bakery company stopped production in November, and has been trying to sell off its divisions since. Lucky for folks like Twinkie-obsessed Tallahassee, played by Woody Harrelson in Zombieland (2009), the much-beloved synthetic pastries may again appear in stores this summer.

And not as a zombie product, but as the real, edible confection we’ve known all our lives.

How? Not through any demented reanimation or infection process. This has nothing to do with zombies.

Instead, it has everything to do with the normal workings of capitalism:

In a joint bid, Metropoulos & Co and Apollo Global Management are paying $410m (£275m) for the bankrupt company.

The offer had originally been planned to set the floor for an auction, which Hostess boss Greg Rayburn had predicted would be “wild and woolly.”

In fact, a court filing showed that no other offers were submitted.

In America, today, it’s still possible for bankrupt companies to sell off their productive capacity — including names, recipes, logos and the like — to meet the debts prioritized by the courts.

The latter is entirely natural, not Zombieland-horrific.

Much of the hysteria over “too big to fail” comes from misunderstanding the nature of the deaths of once-successful businesses. Laid-off workers can and do find new work as more efficient companies step in, and the capital goods of a bankrupt company can still have value, and can be bought and re-employed more efficiently in other companies.

Indeed, keeping inefficient firms going by subsidy and special favor puts them into a zombielike existence — not the Zombieland re-animated dead kind, but pre-Romero, old-fashioned voodoo zombies. These sluggards serve slowly and creepily.

Better acclimate ourselves to capitalism’s “circle of life” than the horrorshow that is “too big to fail” in the United States of Zombiel… Bailouts.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies too much government

Bakers’ Bailout

Bailouts aren’t just for big businesses any more.

Just a few years ago the “too big to fail” argument meant spending trillions on financial institutions and auto companies. Now it appears that rewarding failure — indeed, outright perverse dealing — has a new and eager beneficiary: the federal loot goes directly to unions.

Well, a union, at least. The Bakery, Confectionery, Tobacco Workers & Grain Millers International, whose brinksmanship shut down Hostess, Inc., has former Twinkie techs pulling in money earmarked in a specific way:

This week, the Labor Department decided to shower Hostess workers with Trade Adjustment Assistance, a multibillion-dollar pork barrel program that was beefed up as a bone to Democrats, who were blocking passage of three free-trade treaties in Congress in 2012.

TAA is a lavish program doled out by the Labor Department for laid-off workers who’ve lost their jobs due to “global trade.”

Of course, those 18,500 Hostess jobs were not lost to global trade. They were lost to union pig-headedness. The AFL-CIO-affiliated union was warned that without some cuts, the company would go under. The Teamsters entreated the bakers’ union to play ball. But no deal happened. And Hostess went under.

If the union’s negotiation tactic appeared as risky as a banker’s credit default swap portfolio on mortgage-backed securities, it’s now proved to be as un-risky as the same. The union may not be “too big to fail,” but it appears to be “too well-connected to fail.” The Obama administration is intent on throwing money at the group’s outrageous folly.

And so we continue to reward idiocy, well into the 21st century.

This is Common Sense. I’m Paul Jacob.