The Rise and Fall of Capitalism? No way.

Studebaker. Nash-Kelvinator. Packard. Hudson. American Motors. GM?

After the rebuff by Congress, their tails tucked between their legs, Detroit's big three are back home probably fuming that they can't tap into the billions being doled out for the financial giants. Ridiculed for their private jets, Rick Waggoner of GM took two of his five out of service after returning to Detroit. Nice gesture.

One thing I think that is missing from this discussion is the nature of capitalism itself. Adam Smith must be bristling in his grave. The whole basis for capitalism as put forth in the "Wealth of Nations" in 1776 and later complemented by David Ricardo in 1817 in "The Principals of Political Economy and Taxation" form the basis for the economy we treasure. Without seeming too Darwinian, the nature of capitalism itself allows for the failure of enterprises to be replaced with more efficient competitors. While the American psyche, as the UAW and the Big Three suggest, might indeed be affected by the failure of our automotive manufacturers, we will survive. We did so when the American Steel giants myopically marched into oblivion when foreign steel manufacturers produced superior steel for lower costs. In short, the arrogance and short-sightedness of automakers should not be underwritten by your and my tax money.

Despite Obama's ties to unions and campaign promises to reward their support for his election, he should think long and hard about pouring good money after bad. Even the liberal leaders of Congress, House Speaker Nancy Pelosi and Senate majority leader Reid, have no patience for rewarding businesses that have managed themselves into bankruptcy. Somehow, though, failure is a competitive notion we have come to believe is unacceptable. In truth, it is the natural selection process that capitalism in its purest form embraces. Our history is littered with mismanaged enterprises that could not, or would not compete. GE is the sole company remaining on the Dow Jones Industrial Average since its inception.

While pouring money into financial giants like Citicorp and AIG, mismanaged into insolvency, is a poor idea, so is underwriting the mistakes of a failed automobile manufacturer. The cry goes up, "What are we to do about America's leadership in the world? How are we to compete in an increasingly global economy?" The answer is, if we still believe in a free market economy, let the private entrepreneurs flourish. They will continue to meet the needs of the ever-evolving perceptions of what we want for our future, developing the skill sets and creating innovation where it makes sense and of course, a profit.

The late Peter Drucker, at one time hailed as the father of modern management, while often chastised by his peers, was a brilliant spectator of what innovation really means. Paraphrased, he described innovation as the reallocation of existing assets into new subsets that better address the needs of the end user. Total Quality Management, the TQM model championed by W. Edwards Deming, embodied this notion. Dr. Deming was thrown out of the Detroit automaker's offices 50 years ago, only to find an eager audience among the Japanese. That compelling story, as they say, is proof positive that: a) capitalism is efficient and, b) American automakers created the seeds of their own destruction.

While no one relishes the idea of millions of Americans being tossed out onto the unemployment line after generational devotion to their foolish employers, we must remember that the unions helped create their bosses' inability to compete. This was a joint effort and the results will be, or should be, shared by both.

The financial black hole that has crippled our economy should be allowed to run its course. Citicorp should be allowed to fail. GM, Ford and Chrysler should either sink or swim based on a free market ideal of "either innovate or die". We apparently look at our past dominance of the industrial age and have decided, as a nation, that this is the future model of our ability to dominate the world stage. That's a ridiculous notion. Just as the agrarian economies gave way to the industrial age, we now enter a future that could be just as exciting and promising. Our ability to create, unfettered by government interference, will allow us to enter and dominate the age of technology, or post-modern transportation, or communication, or any number of promising new discoveries that will change the way we live our lives into the next century. If we persist in this mindset that says we have to shore up the inefficient producers of the industrial age or the pathetic greed of our financial sector, we will set back the evolution of our economy for a generation or more.

If we were a nation with $2 trillion in cash like China, we might be tempted to undertake the re-tooling of our automakers. Insofar as the United States sits buried under $10 trillion of debt, this should not even be under discussion. But let's leave that idea for another time...