Megan McArdle explains:

Why bail out Wall Street and not GM, demand many people. Why do we care about bankers and not ordinary folks? I think this misses the point of the financial bailout. Whether or not it works--and I sure hope it will--I don't think very many people wanted to bail out the financial industry because we were so moved by the plight of those plucky traders on the mortgage desk. We bailed them out not because they deserved it--they didn't--but because if we didn't, there was a very big risk that they would take us down with them. This is not generalizeable to other industries. Money is weird. Finance is weird. There is no other industry that is, first, so tightly coupled, and second, severely affects every other industry in the country. Moreover, there are few other industries that are so vulnerable to panic. Strategic injections of capital can actually salvage operations that are otherwise sound. GM's operations are not otherwise sound. They have been headed for this moment since 1973. Conservatives blame legacy costs, and liberals blame management. They're both right. GM's legacy costs are crazy. So is the UAW leadership, which, goaded by the retirees, is knowingly driving the company into bankruptcy rather than negotiate clearly unsustainable deals. Those legacy costs would probably not be supportable by any company in a competitive environment; the UAW's expectations were created in an era of comfortable oligopoly, when all costs could be directly passed on to the consumer. And the poor quality control on American cars is, from all reports, the responsibility of the union, which maintains downright silly work rules that not even the most ardent liberal could defend in both the Big Three and their various parts suppliers. My favorite was the supplier plant that was forced to work in english measurement even though they had to sell parts in metric. But the examples are legion.

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