How politics makes economics for you and me

even worse:

In 1993, the legendary economist Michael Jensen gave his presidential address to the American Finance Association. Mr. Jensen’s presentation included a ranking of which U.S. companies had made the most money-losing investments during the decade of the 1980s. The top two companies on his list were General Motors and Ford, which between them had destroyed $110 billion in capital between 1980 and 1990, according to Mr. Jensen’s calculations. …

He wanted his students to understand that when a company makes money-losing investments, the cost falls upon all of society. Investment capital represents our limited stock of national savings, and when companies spend it badly, our future well-being is compromised. Mr. Jensen made his presentation more than 15 years ago, and even then it seemed obvious that the right strategy for GM would be to exit the car business, because many other companies made better vehicles at lower cost.

The problem with Professor Jensen then and Professor Yermack now was that they were in the wrong academic program. The issue wasn’t financial. It wasn’t even economic. It is political. Politics has a put “our limited stock of national savings” on a collision course with the abyss in pursuit of “affordable housing” and saving the industrial backbone of the nation.