Why GM's bankruptcy matters

Our formerly weak peers are picking up the pieces of a once world leading auto giant. That's the latest chapter in a story which ends on Monday with the nearly guaranteed bankruptcy of General Motors (GM). In a loss to Italy's Fiat, a Russian bank and a Canadian auto parts makers are poised to buy GM's European operations. Does it matter?

GM's pending bankruptcy is an example of how success leads to failure. And failure is fine in an economy that thrives on creative destruction -- the doctrine that growth springs from industrial churn. That's because for every business that fails, creative destruction dictates that there ought to be 10 new ones scrambling to snag its customers and make better use of its people.

But the U.S. has strayed from that vision of creative destruction. Now we can't even fail right -- we have companies that are simply too big to fail without massive government intervention. Our biggest banks have gotten trillions to keep them from failing and two of our three auto giants are failing with the aid of billions in taxpayer money.