The problem with the United States' industrial policy is less what it is or isn't than that we pretend we don't have one.

In proclaiming grandly that he's got more important things to do than running auto companies and banks, the president is perpetuating the myth that the government has just stepped in, forced by the "incompetence" of auto and bank managers to save the day. That's a popular stance, and it may serve him well politically, but it won't help the economy.

In fact, the government has been up to its ears in the management of auto companies and financial institutions for years. And overpaid CEOs haven't had a monopoly on incompetence. The problem with government management is that it has been inconsistent and uncoordinated, a "whack-a-mole" effort to address scattered industrial problems without regard for their interconnection or their overall results on the companies involved.

We mandate fleet rather than vehicle efficiency, slap tariffs on foreign trucks, then wonder why car offerings range from gas-guzzling, truck-like SUVs to an array of obsolete sedans with "iconic" brand names and eroding customer bases.

We pay lip service to energy independence and shower subsidies on ethanol producers, then shout for "excess profits" taxes when oil prices go up and sign petitions to lower the excise tax on new cars. We want the results, but we never want to pay the price.

Back in 1999, the Wall Street gurus at Goldman Sachs and Federal Reserve Chairman Alan Greenspan convinced President Clinton that Depression-era bank regulations were holding back 21st-century financial innovation.

At the other end of the Capitol Mall, Rep. Barney Frank led the charge toward "affordable" housing for all through ever-expanding government guarantees of mortgage loans. Uncertain about the future of the so-called "jobless recovery," the Federal Reserve kept interest rates near zero for years.

Enjoying the cheap gas and big car consumer economy fueled by ever-rising home prices, U.S. consumers poured billions of dollars into the petro-economy of the Middle East and the manufacturing economy of China.

Much of that money flowed back here looking for higher returns than Treasury bonds provided. Our recently deregulated financial innovators were only too happy to oblige. Pretty soon, we had banks and insurance companies "too big to fail." But fail they did.

And that, Mr. President, is just the problem. You're right. You shouldn't be running car companies, or banks or insurance companies, or hospitals or schools. And you shouldn't allow those who got us into this mess to persuade you otherwise. When a private business has become "too big to fail," it already has failed. Its future has become dependent not on the quality of its products and services in the marketplace, but on the extent of its influence in the halls of power.

Such companies should fail. It should be the policy of government not to prop them up but to oversee their dismantling in an orderly fashion and to put in place coherent regulations to ensure that such excesses do not occur again.

The real scandal is not the millions of dollars we taxpayers paid to the inventors of inadequately tested financial innovators. That was pocket change. The real scandal is the billions we paid to bail out the institutions that bought and sold them on the basis of the "too big to fail" argument.

It's not that they were too big to fail. It's that they were too powerful to fail. The same guys who rewrote the rules years ago that created the auto and banking messes are now busy trying to prop up those messes, all the while pretending it wasn't their fault.

Yes, Mr. President, you do have better things to do. But it's what you don't do here that is important. Don't just do something, sit there. Let them fail.

Clean out not just the companies...