I did my part to save U.S. auto companies. I bought a Ford Focus nearly five years ago. Full confession: I didn't do it out of any altruistic concern for Ford's bottomline. I did it for the same reason everybody buys a car: I wanted to get from point A to point B. That I wanted to do so in an economically efficient manner--through the sticker price and at the pump--inspired my particular choice, the Focus. The same notion--efficiency--that inspired my bailout plan (I still make monthly installments on it) is the only rescue package that will save GM, Chrysler, and Ford.
Citing the catastrophes their demise would unleash on the U.S. economy, the automakers wish to forgo efficiency in favor of a massive subsidy of their inefficiency. Tough economic times force companies to make wise economic decisions. They streamline or get steamrolled. The Big Three could slash lavish pay for executives. They could trim exhorbitant worker benefits and pay. They could concentrate on producing fewer, more profitable cars. But they refuse to do any of this. Instead, their plan is to siphon hundreds of dollars from each American taxpayer--many of whom don't benefit in any way from their product--to save themselves from such tough choices. That's a shame, because making those tough choices will be the only way the market bails out the Big Three. A cheaper, superior product is better for longterm health then a cash transfusion from Washington to Detroit. Give them billions of taxdollars and in a few years they'll just need another transfusion--just ask the Motor City's welfare queen Lee Iacocca. Make a cheaper, superior product, and watch millions of Americans give you voluntarily the billions of dollars you currently seek through the force of the federal government.
Ford, Chrysler, and GM aren't charities. There is no ethical reason for Americans to tithe for their benefit. There is no sound economic reasoning to do so, either. As the bank bailout proves, this hasn't stopped Washington in the past. Now that the horrible precedent of the federal government as the insurer of first resort has been established through the banker boondoggle, it probably won't stop them in the near future from bailing out auto manufacturers.
Dan,
Everything is getting steadily worse than even this post reflects.
1) For all of these bailouts the government is NOT raising taxes nor are they cutting spending elsewhere. That means that we will pay for this not as "taxpayers" but as "consumers" or "savers" in the form of inflation from a debased/inflated currency.
2) Some of the latest news includes the decision by AMEX to become a bank . . . that's right, one of our largest credit card companies is going to declare itself a bank. Why? So that it can get in on the completely fascist/socialist (and totally arbitrary) handouts from Paulson and co.
Here is a rundown of some more of the latest really bad decisions by our rulers:
The Amex decision is not illegal, just highly unethical. But there probably should be a legal restriction to not allow that kind of thing.
To be clear, this isn’t a bailout of the big three. It’s a bailout of the UAW that lavishes its workers with an average of $81 an hour as compared to $25 for non-union work.
It's likely that this won't be the last one as they are not changing their business model and will continue to hemorrage money.
The help Detroit needs is with pulling the fangs of the UAW out of its neck. To that end the government would rightly work. Otherwise it's as asdf says.
"President-elect Barack Obama said the government needs to provide help to U.S. automakers on condition that management, labor and lenders come up with a plan to make the industry ``sustainable.''
``For the auto industry to completely collapse would be a disaster in this kind of environment -- not just for individual families but the repercussions across the economy would be dire,''
There is no problem that the President-elect does not think can be solved without complete intervention by government. Doesn't matter if government can afford it or not.
I thought it was funny that, even though the body isn't cold yet, Hussein was prompting Bush to seal the deal on the Big Three bailout.
After the way that Bush has been trashed by this fraud, I would have loved to see him give little Barry the one finger salute in public. Alas, I hope Bush knows that Hussein will use this against him and the GOP forever when more money fails to solve the problem.
"All plunder all" is clearly the choice our country has made -- ridiculously, transparently stupid though it be, we will eat our cake and demand to have it too.
"If America is an empire, where is our empire?"
"Rethink rather than retrench."
"They streamline or get steamrolled."
Great points are often simple. Dan is the man at doing this.
Dan, what I would like to see from you is a philosophical defense of your economic reasoning.
Dan, what I would like to see from you is a philosophical defense of your economic reasoning.
Andrew, I'm sure you can get that by consulting Hayek, Friedman, Sowell and the like.
Eric:
I've read a bunch of Sowell, some Friedman, no Hayek... wanted to get Dan's personal take.
As for our e-mail excahnge, I have not fogotten about it. It's a busy time of year for me. I'll reply soon.
IMO, Hayek is the best of the bunch. I also highly recommmend Hazlitt: perhaps no one makes it as clear to the layman as he.
Eric, I often hear capitalists claim that every monopoly in history was caused by the government, via some leglislation. Any capitalist scholars out there that defend that view?
I dunno.
But I have a hard time conceiving of any monopoly being able to maintain monopoly power without employing political power to erect barriers to entry for would-be competitors via, licensing requirements, subsidies, preferential tax policy and various other regulations that are often employed by corporatists.
I think the answer here is clear: that Government of the people, by the people and for the people doesn't exist anymore. The political powers that be could give a crap less about the people as long as their citizen based tax revenues keep pouring in and their wars get fought. Corporations and lobbyists are the primary interest of Government these days.
Same here. I'd like to see a systematic, comprehensive defense of that viewpoint though.
Andrew,
Not sure if it is what you are looking for, but a fantastic book along the general lines of your interest is Burton Folsom's "The Myth of the Robber Barons."
