Friday, November 14, 2008
Car wreck economy
I am watching the markets fall again today and the news is reporting another round of government plans for bailouts. There is talk of another stimulus package and a bailout of the big three auto makers. The liberal bloggosphere is now debating how to make the car makers eco-friendly in exchange for the money. More of the too big to fail mentality that is doomed to failure. This will be a horrible boondoggle just as the financial sector bailout is turning into.
The auto industry is not truly in trouble just the American auto industry. Yes all sales are down but in this recession but the big three were tanking long before the downturn. This is a symptom of a larger American attitude that is the root of the problem but first let us look at industry as a whole. Companies like Volkswagen and Toyota are profitable and have been while GM looses billions. If we are going to bail out bad decisions and bad business practices we must abandon the idea that we are a market economy. Rather than pour money down the rat hole let these companies go into bankruptcy and have the government backstop the people at the bottom that will lose out. Don’t hand the idiots running these companies billions to waste instead let them fail and take over the pension and medical insurance payments for the retirees. This should be done as part of a national single payer health care reform that will help to make all American industry more viable and competitive.
The big three have been losing market share due to bad products and poor workmanship. The market does in fact work in cars, make a product people want and it sells. Once you have a reputation for making bad poor quality products it is tough to come back. This brings me back to the larger American attitude that is failing. Marketing will make up for bad product. The big three think polishing a turd is the solution rather than flushing the toilet.
The idea that we are going to bail out these companies seems to no longer be the argument but how the government should determine what they make is the position of the left. The right and let them fail is actually correct but their reasoning as usual is faulty and they do not want to deal with the fallout. Planned economies fail. I have accepted that fact even though I tend toward socialist solutions. The market is pretty good at deciding which types of goods consumers will buy. Badly made poor quality ugly looking boxy hybrids will tank and that is the kind of crap Detroit’s designers will spew forth if the government steps in with mandates in exchange for loan guarantees. The management of the big three are of the same mentality as the American way of life is nonnegotiable wing of the anti environmental party. The automobile is not conducive to a sustainable lifestyle for 6 billion plus people and the sooner we warm up to that concept the sooner we can keep the world from getting too hot.
Let them fail. Force the unions to work out a new deal and let the taxpayers bail out the retirees not the investors. Take the money and spend it on public transportation. There simply are not enough resources in the world for everyone to drive around in their own car. This is the fundamental change that we need to deal with. If we start now we can save lots of pain in the long run.