While I haven’t written a post in a week (and I’ll get into that later), we all need to stop and thank the men, women, and families that have served in the Armed Forces of this country, the United States. It is not only those who have lost their lives in serving who need to be recognized, but those who are still living and their families. The sacrifices may not be evenly shared among those living and dead, but the families that waited for their return have also sacrificed as well.
This past week has seen continuing GM’s steady march toward bankruptcy, and the frighteningly rapid developments of Chrysler’s bankruptcy. The Obama Administration’s continuing influence in both of these automakers is extremely disconcerting, especially since Chrysler and GM both announced the termination of approximately 1900 dealers nationwide. Further reductions in the workforce were also announced by both companies earlier this week.
To add to the governmenal interference is the passing of fuel mileage requirements, of which the automakers(!) agreed to. But then again, when the government owns so much of your company and they say “jump”, you ask “how high?” Never mind that in order to meet these new requirements GM is wanting to close down plants in this country and import cars from China.
Now I need to stop and ask: How is this going to save American jobs? I thought the reason for all of the government loans was to save American jobs. But it sounds more and more like we’re saving Chinese jobs…
The bottom line is that no matter if the companies emerge from bankruptcy or not, both companies need to sell vehicles in order to survive. Otherwise…
But then again, look at Amtrak…
Amtrak was created in 1971 to provide intercity rail service due to a decline in rail service. Part of this was due to overwhelming taxation of the industry as well as inflexible rail costs. An expanded interstate highway system and airline travel also contributed to this decline.
Amtrak was expected to break even by 1974. It has never broke even or made a profit, and lives only by government subsidy.
And we are expecting better for government-run automobile companies? Whom are we trying to snooker?
The Wall Street Journal had an opinion column by John Gordon which listed the following reasons with explainations why government cannot run a business. By the way, this is a must read.
- Governments are run by politicians, not businessmen.
- Politicians need headlines.
- Governments use other people’s money.
- Government does not tolerate competition.
- Government enterprises are almost always monopolies and thus do not face competition at all.
- Successful corporations are run by benevolent despots.
- Government is regulated by government.
Need further proof besides the above cited article? Then consider the plight of the British automotive industry. What automotive industry, you ask? Exactly!! Ian Murray of National Review Online had this to say:
What we now face is a nationalized car maker, with the government owning 51 percent of the company and the United Auto Workers (UAW) union holding a stunning 38 percent of shares. Bondholders, who normally have first claim on a company’s assets, receive only 10 percent instead, and the current stockholders get the remaining 1 percent.
Consider that for a moment. The government and the current administration’s political fellow-travelers own 89 percent of an American company. This is a terrible precedent. Just ask the domestic British auto industry. Unfortunately, it won’t answer, because most of it went out of business when the British government tried the same tactic in the 1970s. The government attempted to save a dying domestic industry by nationalization and heavy investment in R&D to produce a “product-led” recovery. That recovery never emerged, because the unions put saving jobs before producing good vehicles (as I detail elsewhere). With the UAW now owning 38 percent of the company, should we expect anything different from GM?
And here is the crux of the matter – President Obama has political dues to pay, and in this case, it’s the UAW. In the case of the banks, it was all of the financiers that “donated” money to the Democratic party. Unfortunately, we, the taxpayer and our descendants for at least two generations, will be paying the bill.
If you’re not angry by now, then you should be…