Wednesday, November 12, 2008

Ignore the Stupid Auto Industry

Democrats let by Obamassiah are preparing to approve large loans and/or subsidies for the American auto industries. Supporters of the initiative hope that it will require automakers to increase fuel-efficiency standards and prevent job losses and a deeper recession.

I too worry about job losses and fuel-efficiency. Giving money to Detroit is not a good way to solve these problems. If we give money to Detroit, we are investing in a money-losing industry, and there is no guarantee the this industry will ever manage to heal itself. Imposing fuel-efficiency standards might result in more environmentally-friendly products, but without a guarantee that these products will be of high enough quality to compete with the excellent line of fuel-efficient vehicles currently offered by Honda and Toyota. Moreover, giving money to private industry creates a closer marriage of government and business, which is precisely the kind of thing that Obamassiah likes to pretend he opposes by shunning lobbyists.

At the root of Detroit's problems is a culture of entitlement and unionization. Workers demand far higher pay than their foreign counterparts, and their jobs are protected by elaborate union agreements. This makes it difficult for the car industry to compete internationally. Even now, at the brink of bankruptcy, the unions continue to make demands on the employers which could lead to the collapse of the economy and result in the loss of jobs for everyone in the union. In addition to the problem of unionization, Detroit suffers from poor management: Auto executives failed to forsee the shift in demand from SUVs to compact hybrids.

Giving Detroit money now will only prolong these problems. The unions will not die as long as the industry survives. Imposing additional regulations on the industry, such as fuel-efficiency standards, will only make it harder for these companies to survive. We have no reason to question that the executives primary motive is profit, and therefore we can expect that they will do their best to build the cars that America wants to buy without government proding.

In summary, giving money to Detroit is merely delaying the death of a failing system, at great cost to taxpayers. The money would be much better used to make other investments, such as in education, or to pay off the national debt, or to provide a reduction on taxes for Michigan residents.

What better way is there to address the problem of fuel efficiency? A simple solution is advocated by many leading economists: implement a federal gas tax of $1.00 per gallon. There are obviously many good potential uses for the funds raised, such as subsidizing the development of alternative energy or paying down the national debt.

What better way is there to address the problem of a collapsing Michigan economy and the loss of jobs? I would argue that beyond providing a basic welfare and healthcare option for the unemployed, this problem is best left to individuals to deal with. Self-serving individuals tend to be very good at finding ways to support themselves. After the unions in Michigan have died, and if the government stays out of the way, new companies will come in to Michigan to take advantage of cheap labor, and perhaps a new manufacturing empire will emerge. Or maybe people will migrate out of michigan in search of new opportunites, and the Michigan wildlife will florish in the absence of humanity.


Blogger current typist said...


2:27 PM  
Anonymous Happypappy said...

Well, you sound a bit huffy. You must remember that people suffer--no fault of their own--during such transitions, as losing jobs.

A precedent (a successful one, at that) was set in the 1970's when the government bailed out Chrysler.

I'm for a wildlife preserve in eastern Michigan.

5:08 PM  
Blogger Sarah said...

Have you ever taken the Meyers-Briggs personality type test? I think you'd be a T. Not a criticism, just an observation.

11:11 AM  
Anonymous Anonymous said...

I don't know if you can call a bailout (Chrysler's) successful as long as it manages to keep an industry afloat for 30some years only to bail them out again.
It seems the smart move for the big three will still be to put lots of its money into furthering their political connections, and to undermine fuel efficiency standards legislation - instead of innovating and being competitive. Looks like it's worked for them at this point.

9:03 AM  
Blogger Alex said...

What I don't get is how, amidst all these cries of Obama being a "socialist" because he supports (gasp!) progressive taxation...

...people seem to be totally ignoring the blatantly socialist principle of using government money to subsidize an industry, and then take an ownership stake in it.

9:03 AM  

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