Why is letting the Big-3 auto makers go under is the best for the USA? It is the best for the following reasons:
- Productivity: Detroit was financially tooled when Detroit was the only game in town, and its contracts and operations prohibit production improvements
- Progress: the "buggy whip" industry as the turn of the last century probably had its reasons why it should not be let to go under, but the livery industry had run its course and needed to be replaced. The "old style" auto industry in the US is in the same condition.
- De-unionization: the US had progressed beyond the need for big unions. Laws now protect the American worker and big union simply drive US companies into non-competitiveness. Name one highly unionized US industry that is competitive and healthy today.
- Free-market protection: the term "too-big-too-fail" has now replaced innovation and competitiveness. With the ESA 2008 and the bail-out of Wall Street came the socialization of American big business.
- Protection of manufacturing: in reality the Big-3 auto manufacturers and their unions have stalled manufacturing innovations and could kill it completely. Detroit needs to be re-born, not propped-up.
In all failures and bankruptcies, resources of all types move from improper utilization to optimal utilization. That is the fundamental tenant of capitalism. Either we believe in capitalism or we don't. We believe that free-markets solve their problems or we don't. When you mix government intervention with free-markets, you hamstring the markets and everything breaks down.
Oh, you mean like now? The markets are breaking down because the government is sticking its fingers into the process, changing the rules, and making decisions that capital should make. Think about it? Would you trust your money to someone that has a vested interest in its growth and application or a disinterested third party driven by political an self-interest?
Right, you make the decision, and now you understand why bailing out even the Big-3 auto makers will be only worse for the future of the US auto industry. Now is the time to let them go into history and let smaller, more innovative and competitive replacements take their place.
However, with the Democrats in bed with the Big Unions, don't count on it. They will bail them out after January 20, 2009, and more of your tax money will go to buy off union support.
2 comments:
I agree with you, Paul on this one. My question is, would those auto companies really fail, IF the CEO's and higher paid people in those companies, agree to take a paycut (perhaps not get paid at all, since I'm sure their greed along with stupidity has put them in this position to begin with) would they have to close down or maybe just scale back. Maybe some of the jobs they claim will be lost, could be saved.
Hi, Jill, good to hear from you. Good question, however, unfortunately it has progressed beyond simply a cut back of a few million dollars in top executive salaries.
Detroit is BROKEN! And in a capitalistic world, which I grant we may not have much longer once the Dems get a SMDC (super-majority Democratic Congress - that's 60 seat in the US Senate), the weak, the broken, the failed are allowed to go out of business to make way for more efficient, more innovative, and more productive operations.
I would bet that if we let capitalism work, out of the ashes of old Detroit would arise 4,5, maybe 10 new car companies with better designs, better operations, and better products putting the old resources, talent, and facilities to better use. That's capitalism. No other economic formation has that capabilities, but its hard to watch and even harder to let happen.
It's like watching someone make sausage. If you watch the process you probably would not eat the product, but that's the way it goes.
Out government has now or is soon to be in the business of deciding which private company lives and which dies. That's not capitalism, that's a good definition of central planning which is a tenant of socialism.
The Republicans set this up for the Democrats to take over and never let the American genie out of the bottle again. They want America to be a 3rd-world, European style socialistic country. They don't want a USA as a the lone superpower. They want the UN to be the only nuclear armed entity. Read my early blog about the American Democratic Socialist Party and their endorsement of BHO (Obama). It's their goal to have an impotent USA.
Propping up the Big-3 is just one more step in that direction. American can only be strong as its economy is; as I said before, on 9/11, our enemies became economists. The only way to bring down the USA is to destroy its economy since they can't do it via military or political action.
Again, welcome, Jill. Hope to see you often.
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