Giving the Devil His Due
Over at Takimag, Chronicles contributing editor Tom Piatak has a thought-provoking piece on the proposal to extend $25 to $50 billion in government-backed loans to the Big Three automakers. Among other points completely ignored by those who reflexively shout "Let them die!" whenever the American auto industry is mentioned are, as Tom notes, that as many as three million U.S. jobs may be lost; that the "tax loss from such a catastrophe would be over $150 billion over three years"; and that over 850,000 retirees receive pensions and health benefits from the Big Three--and taxpayers are on the hook for at least some of that cost through the Pension Benefit Guaranty Corporation.
In other words, the extension of $25 to $50 billion in loans may be the cheapest way out of this mess. Predictably, though, the same people who declared that we had to bail out Wall Street have drawn the line at Midwestern Main Streets.
Tom's thoughtful, reasoned, and fact-filled post drew a response from Richard Spencer, modestly titled "A Modest Proposal." Alas, there's nothing Swiftian about Richard's post. His modest proposal comes down to this: "Give every Big Three worker a direct cash handout of $100,000, and then cease all bailouts." He offers this alternative to loans to the Big Three because, as he writes, "arguments for saving the Big Three are arguments for saving jobs and helping out the good people who work for these massively unionized and horribly mismanaged companies." So why not just give the money to the workers and be done with it? (And save as much as $25 billion to boot!)
Since Richard doesn't really support this idea, it's perhaps a bit unfair to point out what his proposal reveals about his knowledge of the economic impact of the American automobile industry and of manufacturing generally, but I'll do it anyway. Like a good individualist, Richard instinctively assumes that all jobs and companies and industries are interchangeable. Individual wages and profits tell the entire economic story.
But they don't. This passage in Tom's post should have alerted Richard to that point: "The November 3 issue of Crain’s Cleveland Business reports that in greater Cleveland, where I live, 26,800 people work in the transportation equipment sector, and 100,000 jobs depend on that sector, directly or indirectly." Here in Rockford, as recently as three years ago, 23 percent of jobs were still in manufacturing, but another 23 percent of all jobs in the area depended on the manufacturing jobs.
That's why, even though Richard finds in Wikipedia that "there are around 240,000 people working in the American auto industry," Tom notes that "The Center for Automotive Research has estimated that a collapse of GM, Ford, and Chrysler would cost nearly three million jobs." Different types of occupations have different effects on the economy. Industrial manufacturing has a relatively high multiplier effect; internet punditry (to pick an example out of the air) does not.
None of this, of course, necessarily means that the proposed loans are a good idea. I, for one, would like to see a serious debate in Congress before such loans are approved--far more serious than the one held before the Wall Street bailout. (Financial services, by the way, also have a rather low multiplier effect on the economy.) And I'm heartened by the fact that some commenters at Takimag--especially Evan McLaren, "Eagle," John Médaille, Derek Leaberry, Sean Scallon, and Red Phillips (among others)--clearly understand the issues at hand. (Others, unfortunately, cannot avoid bleating out "one size fits all" libertarian talking points.)
Some of the commenters, including McLaren and Leaberry, note the irony that paleoconservatives now find themselves in the position of trying to save America from deindustrialization, even though industrialization had many very anticonservative effects. This was a subject of one of my Rockford Files columns over five years ago. In light of this debate, that column seems relevant again, and so I present it below.
* * *
Giving the Devil His Due
Early in the morning factory whistle blows,
Man rises from bed and puts on his clothes,
Man takes his lunch, walks out in the morning light,
It’s the working, the working, just the working life . . .
One of the oddest ironies of our postindustrial age is that conservatives—true conservatives, not the various utopian progressivists who call themselves by that name—find themselves defending the remnants of the industrial system, the onset of which their intellectual and spiritual forebears viewed with dread. It is not that the crazy mystic William Blake was wrong when he wrote of the destruction of the English countryside by “these dark satanic mills”; still less Robert Burns, in his “Impromptu on Carron Iron Works”:
We cam na here to view your warks,
In hopes to be mair wise,
But only, lest we gang to hell,
It may be nae surprise . . .
Rather, conservatives, knowing that Jacobin optimism is more dangerous politically (and, possibly, even more destructive spiritually) than despair (you can, after all, repent of despair), see all too clearly that, whatever the damage wrought by industrialism, the emerging postindustrial “service” or “technology” economy bodes far worse for society.
Through the mansions of fear, through the mansions of pain,
I see my daddy walking through those factory gates in the rain,
Factory takes his hearing, factory gives him life,
The working, the working, just the working life . . .
“Factory gives him life”: Can the same be said of the job at Wal-Mart or McDonald’s or even the relatively high-paying technology positions at WorldCom or Enron? Libertarians and neoconservatives may long for the day when subsistence farming and manual labor disappear completely from the American scene, but what kind of a life can you build for your family if your continued employment—let alone the continued existence of your employer—is always in doubt?
These questions have an added urgency here in Rockford, now that Ingersoll Milling Machine has closed its doors after 112 years and filed for bankruptcy, and one of the largest private employers, Hamilton Sundstrand, is sending signals (perhaps unintentionally) that the days of its factory in southeast Rockford are numbered. (After months of negotiations, Sundstrand’s management gave the union less than a day to examine a six-inch-thick contract proposal; when the union asked for more time to examine the details, Sundstrand locked the employees out.)
Shortly after Ingersoll gave its 300 employees two hours to clear out and locked its doors forever, the local Gannett paper’s token Republican columnist opined that “Some doomsayers will predict that Ingersoll’s failure signals the end of manufacturing in the Rock River Valley.” I’ll take the bait: Yes, manufacturing is leaving Rockford—20 percent of local manufacturing jobs have been lost over the past three years. And, unlike in my hometown in Michigan—which, in the recession of the early 1980’s, successfully exploited its access to Lake Michigan to move to a tourist economy—nothing is replacing it: Unemployment in Rockford is back in double digits—its highest rate since that earlier recession. Rockford is more like Flint, post-GM, struggling to avoid bankruptcy. The major difference is that the political, media, and civic leaders in Flint acknowledge the problem.
When Bruce Springsteen wrote the final verse of “Factory,” he was describing the pain and anger of men who would return to their jobs the next morning, when the factory whistle blew once again:
End of the day, factory whistle cries,
Men walk through these gates with death in their eyes,
And you just better believe boy,
somebody’s gonna get hurt tonight
It’s the working, the working, just the working life.
That pain and anger, however, is nothing compared to the social disruption caused by the loss of those jobs. Over the past year, I’ve watched marriages end—good marriages, loving marriages, with young children—as the financial strain of unemployment, compounded by the loss of healthcare just when it is needed most, pulls families apart. Homes are lost, and the financial effects of factory closings cascade through the local economy as small businesses—from sandwich shops to metal-working and packaging plants—find themselves without customers. What does a father do when he can’t find a new job within six months, or nine months, or a year? He can “retrain” in one of the “hot new fields,” the democratic capitalist replies—but that assumes that companies in those fields are opening up in Rockford. (They aren’t.) Then he can uproot his family and move where the action is, the libertarian smugly answers. (The market has spoken.) But at what cost to his family and to Rockford? And where? And when his family arrives in the Promised Land, what guarantee will the father have that his new job won’t head south, or to China, or to India?
Yes, life involves certain risks, and most of us are here in the United States because our ancestors suffered similar economic “dislocations,” but there is a difference in kind, not simply in degree, between the farmer in 1832 who left one subsistence existence in Alsace for another in the fertile fields of Southern Indiana and the engineer in Rockford in 2003 who may eventually—and, in all likelihood, far from his hometown—find work that will pay him wages that the subsistence farmer would never see. After all, that engineer will always know the uncertainty that comes from earning your livelihood at the mercy of another man.
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As someone mentioned on one of these threads recently, paleo-conservatism isn't so much an ideology as a sensibility. Yes, we have certain ideas about how government should function and how society should comport itself. But above all we are loyal to a tradition, an aesthetic, and a code -- all of which manifest themselves in a seamless garment called being a Western man.
Neocons and libertarians are totally clueless about things of this nature.
As if to illustrate the real issue in debate re: this auto company bailout, is this story in today's NYT
If Detroit Falls, Foreign Makers Could Be Buffer
By LOUIS UCHITELLE
Experts say the foreign carmakers could take control of the industry and its supplier network more quickly than is understood.
http://www.nytimes.com/2008/11/17/business/economy/17impact.html?partner=rss&emc=rss
Can we seriously contemplate placing our economy even further in the dependent state of Mexico and Canada? And how will the neocons and the rest of the "strong defense" crowd support their sexy military without an auto industry. (See Wesley Clark's--I know, I know, "Wesley Clark?!"--recent op-ed piece on the dependence of the Army on the auto industry.)
Too support a "foreign-owned" auto industry in the US is to deny both economic reality and even the appearance of fealty to the country. It would laughable except that it apparently seriously considered an alternative.
(I would also point out that Tom Piatak's figures on the current number of jobs dependent on the auto industry reflects only the current state of the US industry; which follows substantial downsizing. If one considers the historic economic signifance of the industry, it is even larger. The notion that the country would have the economy it has today except for the driver of Detroit is simply unfounded.)
Mr. Wilder,
You are exactly right. People who are content to be economic colonists of a foreign country have a a mentality completely alien to my own.
Off topic to a great degree, in all the post-mortems that the neo-conservatives have written since O-Day of November 4, none mention the effects of the debacle in Iraq on the electional decline of Bush, McCain and the Republican Party. For instance, in yesterday's Washington Post, Tod Lindberg pointed fingers(in many cases validly) at the causes of the Republican/conservative electoral retreat without mentioning the fools errand of Iraq. Sam Francis would skewer the neo-cons if he were still alive; I hope someone else in the Chronicles orbit is up to exposing the wicked ways of the neos.
If the foreign car companies were to "fill the gap" as in the NYT article in #103, it would be even more serious than just realigning suppliers. The designs for these cars are typically done outside the US, so if we were to lose all/most production to the foreigners, we would also lose the creative talent that currently designs cars for GM/Ford and Chrysler. Without these jobs available, why should students study engineering? We would lose more youth that chose not to study engineering, thus we lose our creative, engineering resource.
We have to retain a US auto industry for more than factory jobs.
Mr. Piatak (@104),
If we're subsidizing the auto industry, then are we not already economic colonists of a foreign country? The solution surely is to build a real wealth-producing asset, rather than maintain a liability and the illusion of strength.
Lucius (@107):
Only if the country in which you live is foreign to you. I know some libertarians (though by no means all) regard themselves that way on principle; real people do not.
I tried to post on Mr. Spencer's blog also...but Takimag does not seem to be allowing me at the moment...
I don't understand why this discussion went in the direction that it did. The major points are NOT whether the auto-workers or auto executives "deserve" a bailout or not. The points rather are whether the auto manufacturing industry is important to the US, in what ways, and is it worth "saving"...the paths to "saving" being open to debate.
Additionally, people seem to have a taken a black and white / good guys - bad guys view of the executives and workers to an absurd length. Here's my perspective. (And for what it is worth - I am a Detroiter, first generation to go to college, former automotive engineer, uncles in union jobs in the industry, and a refugee from the sinking industry.) The individuals that comprise the UAW are neither as good nor as bad, nor as different from the general culture, as they are being made out to be here. Many are decent, hard-working folks and, yes, there are some lazies as well. But they are to a great degree pawns in a game that high-ranking union leadership plays with high-ranking executive leadership. The executives themselves are a varied lot. Believe it or not, many have stayed on in the industry (because of roots to locale, loyalty to company, interest in cars, etc) at the expense of higher paychecks in different geographies and different industries.
Further: does everyone realize that white collar workers are now organizing in order to protect their jobs from the effects of "globalization"?
As to Mr. Spencer's argument in the above piece: Though you started a good argument in the first piece, this one here was abysmally bad coming from a writer such as you who is normally well-reasoned. Mr. Wolf said what needed to be said about the utterly useless example of telegraphs. Let me help you make your argument with one simple point as a rebuttal to the "save the jobs at all costs argument". Some - some, not all - jobs will naturally be lost due to the productivity gains made both by technology and improvements in process. Just like the number of people it takes to produce agricultural products (and other products) shrinks away over time, so too will the auto labor force. This is a natural sign of healthy economic developments.
This, however, is not to argue that we should not care if the auto industry collapses. We most definately need to care for the numerous reasons people have outlined: technological innovation on the home front (people who argue that there is no innovation that comes from or derives from the Big 3, simply do not know the basic facts even as measured simplistically by patent issuance, R&D dollars spent, etc), multiplier effects, national economic security, national physical security, etc.
Further: yes, we should have "saved" the electronics industry and perhaps save the agricultural sector for many, if not all, of the same reasons.
None of this is to absolve any individual lazy workers or negligent executives. HOW TO MANAGE a large American corporation with a complex product and complex value chain is indeed an improtant topic. How to best use the carrots and sticks of taxes, tariffs, and government-backed loans - if at all - is also a valid discussion. However, while related, this discussion is apart from the general importance of the sector to the economy of individual states and the nation collectively.
Once we can (I hope) establish that the auto sector, and industrial manufacturing in general, is important, then we can discuss issues - complex issues - such as the breaking up of oligopolies, incenting long-term planning & investing, and, perhaps most difficult, how we devolve back somewhat from an ego-driven individualistic work culture to more teamwork orientation which proved effective in the past (and today proves effective in places all over Asia and Europe).
Apologies for the long post. I will copy to Mr. Richert's post on Chronicles also.
I want to also make a reference to a word that has for curious reasons become a pejorative: protectionism. Let me ask folks this:
1. Why in non-economic discussions is "protection" a positive word and in economic terms a negative one. If it were possible to in net economic / efficiency terms "protect" more of the GDP of our country, why would we not desire to do so? Why should this be "off the table" for ideological reasons?
2. How many of those folks railing against tariffs realize that the very companies in countries "kicking the Big 3's butt" benefit from their own - dare I call it what it is? - TARIFFS/value added taxes/border adjusted charges??
3. Is or is not the word "protect" in any way related to "conserve" something?
Regarding Eagle (@109), just to make it clear to readers, starting with the paragraph where he refers to "Mr. Spencer's argument in the above piece" and continuing on for at least the next two paragraphs, Eagle is not referring to the piece posted above but to a piece by Richard Spencer at Takimag.
One more post on the meaning of "private sector" to address those bemoaning loans...
As some have argued, we do need MORE of a private sector. How do we get one back is the key question (and the answer may not be as simple as immediately stop all regulations...private does equal totally deregulated)?
Along with short-term government-backed loans, our representatives (our board of directors, if you will), the US House in Congress, should step in and stipulate that in order to create more of a private sector (vis-a-vis the auto sector AND banking):
1. the oligoplies be broken up
2. VATs be established at the borders to "even the playing field" against companies backed by the government's from the home country
3. corporate taxes reduced as compensation for a break-up and as inducement for more investment
4. foreign producers be re-assured that their production plants are still welcome, provided the appropriate VATs are paid on the design and engineering and sub-assembly production done overseas
This will INCREASE competition to the level of a real market that IS sustainable in an economy as large as that of the US.
Also, in order to ensure that we the underwriters for ALL loans and bailouts, same said House should MANDATE that we the taxpayers make a PROFIT on our loans and on the equity stakes bought on our behalf. Then later, after an appropriate period, we can ask for our "dividends" and "profit sharing" via tax reductions and REAL refund checks. BUT this time, those of us that actually PAY the taxes get the profit sharing.
We could just end up "saving" the auto and the bank sectors, increasing the size of the private sector pie over the long-term, and ensuring more competition which is necessary to a healthy private sector.
If we had representatives....
What was said about taxation and representation?
Yes - sorry, Scott. I should have amended that portion. I was intending to post originally to Mr. Spencer's Takimag piece and then copy here. However, Takimag was freezing me out (and not for length either, I could not post anything). Perhaps they shut down posts on that particular piece.
Just for the record, I believe the topic at hand deserves debate and I hope that any counterpoints or criticisms made (of Mr. Spencer and others) will be viewed for what they are intended: constructive feedback.
I will admit I have some personal ties to the Midwest and to the auto sector which can make me emotional about the topic, but I hope that I have utilized my background from inside the industry and as a Corporate finance and tax worker in my next life to illuminate some points here. With that, I will once more apologize for my verbose comments.
Eagle (@112):
All very good ideas. Thanks for contributing them to the discussion.
Scott (@ 108),
An appeal to patriotism is a clever way to avoid answering the question. Let me ask it another way: how much of our GDP should be devoted to propping up the auto industry?
Eagle (@113):
No need to apologize for verbosity. Your comments have been quite illuminating, and my point in starting this post was to have a serious debate, which I was afraid was not going to happen elsewhere.
And unlike our libertarian friends who want to spin out abstract principles and then apply them coldheartedly to their fellow countrymen, we should recognize that personal ties are not only inevitable but welcome in such debates.
Lucius - wrong question. Right questions:
1. Is the sector worth "propping up" for long-term economic benefit to US citizens?
2. By what mechanisms should it be "propped up" and will this help make it healthy over he long-run?
3. If tax-payer funds are electd to be used by the tax-payer representatives (US House) acting on behalf of tax-payers, at what profit margin and what timelines will said loans/bailouts/etc be returned?
4. If the federal budget is short of the necessary funds, how can the House Budget Committee (the Finance Committee of our federal board of directors) re-prioritize spending in other areas (i.e., make cuts of items deemed less important, like war, etc) so as to dampen or eliminate any negative inflationary consequences that might arise from additional debt-driven spending.
Patriotism is a fuzzy curtain far behind these hard-headed objective questions that need answering.
Lucius (@115):
Changing the question is a clever way to avoid answering it. Do you regard the country you live in as foreign to you?
$50 billion (the high end of the loan guarantees being sought) is 0.38 percent of the U.S. GDP of $13.13 trillion (in 2006, the last year I could find). And again, these are loan guarantees; they are expected to be paid back, with interest.
By the way, because Prof. Gutzman brought up the issue of legality and constitutionality of any potential economic actions by the federal government, I am making a case for what I believe to be the only legal body empowered to use our treasury in any of the suggested manners. The US house is the ONLY body I believe qualified to do so. I am explicitly stating that the President, Treasury Secretary, and other administrative officials are just that, "adinistrative" officials tasked with executing the wishes of the superior body.
Looks like current forecasts for GDP are running about $14.5 trillion.
Scott (@118):
I don't regard the country I live in as foreign to me. That's beside the point. If my brother is hemorrhaging and near death, how is it cold-hearted to recognize that a blood transfusion is futile?
As for the possibility of the US taxpayer actually making money with a loan guarantee, if such were a real possibility, wouldn't a lender in the private sector have stepped in already? The market seems to recognize that this is a losing proposition.
In answer to Eagle's questions (@117):
1. If there were a benefit there, the private sector would have recognized it already.
2. Any mechanism entails a weakening of other more hopeful sectors.
3. Again, if there were any hope of making money on the deal, someone would have stepped in already.
4. I'd be happy to cut back on government waste. I don't see how switching from one wasteful program to another produces a net gain.
Lucius (@121):
If it's beside the point, why did you write this?
I'm just trying to see the logic.
Perhaps you haven't paid attention to the credit market lately. The reason GM is asking for the loan guarantees is to provide incentive to private lenders in a market that is more than naturally tight at the moment. Which is precisely the problem with this:
Pace libertarian economics, "the market" does not "recognize" anything. Economic actors--human beings--do, and their assessments of risks and potentials are subject to many factors, some real, some imaginary, some overblown, some not given proper weight.
Lucius is quite familiar with our friends at the Ludwig von Mises Institute. About seven or eight years ago, I had a day-long e-mail exchange with Lew Rockwell about Microsoft, in the course of which Lew kept trotting out that same idea as proof that the criticisms of Microsoft for making shoddy products were unjustified. The market has spoken! Microsoft's market share proved it!
Yet it didn't, and today, Lew is an Apple fanboy (and with good reason). The trouble is that some of us were using Macs back when Lew was consigning them to the dustbin of history on the basis of market share.
Again, "the market" is the result of human action. That's a point that Misesians should understand, yet they somehow seem to fall back, more often than not, on economic determinism.
(EDITED TO ADD: I'm not talking out of school about my exchange with Lew; at the end of the day, I asked him for permission to send it around, and he agreed.)
Scott (@122),
You're using product quality and market viability interchangeably. I don't know about your debate with Lew Rockwell, but it seems obvious to me that percentage of market share does not necessarily translate to better quality product. McDonald's has a larger market share than the diner on the corner, but that doesn't mean they make better burgers.
The diner on the corner is able to make better burgers, and find a market for them, charge more, and survive as a business. Apple survives as well. But would you suggest a bailout of Apple (should it come to that) on the basis that, in your judgment, they make excellent computers?
The term "the market" is shorthand for all the economic actors in play--human beings. No economic actor can make sense of a loan to GM. The money is there--it's the likelihood that GM will pay the loan back that's the question. If the government steps in, it will be by borrowing money from the Chinese (turning us into economic colonists), or by printing more money (i.e., robbing taxpayers, weakening the dollar, etc.)
Lucius (@123):
Ah--thanks for clarifying that. Suffering from a head cold, I wasn't making the (rather obvious) connection. I apologize if my questions above seemed out of line.
Oh, and by the way--Lew has on many occasions defended the quality of McDonald's burgers, too. Including once in the pages of Chronicles, which just goes to show how open-minded we are.
Lucius,
If the Big Three fail, the government is going to be robbing the taxpayer and inflating the dollar a lot more than the amount of the loan being requested; not only will $150 billion in tax revenue be lost, but those thrown out of work will be getting unemployment compensation benefits, those who lost retiree medical care will be drawing funds from Medicare, and those who lost their pensions will be getting money from the Pension Benefit Guaranty Corporation.
Tom (@126):
I agree that there will be dire consequences should the big three fail. I'm just not convinced that the Big Three will succeed with a bailout. The government is going to pump money into those companies, they will fail anyway, and we'll still be faced with reduced tax revenue, an increase in unemployment comp, an increase in Medicare costs, etc. etc. etc.
Scott (@125),
Lew's on his own if he wants to defend the quality of McDonald's burgers!
Lucius,
The private sector may not be funding the industry with its own loans because the market place operates in different and extreme manners when oligopolies and monopolies are in effect. Basically the monopolist gets everything he wants or nothing, with little inbetween.
If you apply the anti-trust measures as written on the books, break up the auto oligopolies, and simultaneously apply more thoughtful VATs, then I suspect you'd see a much different market reaction.
Though, consider the current cash crisis these behemoths face in a recession...the argument is for loans to "keep them afloat" with the above changes being made basically simultaneously.
You can't look at the issue in a vacuum...but I might add that it would be foolish to theorize the situation too much at the same time. THings I am proposing here were the conditions which allowed for a prosperous sector in the past.
Lucius,
They may fail anyway, but there is reason to believe they won't. The new collective bargaining agreement contains substantial concessions and largely eliminates the labor pay differential, and GM and Ford are poised to introduce cars that consumers looking for good gas mileage will snap up--a version of the Ford Fiesta that already sells very well in Europe and the Chevrolet Cruze, with a 45 mpg rating for highway driving. And if gas prices contiue going down, the Big Three are alredy making SUVs and trucks people enjoy driving. To me, it makes sense to avoid the massive costs, both economic and social, that would accompany the collapse of the Big Three.
Regarding discussions concerning PCs vs Macs (and the importance of market share):
1. I was ready to buy my first business computer (to move up from a home computer - more on that below) when I read in Byte Magazine that Apple was going to make an announcement on the rumored Mac computer. I had been on the verge of buying an IBM PC clone, but decided to wait a little longer. When the announcement came, Jobs or Wozniac was quoted as saying that 128K RAM was all anyone would ever need. I thought they were smoking too much dope and, next day, bought a clone with 256k RAM (expandable to 640K) for about $3K.
2. Prior to purchasing my first business-class computer, I owned a TI-99/4A home computer. The 16 bit chip in the TI was superior to the 8 bit chips in the Apple, Atari and Commodore computers. However, the TI computer failed in the market place because of market share, or lack there of. (Software vendors were put off by the closed architecture of the TI. Software availability determined market share, not inherent quality of the computer.)
3. The clone that I purchased was a Seequa Chameleon. The Chameleon was one of the first suitcase-style computers and it contained both a Z80 and an 8088 processor, so it was capable of running either CP/M or the early MS-DOS operating system. It came bundled with DOS-based business software. It was a hit with those who wanted to transition from CP/M to MS-DOS. It, too, failed in the market place.
4. In the early years of Seequa, which was located in Anne Arundel County, Maryland, the county government had some "extra" federal money. The county council voted to give Seequa a $250,000 grant to help the company expand market share. I remember one of the council members responding to criticism about giving tax money to a private company, saying that it was federal tax money so the county could take more risk in using it than it could with county tax money. (That, in my experience, is typical thinking. The state, counties, and cities think of federal revenue as some kind of bonus that they can be more careless with.) Seequa eventually failed in the market place.
5. I've also owned eight-track tape players, a beta video camera, and companion beta tape player. All of these were at least slightly better than the competing technologies (for example, the eight-track format gave easier access to the various songs on a tape because you could switch tracks with a push of a button), yet they lost in the market place. (Such was my reputation that my friends always checked to see what I bought so they could buy the competing product.)
6. One can only conclude that although market share is critical to success, it is not necessarily determined by superiority of the technology or product features. Many factors come into play.
I've enjoyed reading this back and forth. I know most people are keeping an almost entirely practical perspective -- even the people making libertarian-esque arguments may just be arguing that the track record of Detroit shows no real improvements to compete that would make an intervention worth it. Others are arguing they are. ANd lots of people are coming up with great ideas for running an auto company. If I had the cash, you bet I'd be stepping in right now.
But could someone clarify for me how the very consistent thread guiding the voting debates earlier that basically said, "The GOP is an ideological, neocon evil and should be destroyed, in spite of it being the lesser evil of two practical options." Yet, now so many same seem to be saying go ahead with the lesser of two evils because these guys are our friends or look like us.
I do not know if I believe the 3 million man march would happen if we do nothing. Although I believe in the incalculable loss our manufacturing industry has left in our country, without reforming our government, our tax policy and our borders (iincluding border taxes and immigration), I fail to see how any bailout would be a practical success.
If it came to war, could we not as easily comandeer Toyota's and Honda's plants and workers here? They're Americans too, aren't they? The free market is a dangerous thing to be argued against vehemently and acted against, for it works in spite of our efforts -- replacing union workers with non-union workers (nothing to do with the workers themselves) and American CEOs with Japanese ones.
Tom (@130):
"To me, it makes sense to avoid the massive costs, both economic and social, that would accompany the collapse of the Big Three."
You mean: it makes sense to bet with federal money that we may avoid the massive costs, etc. It makes sense to take a risk that no bank is willing to take.
Lucius:
Yes, I meant that it makes sense to try and avoid those massive costs. I didn't mean to suggest that the federal loan is guaranteed to work.