The typical American automobile in the early 1920s was easy to describe. It was boxy and black, offered a manual transmission only, and sported a straight-up four-cylinder engine. Creature comforts were few. On the bright side, if your car tipped over on a sharp turn — as the top-heavy contraptions were wont to do — two strong men could usually set the thing upright , little the worse for wear. <\/p>\n
On the front were four letters: \u201cFord.\u201d <\/p>\n
A decade later, despite hard economic times, America\u2019s streets teemed with cars in every color of the rainbow. They were far more streamlined. Six and even eight-cylinder engines in more efficient and powerful configurations succeeded one another rapidly. Manufacturers vied with one another to advertise new and better features both mechanical and aesthetic. <\/p>\n
What had happened? History has two names for what had happened, both of which (at one time) meant the same thing: <\/p>\n
1) Free-market competition. <\/p>\n
2) Chevrolet. <\/p>\n
Henry Ford had famously said Americans could have any color car they wanted, as long as it was black. What it took to change his mind were competitors with better ideas. Innovative, vibrant American auto manufacturing raced to a world leadership position which was not seriously threatened for half a century. <\/p>\n
So why has American free-market auto manufacturing failed, today? <\/p>\n
It\u2019s not at all clear it has. Auto manufacturing in America has been subject to an ever-tightening noose of government regulation over the past 30 years, the most onerous being \u201cfleet fuel efficiency standards\u201d which require U.S. manufacturers to make a certain percentage of light, less safe, high-gas-mileage vehicles to which buyers give the cold shoulder (and which can\u2019t be sold for enough to cover inflated union \u201clegacy\u201d labor costs, anyway.) <\/p>\n
The industry tried to hang on by making up profits solely on the bigger, heavier vehicles that U.S. consumers love and our masters in Washington love to hate. To sell more, they offered easier and easier credit. That created a bubble. <\/p>\n
Free-market capitalism has developed a systematic way to organize and minimize the pain of contracting bubbles. Two of America\u2019s Big Three automakers probably need to shed their costly union contracts by going through a bankruptcy — a real one, not a \u201cdirected bankruptcy\u201d with union contract declared off limits from the start. <\/p>\n
Such a course would still leave them in the hands of free-market entrepreneurs (albeit new ones), making decisions in which they know their own capital is at risk. <\/p>\n
But the Obama administration, deeply beholden to the unions, wants no part of that orderly economic solution. Instead, as became obvious this weekend, the U.S. government, through its \u201cbail-outs,\u201d has de facto taken over the auto industry. <\/p>\n
President Obama over the weekend forced out long-time General Motors CEO Rick Wagoner (yes, as in \u201cChevrolet\u201d); gave Chrysler just 30 days to merge with Fiat or some other foreign entity; declared he will accept no dawdling on his demand that Detroit must \u201cbuild the next generation of clean cars,\u201d and announced creation of a new \u201cDirector of Recovery for Auto Communities and Workers\u201d — a post to be filled by former Deputy Secretary of Labor Edward Montgomery. <\/p>\n
It should take the breath away. An elected politician who never even finished a term in the Senate, who has never so much as run a local car dealership or worked the counter in a brake and muffler shop, has just removed the head of a major American corporation — the kind that\u2019s supposedly owned and controlled by private stockholders. <\/p>\n
Have Mr. Obama and \u201cEd\u201d Montgomery invested $10,000, $50,000, $100,000 of their own cash in auto stocks — money they stand to lose if their scheme for \u201ccleaner cars\u201d goes down as the next Edsel? <\/p>\n
No. Not a penny. They want to play with the toy trains, but if they break them, they\u2019ll just \u201cmove on.\u201d <\/p>\n
Then, in a move that sounds like something out of Ayn Rand\u2019s great parody of the new Deal, \u201cAtlas Shrugged,\u201d the President declares he will decide which firms will merge and which will survive, and winds up the day by appointing a desperately pro-union bureaucrat and functionary to \u201cfix things\u201d in autoland — clearly implying what\u2019s needed is not freedom from regulatory and government-facilitated union-contract shackles so automakers can go find out what consumers want to buy, but instead some kind of institutionalized hand-holding and lifetime welfare (\u201cusing the unprecedented levels of funding available in our Recovery Act,\u201d the president said) for their poor, abused workers — many of whom retire in their 50s and enjoy handsome pensions and benefits for the rest of their lives, with the bill added to the price of every Detroit-made car. <\/p>\n
It appears the president and his men have entirely lost track of — if they ever really grasped — the fact that in America, major industries are not run by the government, and for good reason. <\/p>\n
This \u201cnew\u201d system — in which private capitalists technically maintain title to their enterprises, but really operate under close, monopoly government supervision — was tried in Italy starting in the 1920s (where Mussolini\u2019s system was called \u201cFascism\u201d), and in Germany starting in the 1930s (where they called the plan \u201cNational Socialism.\u201d) <\/p>\n
This is not \u201cname-calling.\u201d These terms describe a certain type of state-run economic system, to which the Obama administration — in office a mere 60 days — is now embarked with a vengeance on converting this nation. <\/p>\n
It\u2019s a version of central planning, and it can\u2019t work. No one bureaucrat can know what everything should cost, which technological innovations will succeed, and what consumers will buy. <\/p>\n
In fact, the president\u2019s weekend speech on this subject is even more breathtaking than that, if examined closely. <\/p>\n
Those \u201cunprecedented levels of funding available in our Recovery Act and throughout our government\u201d? They\u2019ll be used to \u201ccreate new manufacturing jobs and new businesses where they\u2019re needed most — in your communities,\u201d the president said. <\/p>\n
Note that he did not set a goal of \u201cbringing back\u201d lost or threatened auto manufacturing jobs. No, apparently he\u2019s quite content to have the lion\u2019s share of Americans\u2019 autos manufactured from here on by the Japanese, the Chinese, the Koreans — even the Italians. <\/p>\n
Instead, the former \u201ccommunity organizer\u201d sees the problem as one of \u201ccommunities,\u201d vowing that his gang of ex-Labor Department union activists — who have never created a free-market jobs in their lives — will \u201ccreate new manufacturing jobs.\u201d <\/p>\n
Manufacturing what? Windmills? <\/p>\n
In Michael Moore\u2019s amusing 1989 documentary about the beginning of the end in Detroit, \u201cRoger & Me,\u201d he interviews well-meaning people who propose the new industries to replace auto manufacturing in Michigan should include raising rabbits for food, and manufacturing lint brushes. <\/p>\n
Have those people now found jobs in the Obama administration? <\/p>\n","protected":false},"excerpt":{"rendered":"
The typical American automobile in the early 1920s was easy to describe. It was boxy and black, offered a manual transmission only, and sported a straight-up four-cylinder engine. Creature comforts were few. On the bright side, if your car tipped over on a sharp turn — as the top-heavy contraptions were wont to do — […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[18,11],"tags":[],"class_list":["post-182","post","type-post","status-publish","format-standard","hentry","category-economics","category-transportation"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pWqFl-2W","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts\/182","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=182"}],"version-history":[{"count":1,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts\/182\/revisions"}],"predecessor-version":[{"id":183,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts\/182\/revisions\/183"}],"wp:attachment":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=182"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=182"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=182"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}