Monday, June 1, 2009

US Government Owned

So let me get this correct, two major US owned car companies are now going to be, at least, partially owned by the US government. Can anyone please tell me anything that the government has run that they have not run into the ground.

I was asked early today - June 1, 2009 - "Why EXACTLY would you be scared?"

So let me see if I can answer this question.

1) Is it not true that a government that runs industry is a "Socialism" country?

2) The government now has a say in which kind of cars can and can't be made - Supply and Demand are gone.

3) The government now has a say in the materials used to make the product.

4) The government now has a say in where these materials are purchased.

5) The politicians are fighting for "their" district to get the work.

6) The cars are going to meet "government" standards?

Really - when you are part of ever aspect you can set those standard where ever you want.
Here is what really surprises me, when President Bush went to the American people and said that we need to privatize Social Security, give each individual an opportunity to take control of their own financial future people were outraged. But no one has a problem with President Obama governmentizing the auto industry.

3 comments:

Rodibidably said...

As I said on FB (since I was the one who asked "Why EXACTLY would you be scared?"):

What do you see as the negative effect? (and please, not just the word "socialism", I'm looking for actual negative effects)
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CHRYSLER is certainly not a shining example of the free market working... We're talking about companies that have declared bankruptcy multiple times over the last 20-30 years.

I'm looking for what specifically scares you in this instance. Do you think the company will make worse cars? Do you think they'll make worse business decisions?
What SPECIFICALLY do you fear will happen?
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The options for Chrysler really are:
a) letting it go under, sending countless people into unemployment (employees, suppliers, dealers, etc)
b) keeping them afloat, and let them run business as usual
c) government takeover

Part of me says option A is better, but frankly right now our economy can not take it.
Option B is obviously not ideal, since they've shown they are incapable
Which leaves option C.

You are correct that the government may tell them what cars they can and can not build. Things like emission standards, etc. Oh wait, the government ALREADY DOES THAT.
The government could tell them where to buy their materials from, and that is potentially an issue. But if the goal is to get them on their feet, one would hope that whoever is in control will let cost dictate, not other factors. Basically Obama needs to put somebody in control who can stand up to pressure from politicians.
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Yes the government is not typically efficient. But we're not talking about them taking over google or microsoft here. We're talking about them taking over a company that has been on the verge of bankruptcy(or in bankruptcy) and and off since the 70's... If Obama puts somebody in charge who can stand up to politicians who want things for their own district, and it is treated as a corporation, and not a government agency, than there is reason to believe those inefficiencies will not be a problem.

As for the types of cars being built not being related to emissions, please... The emission standards are in place SPECIFICALLY to regulate the types of cars being built.
But for the sake of argument, let's say Obama tells Chrysler and GM that they MUST start working on all-electric, or hydrogen fuel cell, or hybrid cars. Where is the downside to making cars more fuel efficient? Heaven forbid Exxon doesn't set a new record for profit again next quarter...
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And you've said what you don't want...

What would you suggest? Would you send millions into unemployment? Would you allow Chrysler to go back to business as usual?

And how would you handle the negative effects of that choice on the economy?

Rodibidably said...

To respond directly to these 6 "points" (even though it's mostly covered in my other comment):

1) Is it not true that a government that runs industry is a "Socialism" country?Ohh, it's a big scary word that FOX News loves to use. But it's meaningless in terms of what the real actual negative effect is. Yes there are arguments for and against different types of governmental and economic systems, but to say the word "socialism" is not an argument, it's only purpose is to be used as a sound bite sized scare tactic with no meat.

2) The government now has a say in which kind of cars can and can't be made - Supply and Demand are gone.In case you have not noticed, the demand for Chrysler cars could not get a whole hell of a lot lower. But for the sake of argument let's say that they are forced to make cars that even less people want. OH MY, they may be forced against their will to buy a Ford, or Honda, or (heaven forbid) a Toyota... *gasps in horror* OH THE HUMANITY!!! SAVE US!!!

3) The government now has a say in the materials used to make the product.As I said previously:
"The government could tell them where to buy their materials from, and that is potentially an issue. But if the goal is to get them on their feet, one would hope that whoever is in control will let cost dictate, not other factors. Basically Obama needs to put somebody in control who can stand up to pressure from politicians."

4) The government now has a say in where these materials are purchased.Isn't this the exact same as #3? Materials are materials are materials. If a company (government or otherwise) uses more expensive materials it hurts the bottom line. If the goal is to get Chrysler back on it's feet, the bottom line is important, and should be one of the primary factors in all choices.

5) The politicians are fighting for "their" district to get the work.What exactly do you mean here? Building new factories? Parts? Materials? Whatever the case may be, how is this not essentially the same as #3 and #4? Did you intend to only write a list of 3 and repeat one of them multiple times (and use a meaningless buzzword for another)? If there a real discernible difference between #3, #4, and #5?

6) The cars are going to meet "government" standards?You mean like they do now? Last time I checked, each state has their own emission standards, the feds already have safety standards, etc... What's going to change?

Jim Pendarvis said...

Since it is my Blog to which you are referring, I figured I would post a comment.

Fears:

1) The Social Security problem is proof that the government can't run anything and because the government has proven they can't run anything, this is a legit fear.

2) Now that the government is running the company, and don't think for a second they are not, how much of our tax dollars are going to be sunk into this failing company.

3) The political influence on where materials are purchased. This is not always the cheapest and everyone knows that. This is just another line item that they can add to a bill, cost us more money.

4) The government is not going to fight the labor unions, which is the reason the company failed to begin with.

So what would I do....simple, let the company fail...that's right close the doors. It's seems that when companies close their doors and there is still a demand on the product - has a whole - their former competitors pick up on business and hire the people laid off from the old company.

So in a nut shell my biggest fear is this company is going to not going to make it out of the current financial mess and when we get here again, because the government is an owner, we are going to throw more money to them in an endless cycle.