Doing his best to sell (pun intended) the auto industry bailout and to prepare the public for the donning of the Volt, President Obama last week visited a General Motors manufacturing plant.The physical stage of his GM speech, placing the president of the United States with the presidential seal in front an unfinished car off the assembly line, went a long way in setting up the message to America: government and big business are colluding to control the auto market, squash competition, ignore real consumer demand and therefore reduce production, use political instead of business considerations, drive up prices on consumers, and using taxpayer funds to do so.
CNN provides the following portion of the speech:
At the 1:00 mark the president remarks on the number of auto manufacturing jobs lost before he took office, how sales went down, how the industry looked like it "was going over a cliff," how that industry avoided difficult choices, and had not fully adapted to the market.
Such an irresponsible business sounds worthy of failure, of being driven out of the market by competitors seeking the approval of customers and capable of providing more stable jobs for employees. Being competitive capitalism is a profit and loss system, when you're all losses you've proven you cannot efficiently provide consumers with affordable and quality products and services.
But, starting with Bush, what did we do? We propped up GM and Chrysler (again) with a taxpayer bailout.
We have given these business failures even less incentive to get things right and operate efficiently, for now they have the explicit backing of taxpayer dollars. If you do not have to face the market pressures of competitors, why do so? This does, after all, mark the second bailout of Chrysler. What is to preclude a third? Better yet, if government keeps those pesky little competitors out of your way with excessive regulation, all the better.
Worse yet, the federal government is the chief share holder of GM. Besides being blatantly unconstitutional, this transforms GM into a manufacturing wing of the federal government. They now are in the "business" of producing political pet projects for meddling politicians, not making business decisions based on consumer demand. And, as with any government run affair, costs run unnecessarily high as they do not have to operate under the competitive pressures of the market: they have the unending stream of taxpayer funding to fall back on!
Taxpayers pay twice for this collusion of government and business: once in the form of the taxes and borrowing it requires to prop up and run failing businesses, and twice as consumers given a diminished choice of products they did not ask for, offered to them at artificially high prices.
For example, the new Chevy Volt, starting at $41,000 dollars.
Calling this capitalism is like, well, I don't know. Analogies and similes apply to realities that can be logically grasped, and this defies the basic logic of competitive free market capitalism.
This market disruption goes beyond mere socialism. At best it is a lurch backwards into the age of mercantilism that preceded capitalism. At worst it is dabbling in the system of the state corporatism that followed capitalism, tried by 20th century totalitarian governments in Europe.
For capitalism to be capitalism, the market has to be competitive and free. In order to be competitive, competitors cannot be squashed out of the market by excessive government intervention in the form of skewed regulations or, as above, outrageous government bailouts and collusion.
When government exceeds it legitimate role of providing courts to settle disputes, of enforcing contractual obligations, of setting regulations that do not favor one business over another, the market becomes the playground for special interest lobbying and favor-dispensing. Monopolies are created in the market whereby production is lowered by a lack of true competition, therefore prices are artificially made high. This is done by the very government that claims it is the vanguard of consumer protection.
In this circumstance consumers are deprived of their privilege of voting with their dollars, tax payers shoulder the burden, and freedom in the market takes a significant hit.
Volt? From a free market perspective, it deserves the name, Dolt.
