Thursday, May 7, 2009

Will On Obama, Fantasies & Our Auto Industry

George Will has a great article today pointing out the demagoguery of Obama and the problems of Obama's decision to become the director of our auto industry.

George Will begins his article referring to a fantasy land where people pursue utopian ideas with ever more fanatical focus as all crumbles about them. He then analogizes this to Obama's foray into the auto industry:

At the Academy of Obama, professors and others devise plans for extracting a new and improved automobile industry from a semi-sort-of-bankruptcy arrangement that -- if it survives judicial scrutiny; that is not certain -- will give the United Auto Workers 39 percent of General Motors, with the government owning 50 percent. During future contract negotiations, will the union's adversary be an administration that the union helped to put in power?

The UAW will own 55 percent of Chrysler, . . .

. . . The president's "surgical" bankruptcy plan for Chrysler requires some of the company's lenders, mostly non-banks, to receive less than they would as secured creditors under bankruptcy law.

The law may still make itself heard over the political thunder. Meanwhile, the president faults these "speculators" for not being as cooperative as are most of the banks that have lent to Chrysler. But the banks are compliant because they are mendicants: Having taken the government's money, they are the government's minions.

. . . It is Demagoguery 101 to identify an unpopular minority to blame for problems. The president has chosen to blame "speculators" -- a.k.a. investors; anyone who buys a share of a company's stock is speculating about the company's future -- for Chrysler's bankruptcy and the dubious legality of his proposal. Yet he simultaneously says he hopes that private investors will begin supplanting government as a source of capital for the companies. Breathes there an investor/speculator with such a stunted sense of risk that he or she would go into business with this capricious government?

Its chief executive says: "If the Japanese can design [an] affordable, well-designed hybrid, then, doggone it, the American people should be able to do the same." Yes they can -- if the American manufacturer can do what Toyota does with the Prius: Sell its hybrid without significant, if any, profit and sustain this practice, as Toyota does, by selling about twice as many of the gas-thirsty pickup trucks that the president thinks are destroying the planet.

Obama overflows with advice for Americans who he thinks need admonitions . . . He also advises that this is a good time for Americans to put their hygienic hands on the steering wheel of a new car. He hopes buyers will choose American cars. A sensible person might add: Buyers should choose cars made by the Ford Motor Co.

This is so because Ford has, so far, avoided becoming an appendage of the government. And because the national interest will not be served by GM and Chrysler flourishing. It might cost taxpayers more in the short run, but in the long run it will be less costly for the country if the government finds its confident plunge into industrial policy so unpleasant that, sadder but wiser, the incumbent professors and others will flee from such adventures in extracting sunbeams from cucumbers.

Read the entire article. Its clear Obama wants to force his vision of vast fleets of fuel efficient, small cars on the American public. My own opinion is that he is setting up GM and Chrysler to be moribund corporations that will be, whether wanted or unwanted, long parasites on the American taxpayer, and thus at his beck and call.

It is an utter atrocity that Obama is being allowed to pursue both his payoff to big Labor and his strong-arming of "speculators" who have every right to the protection of the law, all unremarked by a press corps that is now, seemingly, an arm of the government. Indeed, there is no need to create a Ministry of Propaganda, that is one executive department that was already formed and fully staffed on day one.


billm99uk said...

Great, it's America's "British Leyland". And you know how that one ended...

GW said...

I hate to say this Bill, but I know very little about British Leyland other than it was a government directed auto manufacturer that utterly failed. That's it in toto. Please feel free to fill in the details.

billm99uk said...

Basically British Leyland was formed in 1968 from the UK's remaining mass market auto manufacturers with the then "encouragement" of the Wilson Labour government, mostly as an attempt to stop falling sales due to an aging product range.
Cue nearly 40 years of awful industial relations, steadily declining sales, nationalization (in 1975), massive injections of public cash, strikes, government-union "deals", more strikes, legendary inefficiency, useless management and appallingly designed, rust-prone and unreliable cars (trust me, I drove some of them!).
Various bits were sold off to foreign manufacturers by the Thatcher government until the core business was sold to British Aerospace in 1988.
It finally went broke (as MG Rover) in 2005 under Tony Blair's administration, which meant the end of mass market car production by British-owned manufacturers. It had gone from having 40% of the UK car market to zero. There were actually very few demands for a "rescue package" because, by that time, both the government and the British public had figured out that a government-run auto industry simply doesn't work.

Something to look forward to in around 2046, eh ;)