"Good intentions will always be pleaded for every assumption of authority. It is hardly too strong to say that the Constitution was made to guard the people against the dangers of good intentions. There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters."-- Daniel Webster (1782-1852)
Contrast that combative attitude with today's political environment, where the mainstream media is -- as many have written about en masse -- simply an outlet for the White House and Congressional press offices. The sycophantic worship of Everything Obama is stomach-turning, especially since the sole reason the Founding Fathers enshrined the protection of the press in the Constitution was to serve as a bulwark against government encroachment and abuse.
There are plenty of brave souls standing strong against the infection of government control in our lives -- Dr. Ron Paul comes to mind, as do countless bloggers and alternative media. However, if the mainstream media is your only source of news, you would think the only people opposing the solidification of the government into every nook and cranny of our lives are right-wing extremists who want the smallest tent possible.
'Tis not the case, of course, but as I have mentioned, therein lies the danger when a news outlet's main source of revenue is advertising, versus subscriptions. Only corporations with the deepest pockets can afford continuing advertising in the major newspapers, and many of those firms rely on government largesse or favorable government regulations. (And, it should never be forgotten, most news outlets are owned by the same corporations that do enormous business with the government.) Does anyone in their right mind harbor a hope that a newspaper would risk government wrath ... thus angering advertisers ... and risking cozy relationships with government staffers?
Back to Atlas Shrugged. A scene reminded me of the (continuing) fight over GM's nationalization/bankruptcy, where an "unnamed" Obama Administration official argued that,
"...the UAW was making other sacrifices in wages and benefits, and that [GM] could not function without workers."
That quote rang in my ear as I read Rand's depiction of the conflict over whether a railroad union would, in a clumsy attempt to dictate the operations of Taggart Transcontinental, try to stop the maiden voyage of the John Galt Line, a train running on advanced rail that was the last hope to save American freight shipping. (Bear with me ... the excerpt is a page long, but well worth reading.
"Well, it's like this, Miss Taggart," said the delegate of the Union of Locomotive Engineers. "I don't think we're going to allow you to run that train."
Dagny sat at her battered desk, against the blotched wall of her office. She said, without moving, "Get out of here."
It was a sentence the man had never heard in the polished offices of railroad executives. He looked bewildered. "I came to tell you--"
"If you have anything to say to me, start over again."
"What?"
"Don't tell me what you're going to allow me to do."
"Well, I meant, we're not going to allow our men to run your train."
"That's different."
"Well, that's what we've decided."
...
She reached for a sheet of blank paper and handed it to him. "Put it down in writing," she said, "and we'll sign a contract to that effect."
"What contract?"
"That no member of your union will ever be employed to run an engine on the John Galt Line."
"Why ... wait a minute ... I haven't said--"
"You don't want to sign such a contract?"
"No, I--"
"Why not, since you know that the bridge is going to collapse?"
"I only want--"
"I know what you want. You want a stranglehold on your men by means of the jobs which I give them -- and on me, by means of your men. You want me to provide the jobs, and you want to make it impossible for me to have any jobs to provide. Now I'll give you a choice. That train is going to be run. You have no choice about that. But you can choose whether it's going to be run by one of your men or not. If you choose not to let them, the train will still run, if I have to drive the engine myself. Then, if the bridge collapses, there won't be any railroad left in existence, anyway. But if it doesn't collapse, no member of your union will ever get a job on the John Galt Line. If you think that I need your men more than they need me, choose accordingly. If you know that I can run an engine, but they can't build a railroad, choose according to that. Now are you going to forbid your men to run that train?"
Now, just substitute "automobile factory" for "railroad," and you get a sense of what GM's former CEO Rick Wagoner probably felt ... just before Obama fired him.
THAT's why I'm enjoying rereading Atlas Shrugged, because I'm getting tired of being defenseless while the government cuts down one pillar of liberty after another.
Posts
Man...itz really unbelievable that...Ms. Rand's ideology still stands straight no matter whichever century we live in - raf
ReplyDeleteOK, you believe strongly that Obama is taking the wrong course with the auto industry. It's very easy to criticize what others do and easier still to offer no alternative. So, what would you propose be done with the American auto industry? Mind you I'm not at this moment supporting or opposing the current strategy, only asking "If this is so bad, what would you prefer?"
ReplyDeleteGadfly,
ReplyDeleteThanks for your comment, and legitimate question.
Let me just say that I do not think there are any magic-bullet solutions to GM. Broadly speaking, however, I think any government involvement takes GM down the absolutely wrong path. Let me explain.
I think that GM should've gone into bankruptcy months ago, before billions of taxpayer dollars were sunk into it. That was good money after bad. Allowing GM to go bankrupt -- without govt meddling -- would've allowed it to shed itself of the crippling labor debt and benefits, and could've invited people to purchase the assets with strong incentive to turn the company around.
However, look what we have now. Yes, GM will be leaner, but Obama illegally sidestepped bankruptcy law, and took bondholders to the woodshed. Who, in his right mind, would be willing to invest in GM (or any other) corporate bonds, if you cannot rely on existing law for predictability? I could list reason after reason for why the current GM situation is wrong, but you asked me what alternative I would prefer.
I think bankruptcy was inevitable -- just a matter of when. Bankruptcy before government involvement, of course, would've meant that the labor union couldn't get Obama's protection, and that Obama couldn't imprint his vision of what an auto company should produce. The most profitable vehicles are the pickups and SUVs, but the Admin is ensuring that GM cannot produce them. The least profitable vehicles are the small (unsafe) and hybrids ... but Obama is ensuring that GM (and any other auto company wanting to do business in the U.S.) will be overproducing them -- and losing money on each car. That sounds about right for when the government inserts itself into the market.
Bankruptcy before government involvement would've given GM a chance, but I don't give GM much of a chance now.
I look forward to your feedback, Gadfly.
Scott
Thanks for your response, Scott.
ReplyDeletePart I
My understanding of bankruptcy in the normal situation - without direct Government involvement - would have been a prolonged mess. Maybe better, in your view, but definitely much more drawn out. Drawing the process out for an extended time creates a separate set of problems like litigation. While that all plays out the whole company dies anyway. People will definitely buy tvs from Circuit City while they're in bankruptcy, people will fly on USAIR when they're in bankruptcy. Will people buy Chrysler or GM cars when they don't know if the company is going to survive? What we've seen recently is that uncertainty about the survival of the auto makers had driven down demand while people sit on the sidelines. My understanding is that in the last 12 months over 3 million more cars have been junked than purchased. That is an indication of pent up demand tht is waiting for the market to stabalize before purchasing. Getting to a new structure in GM and Chrysler quicker might be better for their longterm survival, and I don't know if the traditional way of bankruptcy would have allowed that. Just last night I saw a new GM tv ad that said the equivalent of "We're back - we're leaner and stronger - we're more innovative and we're here to stay." I found it kind of compelling. I don't think GM could have put up that kind of message if the Government had stayed out of it. GM management didn't really want to lose their jobs, etc.
True in traditional bankruptcy you can eliminate all of your obligations to everyone (including bondholders - like my stepfather) and writeoff your immense obligations to the union pension and health care programs, but in some fashion the federal government will have to pick up a lot of that through the Pension Benefit Guarantee Fund/Medicaid etc. You also potentially bankrupt your suppliers and individual debtors can prevent the whole thing from moving forward. So traditional bankruptcy - though it happens with much less government interference - will proceed much less smoothly.
Part II
ReplyDeleteAs far as the policy objectives that are being injected into the proceedings (milege standards, etc.). True, that is what the price one pays for letting the government into the process. Now it's true that in the old paradigm, the larger vehicles were more profitable, but that isn't necessarily what the case will be going forward. A car like the Prius didn't actually make financial sense to a purchaser unless the price of gas was closer to $4 a gallon. The premium that you had to pay for the technology was never going to be made up for in the gas savings. But the Prius was nonetheless very profitable for Toyota. Freakonomics has shown that consumers aren't really all that rational anyway. We are also getting into third and fourth generation technologies such that it may be more sensible for a consumer to pay a premium for hybrid technology. Up until now, GM and Chrysler, though, have not had really attractive alternative feul vehicles that consumers would pay a premium for (though we've shown that we WILL pay a premium for the right car).
Don't forget also that the profitability of bigger cars was based largely on their higher price and the need to include in that price over $2000 of retiree healthcare benefits costs. So for a $16,000 cobalt, there simply wasn't a way to get that $2000 and still make a profit. I'm sure that high end models like cadillac and corvette were still always going to be more profitable per vehicle than malibu etc. because the total cost was still higher. If you can develop truly innovative and consumer desired lower priced models then you can presumably sell at a sufficient volume to generate profits. That's f course, in addition to all the savings that are generated by stripping out 1/3 to 1/2 of the low end dealerships and eliminating extra lines and closing excess capacity plants.
It's nice to think that the marketplace and politcally appointed judges could force a quick and efficient resolution to the problems of the auto makers, but I think unlikely. And true that Obama might protect the unions more than I would prefer, and true that Obama might inject other policies that I might not agree with, but still in the whole imperfect mess that it is, I think it's might have come out slightly less imperfectly than if we'd let GM and Chrysler management work it out themselves.