Ron Morley's Freedom Blog

This is the place where I do my little bit to explain the evils of the State.

December 2008 - Posts

More Washington hypocrisy and the State takeover of the auto industry

The hypocrisy which surrounds the proposed bailout of the U.S. auto industry is reaching heights rarely seen, even in Washington, D.C. The automakers are being held to a totally different standard than is the UAW, which is, at least, partially responsible for the dire financial straits that the car manufacturers find themselves in. The politicians who support the bill, and are revealing themselves to be Statists of the worst sort in the process, are not calling on the union to make the sorts of changes they are demanding of the automakers. The UAW is not being told that it must make the wage and benefit concessions that are needed if the Big Three are to regain any type of long-term financial stability. This point has been driven home, in no uncertain terms, this morning after last night's failure of the Senate to pass the bailout bill. Not one of the Democrats who are so eager to expand the power of the Federal government, House Speaker Nancy Pelosi, Senate Majority Leader Harry Reid, Senators Christopher Dodd, Diane Feinstein, Debby Stabenow, Carl Levin, and others, have called the UAW to task for failing to make wage and benefit concessions. UAW President Ron Gettelfinger stated yesterday, prior to the Senate vote, that the union would not make any concessions in the area of wages and benefits. Yet the Statists are strangely silent about the union's role in the breakdown of the domestic automakers' financial positions.

Not one of the supporters of the bailout of the auto industry is willing to take on the UAW. Instead, supporters of the move, such as Michigan's Governor Jennifer Granholm, are loudly shouting that the Senate Republicans killed the bill as an act of revenge against the UAW. Americans are being told that failure to nationalize the industry, euphemistically called “making bridge loans to the companies,” will result in the total loss of America's manufacturing base. One of Governor Granholm's arguments, made in an interview on NPR's “Morning Edition” today, is that failure of one of the Big Three will “cause a ripple effect throughout the economy” in the form of failure of suppliers to the industry. The governor then went on to state that such failures would have an adverse effect on foreign automakers such as Honda and Toyota because they are also customers of the same companies that supply parts to the Big Three. There is, evidently, no chance that the parts suppliers will shift production to meet the demands of the foreign companies, or move into new fields of endeavor.

The UAW has been told that it doesn't have to make wage and benefit concessions as, according to Governor Granholm, “the union has already done that.” This is patently untrue as UAW wages and benefits are still significantly higher than those of the non-unionized employees of the foreign auto companies. Why is the union not being required to make changes in the same way that the Big Three are? Why is UAW President Ron Gettelfinger not being hauled in front of Congressional committees to answer questions, such as why union workers should be exempted from the pain being suffered by those of us who aren't paid outrageous wages for performing jobs that have been made as simple and repetitious as possible? Why should most Americans be required to finance the lifestyles of a relatively small number of employees of companies which face dissolution no matter how much money is “invested” in them by the State? The answer is simple: union votes are more important to Statist politicians than is the overall health of the United States. Hypocrisy reigns supreme in Washington and ordinary Americans will pay the price in further economic troubles and loss of yet more freedom as the State absorbs another chunk of the economy.

Of course, all of the above was written before word came from the White House that President Bush is going to allow money from the $700 billion Wall Street bailout to go to the automakers. The Big Three will become simply another arm of the government and the American people will pay a high price in economic terms and loss of yet more freedom. This doesn't change the points made above, but it does mean that the Statists have scored another victory through the use of lies and distortions.

Why the State Loves Keynesian Economics, continued

As a result of my last entry here some people have commented that my statement, “ matter how it is sugar-coated, the policies of John Maynard Keynes are essentially ways of increasing the power of the central government at the expense of individual freedom”, was too strong. Some readers felt that I had not made a sufficient case for that statement. I will attempt to correct that issue here.

The current discussion of whether or not to bailout the Detroit automakers by providing billions of dollars in loans is as good a starting place as any. The basic idea of Keynesian economics, that deficit spending by the Federal government will stimulate the economy during an economic downturn, applies to the proposed bailout. The end result of the proposed policy is to save jobs in the hope that doing so will cause Americans to, once again, resume their profligate spending habits and pull the economy out of its doldrums via the mechanism of consumer spending. There is no substantive difference between the Federal government giving the automakers billions of dollars, via the mechanism of deficit spending, or its spending those billions on some other form of “stimulus package” such as President-elect Obama's spending on infrastructure projects. The money is still obtained by borrowing, which denies the private sector access to those funds, and the Federal government still controls how the money is to be spent.

How does this act to limit individual choice and freedom? For the answer one has to look at what the proposed office of “Car Czar” will be empowered to do. The Federal officer who will be put in charge of the bailout of the automakers will have tremendous powers to determine what actions the manufacturers may take. He will decide whether or not the Big Three put together reorganization plans that will “make them viable”. There is every reason to believe that those decisions will extend to what types of vehicles the companies will be allowed to produce. After all, forcing the Big Three to make small, fuel-efficient cars is a project near and dear to the hearts of politicians such as Nancy Pelosi and Harry Reid. That will certainly mean that GM and Chrysler, at least, will be required to put a lot of emphasis on building the small, fuel-efficient cars that Americans have supposedly been demanding, in spite of all the evidence to the contrary, for the last thirty years. Gone, or at least severely limited, will be the supply of large SUVs and pickup trucks that have been so beloved by Americans for the last decade at least. In their place will be vehicles such as the Chevy “Volt” and the various small hybrids that have been developed over the last several years. The judgment of one person will be substituted for that of the millions who make up the market for new autos. In the process individuals will be denied the ability to purchase the type of vehicle that they may want and be forced to take, in its place, a substitute that, by and large, the marketplace has deemed inadequate to the needs or desires of many Americans.

The stimulus package that is being proposed by President-elect Obama will act in a similar way to limit the choices of individuals. As I pointed out in my last entry, deficit spending by the State acts to limit the amount of money available to private enterprise. Thus, the vast majority of the jobs that will be “created” by the proposed State spending will be construction jobs as it's difficult for salespeople, computer programmers, or those engaged in manufacturing to build the bridges, roads, airports, and other infrastructure projects that are so dear to the heart of the President-elect. By limiting the amount and type of jobs that the market would ordinarily be able to provide the State will, again, be acting in a way which arbitrarily limits the freedom of choice of Americans. Once again, Keynesian economic policies act to limit freedom.

There is simply no way around it. The fact is that the Federal government will not provide money to the states or once-private enterprises without establishing rules for how that money may be spent. The limitations that the Feds will put on how the funds may be used will, in the end, act to limit the freedom of individual Americans, even if only in seemingly inconsequential ways. It is time for Americans to realize that there is no such thing as a free lunch, and that while the State may say it is “giving” money or services to help citizens during these economically-troubled times, that money, or those services, invariably come with rules about who may qualify for them and what actions they may or may not take to remain eligible. The more Americans acquiesce in allowing the State to nationalize large pieces of the United States' economy, the more they will find their freedom of action limited by the arbitrary actions of Washington bureaucrats and politicians. And that, in the end, is why the State loves Keynesian economics: adopting those policies, by limiting the freedom of action of the marketplace, automatically enlarges the powers of the Federal government and diminishes the freedoms of the people.