Ron Morley's Freedom Blog

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

More money to be wasted on U.S. auto industry

It's the day before we are supposed to be told whether or not the Federal government will continue to shovel money into the hands of the moribund American automakers, GM and Chrysler. In spite of protestations from the White House that “bankruptcy is an option” there is, and I don't think I'm going out on much of a limb here, no chance that the companies will be allowed to enter Chapter 11 proceedings. This situation can no longer be viewed as strictly an economic question: what's best for the economy overall?, but from a political viewpoint: what's best for the Obama regime? Looked at from that standpoint the answer is obvious as to the course the Federal government will take – more money will be wasted in an attempt to keep ineffective corporations afloat, the only question will be – how much more of the taxpayers' money will be wasted to gain political favor for the new President?

The Obama regime (yes, I'm aware of the connotations of the word, but “group of sycophantic toadies” is too long for general use), and its allies, will mount a large propaganda campaign in order to justify the waste of still more money that the country doesn't have, in order to prop up corporations that have shown themselves incapable of making good use of their resources. Nothing has really changed since the last time the Federal government made “bridge loans” to the automakers. The unemployment situation is worse than it was in late November, so we'll be told that the country can't take the chance of losing the supposed three million jobs that directly or indirectly depend on the U.S. automakers continuing in business. On top of that, since the State now has a financial interest in the companies, we'll be told that further “investment” is needed in order to “protect the investment taxpayers have already made” - the State's excuse for throwing good money after all. And, I suspect, we'll hear about how our “national security” depends on the continued existence of a “viable” American automotive industry.

This last is totally specious as automotive factories are not suitable for manufacturing tanks, APCs, or most of the rest of the panoply of modern war. The only vehicles the auto companies produce, on a routine basis, for the armed forces are Hummers and trucks – which could be purchased elsewhere if needed. The idea that automobile plants could be converted to the production of heavy equipment, as was done during WWII, is no longer viable. Given the pace of any large conventional war the conflict would be over long before the needed conversion could take place. Even in WWII it took the better part of eighteen months before significant military production was rolling off Detroit's assembly lines and the process was sped up to some degree because large amounts of manufacturing capacity was still idle from the effects of the Great Depression and didn't need to be shut down prior to being converted to military use. In the long run our nation's security interests would be far better served by strengthening the economy over the long run by ending State interference in the marketplace – the very sort of interference that is being pushed as the solution to our economic ills.

We will be told that the recent report of General Motors' auditors, which expressed grave doubt as to the company's ability to continue as a “going concern”, is overly pessimistic. The State's propaganda mill will push the idea that all that is needed is to make sure that GM continues to operate during the current economic crisis. The company will announce that its coming products, such as the Chevy “Volt”, a high-priced (recent estimates put the price at ~$35,000) “green” vehicle, will allow the organization to regain profitability as soon as the economy recovers from the current downturn. We will be asked to suspend disbelief, in much the same manner as when we go see a science fiction movie, and accept the idea that the automakers will be competitive when things improve, in spite of all the historic evidence to the contrary. All that will need to be done is to shovel more billions of dollars of “loans” to GM, loans which are supposed to be repaid, in order to assure that this rosy view of the future comes true. No mention will be made of the fact that GM's indebtedness to the Federal government will approach the amount it owes its UAW-approved healthcare trust fund. It is costs associated with on-going healthcare expenses (an estimated $47 billion) that are a large part of GM's financial problems; yet, somehow repaying government loans will not have the same effect on the corporation's balance sheet. This type of thinking can only come from government employees who have access to unlimited funds thanks to their ability to reach directly into the pockets of every American.

Finally, the Obama regime cannot afford to alienate the country's labor union movement, which would surely happen if the UAW was not to be given a huge chunk of the public's money. The simple fact is that the UAW, in spite of all the damage it has done to the automakers over the last fifty years, is to be rewarded by being granted the opportunity to feed at the public trough. Ordinary Americans, most of whom make considerably less than the average UAW worker, will be required to subsidize the lifestyles of those workers. Labor inefficiency will be rewarded at the expense of the overall economy. The majority of Americans will be required to accept a lower standard of living so that a few politically connected workers may be spared the “economic turmoil” that the rest of us will be subjected to.

So, come midweek, don't be surprised to hear that the Federal government, after having carefully examined “all options”, will “invest” more money in the dying American automotive industry. It will make no sense economically. Indeed, it will be counterproductive in the long term. However, politics is more important, in Washington, D.C., than anything else, including the long term health of the overall American economy.



Hanoch Ne'eman said:

Great article. Lot's of info and well written.

Chanoch Ne'eman, Jerusalem, Israel

# March 29, 2009 4:36 PM

Damian said:

Great article! Looks like, as of today, that you were right.

# March 30, 2009 2:48 PM