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A GM letter to president Obama.

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Aiser Posted: Fri, Nov 9 2012 2:59 PM

So here is a letter from an Anonymous GM share holder.


Here the individual makes the statement that Govt "saved" the auto industry. Of course many people  people buy into this argument and the bail-out of the auto industry perhaps began with Chrysler some decades ago. As a result it's pretty much cemented into the American political psyche.

When the statist makes this argument, how do you counter?

The letter also sites how the share price has been "below $30 for ages". What are the consequences of Govt EVEN holding any shares at all of what is basically a public-private company at this point?

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Kakugo replied on Sat, Nov 10 2012 3:56 AM

The US car industry will go down the way of the British one and for exactly the same reasons. It will take longer however because of changed conditions: markets are much easier to manipulate these days anf the US has more money to burn than the UK had at the end of the '70s.

However let's not forget the first beneficiary of the US bailout schemes was not Chrysler but Indian, the motorcycle manufacturer: from the beginning of the Great Depression to its death in 1953 the once flourishing company had been kept afloat by government contracts. Between 1933 and 1941 the assembly lines were working at 10% capacity and the bulk of the production went to the Army or various police departments, which were ready to massively overpay to keep the factory gates open. WWII brought respite and probably bought Indian a few more years of life. Once it was over and Truman was replaced by Ike the new administration proved much less amenable and the Injun was no more.

This letter also highlight another worring signal in today's mentality. "Stock prices are too low, the government should do something about it". This is sheer lunacy and fails to take into account the fat salaries of the CEO's and the completely unrealistic financial results which seem to provoke so much (virtual) anger are the results of heavy handed government intervention. To think government intervention is good for the "small guy" is like believing in Santa when you are 50. You either live in a world populated by fairies, unicorns and frogs wearing hats or can be outsmarted by an amoeba.

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Esuric replied on Sat, Nov 10 2012 11:41 AM

The government 'bailed-out' about half of the manufacturers in the U.S. Most of the manufacturers, including all of the Japanese manufacturers, didn't need any sort of bail-out whatsoever. Next, the president didn't really even bail-out those manufactures. He brought them into bankruptcy but ignored actual bankruptcy law and protected the bloated union contracts (which caused the bankruptcy in the first place). So basically Obama bailed out the UAW, partially nationalized a portion of the U.S. auto market, forced them to pursue bad investments (the Volt, for example) and has assured that these companies will need perpetual bailouts by tax payers forever. The government has transformed GM into another parasitical GSE. 

"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."

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