Political Theory

Re: As Taken from PIG to American History (looking for the source)

Jeremiah Dyke — Sun, 14 Feb 2010 22:44:44 GMT

Student:

JD,

Does PIG say how this policy impacted product development? For example, did GM spend less on R&D?

Also does it suggest why they were particularly afraid of anti-trust prosecurition? For example, was it because Ford or another had the political clout to initiate an investigation and would use anti-trust law as a tool for crushing strong competitors?

I only ask because last year I often wondered how much of the Big 3 troubles were brought on themselves through rent seeking. For example, in the 1940s the Big 3 pulled some strings with Detroit Senator Homer Ferguson to shutdown innovative upstart Preston Tucker:

http://en.wikipedia.org/wiki/1948_Tucker_Sedan#SEC_investigation_and_demise_of_Tucker_Corporation

And of course, automakers used a variety of quotas and trade restrictions to protect themselves from foreign competitors.

All of this likely reducing the incentive to innovate and after about 50 years would result in some really crappy cars. And of course we could blame the "government" (as if it was some exogenous force no one could control), but its actions can rarely be considered outside the special interest nexus that attempts to steer policy. That's basically one insight from Public Choice that could be brought to better understand current automaker woes. At least I think so.

It gives an account of some the previous egregious anti-trust rulings as the reasoning for GM pursuing only 45% of the market share, doesn’t go into such affects but alludes to it as a potential cause for why our domestic car companies lost so much market share to European car manufactures.

Makes sense.

Re: As Taken from PIG to American History (looking for the source)

Student — Sun, 14 Feb 2010 18:54:47 GMT

JD,

Does PIG say how this policy impacted product development? For example, did GM spend less on R&D?

Also does it suggest why they were particularly afraid of anti-trust prosecurition? For example, was it because Ford or another had the political clout to initiate an investigation and would use anti-trust law as a tool for crushing strong competitors?

I only ask because last year I often wondered how much of the Big 3 troubles were brought on themselves through rent seeking. For example, in the 1940s the Big 3 pulled some strings with Detroit Senator Homer Ferguson to shutdown innovative upstart Preston Tucker:

http://en.wikipedia.org/wiki/1948_Tucker_Sedan#SEC_investigation_and_demise_of_Tucker_Corporation

And of course, automakers used a variety of quotas and trade restrictions to protect themselves from foreign competitors.

All of this likely reducing the incentive to innovate and after about 50 years would result in some really crappy cars. And of course we could blame the "government" (as if it was some exogenous force no one could control), but its actions can rarely be considered outside the special interest nexus that attempts to steer policy. That's basically one insight from Public Choice that could be brought to better understand current automaker woes. At least I think so.

Re: As Taken from PIG to American History (looking for the source)

Le Master — Sat, 13 Feb 2010 19:18:29 GMT

Hypercompetition: managing the dynamics of strategic maneuvering by Richard A. D'Aveni, Robert E. Gunther

Thomas DiLorenzo mentions it here.

As Taken from PIG to American History (looking for the source)

Jeremiah Dyke — Sat, 13 Feb 2010 18:57:58 GMT

page 106, "Beginning in 1937, General Motors actually made it company policy for the next two decades not to gain more then 45% of the automobile market out of fear of anti-trust prosecution."