Wednesday, November 19, 2008

What If GM Going Bankrupt Would Really Be a GOOD Thing??

The rush to lend billions to US car makers, especially General Motors, is being done in the usual fashion: Wild claims of imminent disaster, very little skepticism or hard questioning by the media.

GM has put a video on YouTube summarizing the case, claiming a 4% drop in GDP, millions out of work, decimated tax revenues to the feds, and a loss of large industrial capacity that would cripple US national security (because GM and Ford make military tanks, for example).

Let's back up the panic bus for a minute here.

First, the argument is that *the entire US auto making industry* would collapse -- GM, Ford, and Chrysler. But think about it for a minute: If GM went bankrupt and *stopped making cars,* would that not be GOOD for Ford and Chrysler? A competitor -- who holds half the market -- has just gone away? Won't Ford and Chrysler start selling MORE CARS?

If you wonder, consider this thought experiment: Imagine that Ford and Chrysler are the only two US carmakers, and somebody comes along and proposes, at his critical juncture, to launch a gigantic new card company, one they'll call GM. Imagine the reaction: People would point out that huge new competition in such hard times would devastate Ford and Chrysler!

Well then: Wouldn't GM going away HELP Ford and Chrysler?

Of course it would. Not immediately, because there would be all those stranded GM cars in inventory, thrown on the market at firesale prices. But once that several-months inventory goes away, presumably Ford sales would jump.

Consider this: If Ford sales would *not* jump at that point -- that means Ford can't sell cars even when their chief competitor evaporate! So what would the point of "loaning" them billions of taxpayer dollars? They can't *possibly* recover! And can't possible repay the "loan." Could they!

Companies going out of business is a regular occurrence, even in a healthy economy. In fact, the risk and the fact of bankruptcy contributes to the health of a free economy. The worst thing for the economies of socialist/dirigiste/communist countries has always been the government-owned businesses that cannot fail, no matter what. They eat up resources; they produce inferior products nobody wants; they create a sense of entitlement by everyone in those companies; they encourage the worst tendencies among the populace towards "rent seeking," which is seeking success from the government rather than from the marketplace.

So let's ask the questions nobody so far, nobody in the mainstream media, seems to be asking.

* What happens--really--if GM declares bankruptcy?

* If GM reorganizes under bankruptcy law, they recast their relations with their trade unions and can seek to lower their oppressive costs. This of course alarms the unions, which explains some of the panic language all around-- naturally, the unions don't want to give up their rich contracts, contracts which every student of the U.S. auto industry considers the main cause of the distress of the car business in tough economic times.

* So we're lending billions to the car industry to protect the car unions?

* Doesn't this remind you of government programs that are ever in financial crisis and can never, ever cut costs, but must always, always get more money every year? Hmmm.

* Is that a good thing?

* Let's seriously consider what happens if GM goes Chapter 7 bankruptcy and actually goes out of business. (This is the scenario the auto industry and its unions are fearmongering.)

* Won't this help Ford and Chrysler? Might it not actually save them?

* Won't it also help the Japanese car companies, all of whom manufacture in the U.S. almost all the cars they sell here?

* Won't that create new job opportunities for the laid-off workers of GM?

* Won't getting rid of the oppressive, unaffordable, gold-plated, Senator-style retirement and health packages of GM be good for the industry? Currently, it can only afford these contracts during those brief times when the economy is in boom times.

* Wouldn't the bankruptcy of GM be likely to *save* Ford and Chrysler from bankruptcy?

* Will hundreds of thousands have to leave Michigan and find work elsewhere, in other industries? Won't the bankruptcy release tied-up capital and human resources for the rest of the economy?

Once we've taken the path, as we already have in the financial and banking sectors, of "too big to fail" bullshit, where does it end? Where is the line? Why would there be a line anywhere? Why would it end anywhere? Why wouldn't every business be encouraged by this to get as big as possible so as to be able to have that government guarantee for any future foolish behavior?

There are lots of questions. The politicians don't ask them because they like campaign contributions from industry and union lobbyists, and they don't like having union opposition in the next election. The press doesn't ask them because they get all their quotes from the politicians and from the interested parties. There are no more objective third-party commentators.

Except Reason Magazine. I await their next major feature dealing with all this in an honest and hardnosed way.

We are all doomed.

Monday, November 3, 2008

The Pleasures of Voting for the No-Chance Candidate!

I voted for the Libertarian candidate for President in the 2008 election.

What's his name.

It doesn't matter!

That's the great thing about voting for someone you know has no chance of winning: You don't have to worry about such practical issues as Will he stay on message once he's in office? Is he really competent or a knucklehead personally? How will he react to the unexpected crisis? Dos he have the experience to handle the job? Has he cheated on his spouse? Does he have anything else shameful or embarrassing in his past?

He's not going to win, so none of this matters a whit!

I can vote as an expression of my vision of the role of government in society. I don' t have to worry about distractions.

Try it sometimes! Try voting for the candidate whose politics are closest to yours. Or least far away. Leave out the personality issues. Leave out the stupid "horse-race" aspects too, the one the press obsesses about most! It doesn't MATTER if you "throw away your vote" -- this isn't ACTUALLY a horse race! Nobody's going to come to your door November 5th and pay you your winnings for having correctly bet on the winning candidate!

Vote your vision. Have a vision! Educate yourself! Then act! Without just mindlessly doing what the political class says! And what the press says, because they just echo the mindset and wordview of the political class!

Difference between McCain and Obama, really...

Mises Daily Article today:

"This year we have running for president a warmonger who's a reluctant socialist versus a socialist who's a reluctant warmonger."

That about summarizes it for me. I finally decided to go ahead and vote for my Libertarian candidate, who can't win but at least he's neither a warmonger nor a socialist of any kind....

- mac

Sunday, November 2, 2008

Campaign Promises in Hell (joke)

While walking down the street one day a US senator is tragically hit by a truck and dies.

His soul arrives in heaven and is met by St. Peter at the entrance.

'Welcome to heaven,' says St. Peter. 'Before you settle in, it seems there is a problem. We seldom see a high official around these parts, you see, so we're not sure what to do with you.'

'No problem, just let me in,' says the man.

'Well, I'd like to, but I have orders from higher up. What we'll do is have you spend one day in hell and one in heaven. Then you can choose where to spend eternity.'

'Really, I've made up my mind. I want to be in heaven,' says the senator.

'I'm sorry, but we have our rules.'

And with that, St. Peter escorts him to the elevator and he goes down, down, down to hell.

The doors open and he finds himself in the middle of a green golf course. In the distance is a clubhouse and standing in front of it are all his friends and other politicians who had worked with him.Everyone is very happy and in evening dress. They run to greet him, shake his hand, and reminisce about the good times they had while getting rich at the expense of the people.

They play a friendly game of golf and then dine on lobster, caviar and champagne.

Also present is the devil, who really is a very friendly & nice guy who has a good time dancing and telling jokes.

They are having such a good time that before he realizes it, it is time to go. Everyone gives him a hearty farewell and waves while the elevator rises...

The elevator goes up, up, up and the door reopens on heaven where St. Peter is waiting for him.

'Now it's time to visit heaven.'

So, 24 hours pass with the senator joining a group of contented souls moving from cloud to cloud, playing the harp and singing. They have a good time and, before he realizes it, the 24 hours have gone by and St. Peter returns.

'Well, then, you've spent a day in hell and another in heaven. Now choose your eternity.'

The senator reflects for a minute, then he answers: 'Well, I would never have said it before, I mean heaven has been delightful, but I think I would be better off in hell.'

So St. Peter escorts him to the elevator and he goes down, down, down to hell.

Now the doors of the elevator open and he's in the middle of a barren land covered with waste and garbage. He sees all his friends, dressed in rags, picking up the trash and putting it in black bags as more trash falls from above. The devil comes over to him and puts his arm around his shoulder.

'I don't understand,' stammers the senator. 'Yesterday I was here and there was a golf course and clubhouse, and we ate lobster and caviar, drank champagne, and danced and had a great time. Now there's just a wasteland full of garbage and my friends look miserable. What happened?'

The devil looks at him, smiles and says, 'Yesterday we were campaigning...


Saturday, November 1, 2008

Funny Obama Cartoon in Doonesbury Wednesday--Too Bad You Won't Necessarily See It

According to the SF Chronicle Saturday (Nov 1), Doonesbury cartoonist Gary Trudeau has turned in to publishers his cartoon for Wednesday, the day after the election. In it, his joke depends on Obama having been elected, so his syndicate offered a back-up cartoon--a rerun from the summer--in case publishers get cold feet.

The cartoon for Wednesday is described as set in Iraq where some GI's sit around a TV listening to the election returns. As it's clear Obama has won, one white soldier turns to another and, noting that Obama is half white, says "Son of a gun, what a great day. We did it." Another soldier, who is black, turns to his white colleague and says, "You must be so proud!"

*That* is *funny*! And gutsy. But most of all, funny as hell! And fresh: Few have taken up the half-white half-black aspect of Obama and twisted it around to mock racism like that. As one report said last week, a kid asked his parent why, if Obama is half white and half black, he's referred to as black; why isn't he called white? The classic rationalist dig against the "one drop of black blood" racism of slave days and after (Mark Twain wrote an absorbing novel on this theme, "Puddinhead Wilson," that plays havoc with its irrationality).

But if you get the SF Chronicle, you won't see this cartoon in your paper; the relevant editor says that since the comics section goes to press before the election results are known, he's playing it safe with the backup comic. "We certainly don't want to be doing a 'Dewey-defeats-Truman,'" he says.