Monday, April 27, 2009

Obama's Blunder May Kill US Auto Industry

5. an outcome of events contrary to what was, or might have been, expected.

An example of irony:

A socialist president, in a bid to help the domestic economy while appeasing his union supporters, vows to preserve the US auto industry as a vital part of the US economy. He then pledges US taxpayer money, in virtually unlimited quantity, to support the auto industry while they can be "restructured" to be economically competitive again. In doing so, he creates an perception that no matter how bad the losses are, the auto companies will continue to exist, spending taxpayer money.

Emboldened by this, the domestic auto makers make token efforts to control costs, while launching new "reform" plans which rely on significant concessions from their partners and workers to be successful, and keeping all their employees and executives fully employed and compensated (regardless of the actual work to be done) during the "restructuring" process. Also emboldened, the union is willing to hold out forever for the most optimal compensation package, because the president has already vowed to not allow the company to go bankrupt, which is the traditional check against out-of-control union demands. As a result, the company maintains the status-quo indefinitely, while continuing to bleed the taxpayers.

Eventually, public opinion sways to the realization that the auto industry is a dead industry which can never recover (regardless of the potential to return to profitability as an independent business, the deadlock created by the government creates this reality). The public demands that the government stop wasting money paying for corruption and complacency (which, at this point, they are). Under political pressure, the government is eventually forced to allow the auto companies to fail, writing off the losses and decrying the "fact" that they couldn't have foreseen the extent of the problems which caused the eventual failure.

Irony, I suspect you will find fertile ground in the Obamanation.

1 comment:

  1. I agree. If we’re going to give away money, let’s give it to promising business ideas instead of failing ones. Better yet, just let people keep their money, and they will invest it in promising business ideas without government assistance.

    I believe many of Obama's quasi-socialist policies are pragmatic (if sometimes ill-conceived) responses to the economic crisis. I do not believe he is taking advantage of the crisis to push an ideological socialist agenda, unless you define socialist very loosely. Time will tell.

    I don’t believe unions are key to this issue. If the car companies were making kick-ass products, their labor costs would not matter. If their labor costs were extremely low, they still would be failing. The issue of labor gets people fired up, but it’s not the problem.

    Car sales are way down. Let’s let those car companies fail. Cars are not a sustainable technology, unless there’s some breakthrough that gives us more inexpensive high-energy-density fuel. It doesn’t matter if a car company dies sooner or later.