Already dubbed as "Government Motors", the former giant of car making has finally admitted defeat and been forced into bankruptcy. American taxpayers now own 60% of the company that the market decided couldn't cut the mustard any longer. Despite decades of stagnating wages and cuts to company benefits, GM just couldn't get market share and profit margins back to its former glory days. The event could be seen as a signal for the beginning of the end for American manufacturing but in truth this has been happening for years. Many companies tried to sustain the illusion, wrestling with superior Japanese or Korean productivity.
President Obama, the peoples president, has gone through with government intervention rather than speedy free market liquidation. Maybe he can do a better job of making cars than all previous failed attempts by states such as communist Russia for example, however I doubt it. The measures are supposed to save jobs, when in reality it will do more harm than good. Someone has to pay for uncompetitive companies if they are not immediately liquidated. If left to the market, the companies assets and labor would have been released. Manufactures who know how to make cars could have bought the means of production, and placed it under their stewardship to make better productive use of these resources. The labor could then have been employed by such organisations, with the excess moving into other areas of the economy that are still productive. As painful as that may have been in the short term, over the long term liquidation is a vital and a key component of economics. If there was no change, we would all have falling living standards as stagnation would occur.
Obama had to bail them out for one simple reason, people voted him into the White House to 'help' them. The problem is they expect him to act, when in reality the best course of action would be to do nothing.
America can catch a possible glimpse into their future as Britain experienced a similar situation a few decades back with British Leyland. A company that was mish-mashed together by government as British manufacturing was in turmoil during the turbulent seventies never stood a chance in the global marketplace. Generally it produced cars no one wanted, for high costs that were shabbily built. The end result after years of fighting market forces, were the good parts being sold to the companies that were productive in the industry, and the left overs put to other uses. In the end the UK could have saved all the pain by just letting the company fail in the seventies and letting the market take over just like what happened eventually over the following decades, but then again what would the politicians do if they couldn't meddle with business, to 'help' the people. Just like the UK then, the US taxpayers are having to foot an auto bailout all because the government says it needs to.
It's no surprise Americans have a love affair with Cars. Vast expanses of land, the largest oil reserves in its day and cutting edge production techniques pioneered by entrepreneurs such as Henry Ford destined America to embrace automobiles. Americas iconic rock band 'The Beach Boys' inter-weaved their lyrics and song titles after famous American models. 409 even mentions saving for a car - how times have changed. As the beach boys sung Fun, Fun, Fun those days GM once enjoyed have gone. It's time for America to stop clinging onto the past, move on from industries they can no longer compete in and look to do jobs they are still competitive in to produce new improved products better than the rest of the world.
President Obama, the peoples president, has gone through with government intervention rather than speedy free market liquidation. Maybe he can do a better job of making cars than all previous failed attempts by states such as communist Russia for example, however I doubt it. The measures are supposed to save jobs, when in reality it will do more harm than good. Someone has to pay for uncompetitive companies if they are not immediately liquidated. If left to the market, the companies assets and labor would have been released. Manufactures who know how to make cars could have bought the means of production, and placed it under their stewardship to make better productive use of these resources. The labor could then have been employed by such organisations, with the excess moving into other areas of the economy that are still productive. As painful as that may have been in the short term, over the long term liquidation is a vital and a key component of economics. If there was no change, we would all have falling living standards as stagnation would occur.
Obama had to bail them out for one simple reason, people voted him into the White House to 'help' them. The problem is they expect him to act, when in reality the best course of action would be to do nothing.
America can catch a possible glimpse into their future as Britain experienced a similar situation a few decades back with British Leyland. A company that was mish-mashed together by government as British manufacturing was in turmoil during the turbulent seventies never stood a chance in the global marketplace. Generally it produced cars no one wanted, for high costs that were shabbily built. The end result after years of fighting market forces, were the good parts being sold to the companies that were productive in the industry, and the left overs put to other uses. In the end the UK could have saved all the pain by just letting the company fail in the seventies and letting the market take over just like what happened eventually over the following decades, but then again what would the politicians do if they couldn't meddle with business, to 'help' the people. Just like the UK then, the US taxpayers are having to foot an auto bailout all because the government says it needs to.
It's no surprise Americans have a love affair with Cars. Vast expanses of land, the largest oil reserves in its day and cutting edge production techniques pioneered by entrepreneurs such as Henry Ford destined America to embrace automobiles. Americas iconic rock band 'The Beach Boys' inter-weaved their lyrics and song titles after famous American models. 409 even mentions saving for a car - how times have changed. As the beach boys sung Fun, Fun, Fun those days GM once enjoyed have gone. It's time for America to stop clinging onto the past, move on from industries they can no longer compete in and look to do jobs they are still competitive in to produce new improved products better than the rest of the world.
