Tag Archives: detroit

The Bush Legacy

minute-man-2-lithoIf President Bush had stayed at least partially faithful to his oath of office, historians may have listed him along with Reagan and Truman for his stand against Islamic terrorism.  Instead, he will be listed with Roosevelt and Johnson as the President who finally brought socialism to America.

On Thursday, Republicans in the Senate stopped the ill-advised bailout of the United Auto Workers union.  Unfortunately, their reasons were not because of its violation of free market capitalism or the Constitution.  Their reasons were more pragmatic than principled.  The Senators did not believe the proposed loan would be effective without major revisions in the industry’s cost structure, particularly its labor costs.

According to news reports, the President is considering doing an end-run around Congress and using a part of the $700 billion already appropriated for stabilizing the financial markets.  There is no doubt the automakers will get financial assistance of some kind from the federal government.  More than likely Bush will arrange for a “bridge” loan to tide them over until the Obama administration takes over in January.

With a heavily socialist Congress and a socialist administration, the U.S. auto industry will eventually be nationalized to one degree or another.  Instead of the industry being run by industrialists who understand the car business, it will be run by a Car Tsar from Washington.
Detroit automakers will be forced to build “green” cars acceptable to the socialist base of the Democratic Party.

The one factor that seems not to be taken into account by the would be wizards of Washington is the consumer factor.  There is no indication the motorized roller skates Washington will insist on being foisted on the consumer will be accepted by enough buyers to keep the UAW in the manner to which it has become accustomed.

Capitalism is not driven by the capitalists.  It is driven by the consumer.  There is going to be X number of cars purchased by consumers over the next few years.  The number of cars “X” represents will depend on the economy.  The number of cars sold in the U.S. each year is determined by the consumer, not the politicians in Washington or the carmakers in Detroit.  The Big Three automakers and the “transplants” will be competing for their share of that number.  Therein lays the rub.

The American consumer will buy the product that represents, in their mind, the best buy.  There is nothing Washington can do about that fact.  They can influence the kind of cars sold through regulations but they cannot dictate the number that will be purchased by the consumer.  The competition for the “fuel efficient” car market will be between manufacturers located in UAW dominated Michigan and foreign automakers with plants located in right-to-work states, mostly in the south.

In that competition, the Detroit companies do not stand a chance.  The difference in the cost of building a car in Detroit and building a car of equal value in Alabama or Tennessee is several thousand dollars each in favor of the latter.  Operating under Washington “oversight” the Big Three, if they survive, will continue to operate at a loss for the foreseeable future.  That leaves the government with four choices acceptable to the socialist base of the Democratic Party.

First is to have the taxpayer take over the “legacy cost” of the Detroit companies.  Second, is to subsidize consumer purchases of Detroit made cars through tax rebates or outright payments to the purchaser.  Third, is to keep pumping money into Detroit companies until the rest of the economy is wrecked.  Fourth, is to completely nationalize the auto industry so business losses will be borne by the taxpayer rather than the shareholders.

The socialist goal is to destroy capitalism and replace it with a socialist society.  A perfect prototype of that society would be a “worker owned and managed” auto industry in Detroit.  That is the most probable outcome of the current financial crisis in the industry if we continue on the present path.