Friday, November 21, 2008

It's All A Socialist Plot!

An anonymous commenter points us to this piece posted at Objectivism Online, which claims that any proposed bailout of the auto industry is "an enormous power grab" by the forthcoming neo Fascist Democratic State. This argument might perhaps have merit had the American auto industry been itself a global power instead of a global cripple. But unfortunately this is not the case, so it is simply a laughable confusion of cause and effect.

43 comments:

Darren said...

What is laughable about it?

Daniel Barnes said...

Darren:
>What is laughable about it?

When GM puts out a begging bowl it is in fact...a power grab by Obama??...;-)

Damien said...

Daniel Barnes,

Well Objectivism online is right about one thing. This will increase the size of government, although I wouldn't go so far as to say that this is remotely fascist.

Darren said...

That's not exactly what the OO post stated. This isn't a power grab by Obama as much as it is a power grab by the state. Obama backs it, and he's a pretty influential when it comes to what the government will do, but it's not just him. It's considered a "power grab" because the loan, in essence, gives the government more control over the auto industry.

Yes, GM and others are asking for the money, and that's horrible. But what's worse is the fact that there are many in the government that actually *want* to help them. And not "help" in the sense that they want to just help them get on their feet financially. They also want to point the auto industry move in a, say, more "socially responsible" direction. Just look at the restrictions that are being talked about the future "loan." Restrictions on CEO pay, demands for greater fuel efficiency, protections for unions, etc.. Most of these things have no bearing on whether the auto companies can succeed financially (and, in fact, could hurt their financial situation), so why else are they being discussed?

Darren said...

On the question of whether this is fascist, or at least why Objectivists would say it is (including myself), it might help to read what Ayn Rand said about fascism in her book, Capitalism, the Unknown Ideal:
-----------
Observe that both "socialism" and "fascism" involve the issue of property rights. The right to property is the right of use and disposal. Observe the difference in those two theories: socialism negates private property rights altogether, and advocates "the vesting of ownership and control" in the community as a whole, i.e., in the state; fascism leaves ownership in the hands of private individuals, but transfers control of the property to the government.

Ownership without control is a contradiction in terms: it means "property," without the right to use it or to dispose of it. It means that the citizens retain the responsibility of holding property, without any of its advantages, while the government acquires all the advantages without any of the responsibility.
-----------

The meaning of the word "fascist" has become a little blurry over the years, but that doesn't change what Ayn Rand meant when she wrote those words. If you use the word in the same way that Ayn Rand did (btw, she pulled the definition from a dictionary), the attempt to inject government controls into the auto industry are indeed fascist.

Red Grant said...

___________________________________

Yes, GM and others are asking for the money, and that's horrible. - Darren
___________________________________





Why are GM and others are asking for the money?




___________________________________

Just look at the restrictions that are being talked about the future "loan."

Restrictions on CEO pay, demands for greater fuel efficiency,... - Darren
-----------------------------------
Most of these things have no bearing on whether the auto companies can succeed financially... - Darren
___________________________________



So do you think there should be no restriction on CEO pay for the condition of the loan?

So do you think mandating greater fuel efficiency has no bearing on the financial sucess of auto companies?


___________________________________

... (and, in fact, could hurt their financial situation)... - Darren
___________________________________




How could mandating greater fuel efficiency could hurt their financial situation?




___________________________________

...socialism negates

private property rights

altogether, and advocates "the vesting of ownership and control" in the community as a whole, i.e., in the state;... - Darren
___________________________________



Who decides private property rights?



___________________________________

... the attempt to inject government controls into the auto industry are indeed fascist. - Darren
-----------------------------------
Ownership without control is a contradiction in terms: it means "property," without the right to use it or to dispose of it. It means that the citizens retain the responsibility of holding property, without any of its advantages, while the government acquires all the advantages without any of the responsibility. - Darren
___________________________________



Does this mean then you believe if Government ended up owning parts of the auto industry, the government would acquire all the advantages without any of the responsibility?

If so, then

what would be those all the advantages?

and any of those responsibility?

JayCross said...

Red,

You asked "Why are GM and others are asking for the money?"

I would say because the average United Auto Workers union employee salary is over $70 per hour and the American automakers can't compete when their labor costs are 50% higher than the competition. The unions have cannibalized the America automotive industry.

HerbSewell said...

Don't you have anything better to blog about?

Darren said...

Red,

Just to be clear -- I am against the government offering any money to the auto industry. But so long as they do (I'm pretty sure it will happen in the next couple months), I'm against any restriction placed on CEO pay. It may seem fair at first glance; if the government offers a huge loan, doesn't the government have a right to forbid wasteful expenses until the loan is paid off? However, CEO pay is a drop in the bucket compared to the auto industry's budget and the amount of the loan they are asking. When it comes to the company's financial health, it's a non-issue. It's just not a factor.

The same applies with fuel efficiency, but the ramifications of mandates on it could be even worse. I'm sure we all agree that better fuel efficiency is a good thing. It's just one of many factors that can make a car valuable to a customer, though, and sometimes people may value other things more. But when the government steps in and forces the auto industry to hold one value (fuel-efficiency) at the expense of others, regardless of what the customer may want or need, it's creating a situation where the auto industry is incapable of producing the type of product the customer wants to purchase. That's not a good situation for any business.

For example, I want an inexpensive, fuel-efficient car, but I also want a car that is safe and that has enough room for my family. Therefore, I may pass on the Honda Fit and buy a Honda Accord. But what if I couldn't afford the Accord because the government forced Honda to make it an expensive electric or hydrogen car? Or if the government forced Honda to redesign the Accord to make it smaller and less safe? What happens to what I wanted for my family? I can tell you: I lose, and the auto industry will lose, too. Forcing ideas and values -- even when they're good ideas and good values -- will never work.

If the auto industry went to private banks and asked for the loans, would the banking industry put CEO pay and fuel efficiency terms on the loan? Of course not. They would only loan the money based on the auto industry's ability to pay it back, and at an interest rate that makes loaning the money a worthwhile investment to the individuals that earned that money. And based on those rules, no wonder the auto industry is going to the government instead of private banks. They can't get the money they need to keep themselves out of bankruptcy by voluntary means, so they want to force us to help them.

One final thing: Do you think that it's a coincidence that CEO pay and fuel efficiency are two terms that politicians want to place on the bailout money? Politicians have been complaining about both for years, but they haven't had the power to completely control either. Now that the auto industry is asking for the money, this gives them the opportunity they've been waiting. Now they can tell the auto industry that they get to say what CEOs make. Now they can tell the auto industry what fuel efficiency will be acceptable. That's why this is a called a "power grab." The government is gaining power over something it didn't have before.

Darren said...

Red,

You asked what advantages the government will receive by owning parts of the auto industry, and my answer is that they'd get the credit and more power. Just think of what the ads will be in two years. Politicians will crow about how they saved the auto industry, they saved our economy, they saved our jobs... and voters would vote for them. They'd stay in power.

As for responsibility, the politicians still wouldn't be running the auto industry completely. They wouldn't have to find a way to make all of their restrictions work. They wouldn't have to try to find a good CEO without paying a competitive rate. They wouldn't have to find a way to make cars more fuel-efficient and affordable. The real work would still be done by auto-makers. If the auto-makers succeed, the politicians will take the credit. If they fail, the politicians will blame the auto-makers.

If you want an example of how this could work, just look at how today's housing crisis came about. Politicians used government power to force banks to make irresponsible loans. Or in other cases, the politicians used government power to make irresponsible loans something that some individuals could make money off of. Then those politians claimed that they made it easier for people to buy homes. Then when those loans started to fail and people started to lose money, what did those politicians do? Did they take the blame? Did they admit they were wrong? No, they blamed the banks for irresponsible lending. How ridiculous!

Red Grant said...

___________________________________

Objective is anything that can be proven to be true or false, meaning it's validity is dependent on reality,

as opposed to subjective that is based on one views of reality, or statements about reality that is based on faith. - Herbswell
-----------------------------------

Who decides who and what is anti-American objectively? - Red Grant


Individuals decide what is true and what is false. Their evaluation might be contradictory. - Herbswell

-----------------------------------
"Does this mean then you believe that "morality" is relative to each individual?" - Red Grant

Of course it's relative. - Herbswell
___________________________________




Does this mean then you believe that there is no such thing as objective morality?

or

Are you contradicting yourself?

11/08/2008 07:26:00 AM

11/10/2008 05:01:00 AM

Red Grant said...
This comment has been removed by the author.
Red Grant said...

___________________________________

JayCross said...
Red,

You asked "Why are GM and others are asking for the money?"

I would say because the average United Auto Workers union employee salary is over $70 per hour and the American automakers can't compete when their labor costs are 50% higher than the competition. The unions have cannibalized the America automotive industry.

11/22/2008 12:33:00 AM
___________________________________




So you believe the wage differential in favor of foregin auto makers was the culprit for the current trouble of the big three?

If so, then do you believe the wage differential in favor of foreign automakers about 10 years ago was greater or less or about even compared to today?

HerbSewell said...

To Red Grant:

I'm am not starting that debate again. It's a through waste of time.

Red Grant said...

___________________________________

However, CEO pay is a drop in the bucket compared to the auto industry's budget and the amount of the loan they are asking. When it comes to the company's financial health, it's a non-issue. It's just not a factor. - Darren
___________________________________



Then what should be the pay for CEOs?

and who should decide it?



___________________________________

When it comes to the company's financial health, it's a non-issue. It's just not a factor. - Darren
-----------------------------------
I'm against any restriction placed on CEO pay. - Darren
___________________________________





If it's a non-issue, what's your reason for not restricting CEO's pay?




___________________________________

But when the government steps in and forces the auto industry to hold one value (fuel-efficiency) at the expense of others, regardless of

what the customer may want or need,... - Darren
___________________________________





Want or need, are they necessarily the same?



___________________________________

...it's creating a situation where the auto industry is incapable of producing the type of product the customer wants to purchase. That's not a good situation for any business. - Darren
___________________________________




Why do you think the big three got into the mess they are in?



___________________________________

But what if I couldn't afford the Accord because the government forced Honda to make it an expensive electric or hydrogen car? - Darren
___________________________________




Why do you assume making Honda electric or hydrogen will make it necessarily more expensive?



___________________________________

Or if the government forced Honda to redesign the Accord to make it smaller and less safe? - Darren
___________________________________





Do you believe smaller cars are necessarily less safe?

Do you think if most of the public (if not all) drive smaller cars, it will be less safer for the public?



___________________________________

But what if I couldn't afford the Accord because the government forced Honda to make it an expensive electric or hydrogen car? Or if the government forced Honda to redesign the Accord to make it smaller and less safe? What happens to what I wanted for my family? I can tell you: I lose, and the auto industry will lose, too. - Darren
___________________________________




Toyota makes Prius, and it's in hot demand.

Honda's subcompact cars are in hot demand, as well.


Why do you think is that?



Because people don't want them?



Are Toyota and Honda in trouble because they concentrated in smaller and more fuel-efficient cars compared to the big three who concentrated on big macho, gas-guzzling SUVs instead?


___________________________________

Or if the government forced Honda to redesign the Accord to make it smaller ...? - Darren
___________________________________



That wouldn't be a problem at all.

Honda has already been making Civic(which is the smaller version of Accord) for how many decades?



___________________________________

Forcing ideas and values -- even when they're good ideas and good values -- will never work. - Darren
___________________________________



Okay...so does this mean then you believe companies should have the right to sell their products/services to whoever is willing to pay for them under any circumstances?


___________________________________

If the auto industry went to private banks and asked for the loans, would the banking industry put CEO pay and fuel efficiency terms on the loan? Of course not. They would only loan the money based on the auto industry's ability to pay it back, and at an interest rate that makes loaning the money a worthwhile investment to the individuals that earned that money. - Darren
-----------------------------------
I'm against any restriction placed on CEO pay. - Darren
___________________________________





Do you think how much salary businessperson pays oneself and what kind of competitive advantages one's business has over the competition is not or should not be a factor in banker's decision to lend?


If you believe there should not be any restriction on CEO's pay, would you have problem if CEO got paid half the revenue of the auto industry?

or even better, why not the entire revenue of the auto industry?


Do you think Toyota and Honda's competitive advantages over the big three do not include fuel-efficient hybrid and subcompact cars?


Do you think bankers' calculation of loaning money to a business a worthwhile investment do not include how much a businessperson pays oneself and what kind of competitive advantages the business has?


If not, then what factors does a banker study to see if making the loan to a business would be a worthwhile investment for the bank?



___________________________________

That's why this is a called a "power grab." The government is gaining power over something it didn't have before. - Darren
___________________________________





There's nothing new profound about it. Government has been gaining power over something it didn't have before since the independence.



___________________________________

Ownership without control is a contradiction in terms: it means "property," without the right to use it or to dispose of it.

It means that the citizens retain the responsibility of holding property,

without any of its advantages,... - Darren
___________________________________




If the stock value goes up, the citizens who own the shares don't benefit from it?

If the company is running financially sound, do the citizens who are the workers, consultants and the management of the company don't benefit from it?

If the company is running financially sound, do the citizens who are the customers and the suppliers and their employees/consultants don't benefit from it?

If the company is running financially sound, do the businesses that cater to the employees, consultants, management and the shareholders, and the company's suppliers and clients don't benefit from it?


___________________________________

... while the government acquires all the advantages without any of the responsibility. - Darren
___________________________________




So do you think the politicians who vetted the CEO will not pay politically if the CEO fails?


If you are a politician, and you vetted for a businessman as the CEO, and the CEO turn out to be a spectacular failure, or ended up embazzling the company, you think you will not pay politically?

Do you think when the election time comes, your opponent will not seize up on the fact that you vetted for a crook or an incompetent?

...and this will not cost you politically?


___________________________________

...while the government acquires all the advantages

without any of the responsibility. - Darren
-----------------------------------
As for responsibility, the politicians still wouldn't be running the auto industry completely. - Darren
___________________________________



So does this mean then you believe the politicians would be responsible for running the auto industry for some of it?



___________________________________

They wouldn't have to find a way to make all of their restrictions work.

They wouldn't have to try to find a good CEO without paying a competitive rate. - Darren
___________________________________




So who can/will find a good CEO?

and what would be the competitive rate for a CEO?

and who will/can decide what would be the competitive rate for a CEO?



___________________________________

The real work would still be done by auto-makers. - Darren
___________________________________





Did the auto-makers do the job before they got into this mess?



___________________________________

If you want an example of how this could work, just look at how today's housing crisis came about. Politicians used government power to force banks to make irresponsible loans. Or in other cases, the politicians used government power to make irresponsible loans something that some individuals could make money off of. Then those politians claimed that they made it easier for people to buy homes. Then when those loans started to fail and people started to lose money, what did those politicians do? Did they take the blame? Did they admit they were wrong? No, they blamed the banks for irresponsible lending. How ridiculous! - Darren
___________________________________




Indeed, I agree on the housing crisis.


However, who's responsible for the collapse of the big three?

Government or the automakers themselves?





___________________________________

...socialism negates

private property rights

altogether, and advocates "the vesting of ownership and control" in the community as a whole, i.e., in the state;... - Darren
___________________________________



Who decides private property rights?

Red Grant said...

HerbSewell said...
To Red Grant:

I'm am not starting that debate again. It's a through waste of time.

11/22/2008 10:43:00 AM


I want everyone to read clearly what Herb had said earlier:


___________________________________

Objective is anything that can be proven to be true or false, meaning it's validity is dependent on reality,

as opposed to subjective that is based on one views of reality, or statements about reality that is based on faith. - Herbswell
-----------------------------------

Who decides who and what is anti-American objectively? - Red Grant


Individuals decide what is true and what is false. Their evaluation might be contradictory. - Herbswell

-----------------------------------
"Does this mean then you believe that "morality" is relative to each individual?" - Red Grant

Of course it's relative. - Herbswell
___________________________________




Does this mean then you believe that there is no such thing as objective morality?

or

Are you contradicting yourself?

gregnyquist said...

Jay: "I would say because the average United Auto Workers union employee salary is over $70 per hour and the American automakers can't compete when their labor costs are 50% higher than the competition. The unions have cannibalized the America automotive industry."

Well I'm glad that someone other than myself recognizes the real problem here. Indeed, it's a much wider problem than just the auto industry. The high cost of American labor is one of the reasons why we're in the mess we're in, because it discourages America's trading partners from wanting to buy American consumer goods, while encouraging them to sell consumer goods to our market. The consequence is a huge current account deficit which could only be funded by assets fueled by a credit bubble. We were in effect purchasing consumer goods with mortgage securities (the real reason for the push to sub-prime loans and other shady mortgages). And this wouldn't have been happening if there weren't so much political pressure to keep wages unrealistically high in this country.

Note how this bad (some might say "socialistic) effect on the economy stems, not from altruism, but from self-interest: the self-interest of American workers and their political supporters. So it's not true to suggest that "socialistic" interference in markets is motivated primarily by altruism, and that all one has to do is to convince people that greed is good and most people will accept "pure" laissez-faire capitalism.

HerbSewell said...

Why are you bringing an argument that is several weeks old from another post that has absolutely nothing to do with this one? I seriously doubt you're so interested in the answers to your questions. I tried answering them several times and you don't seem to have any goal but to question every single sentence, taking it out of context and trying to muddle my entire message so you can have something to debate, asking the same questions repeatedly, expecting me to answer the same questions repeatedly. I simply refuse to engage in such trite forms of conversing. It really was more of a contradiction than an actual argument, with you constantly asking questions, taking my answers out of context, in which you argue that my answers contradict themselves. I'm not making any opinion of you, I simply care not to have any hand in such abhorrent wastes of time.

jurassicpork said...

Obama is neither a senator nor the president, he's understandably keeping his distance and now no longer to meddle in the affairs of the Senate.

It's not about a power grab, of course. If it was, Senate Democrats wouldn't be asking the Big 3 to show some effort at restructuring their corporate plan. It's really about saving jobs and, of course, to Republicans, that's an invasion of their beloved free market that doesn't give a shit if they live or die.

JayCross said...

"Toyota makes Prius, and it's in hot demand.

Honda's subcompact cars are in hot demand, as well.

Why do you think is that?

Because people don't want them?"


No, because those companies aren't paying $70/hr union extortion wages for jobs that are probably worth $20-30/hr at most.

To answer your earlier question Red, I'm not sure what the domestic/foreign automotive wage differential was 10 years ago. Are you saying it was less than today? I wouldn't doubt it, but it's probably always been lopsided in favor of foreign automakers because they aren't unionized.

JayCross said...

Red, you said (in response to someone saying the government can't force automakers to make smaller cars)

"That wouldn't be a problem at all."

Do you really want the politically-driven, hidebound, careerist, process-oriented government bureaucracy dictating what types of cars get made?

JayCross said...

Greg,

I think altruism might actually be playing a role here. After all - what is the typical union reasoning for higher wages? "The company is making money on our backs! They're so rich as it is, they can afford to pay us more than we make now! Why should the top executive fat cats get so rich when we're struggling, how selfish they must be!"

Now, you're right - they're saying these things completely out of narrow, economic self-interest. But it only works in getting them extortionate wages insofar as executives and the mass public believe their bullshit altruism-laced reasoning.

As a whole, the masses are pretty ignorant of business and economics. They can't fathom why a CEO would make millions of dollars for "just sitting in an office and going to meetings all day." So this economic ignorance, in turns, reinforces their acceptance of the altruist premise that workers constantly deserve more and more for the same work.

Daniel Barnes said...

PS Check out Thisthis research which, contra the propaganda of the past 20 year, indicates that big bonuses make people perform worse!

Daniel Barnes said...

>Jay:No, because those companies aren't paying $70/hr union extortion wages for jobs that are probably worth $20-30/hr at most.

Hang on a second. Autoworkers aren't paid $70 an hour. Here's what they do get paid. The majority of the difference is legacy costs for retired workers. Additionally you can see immediately that universal state healthcare (like the Japanese have for example) would help make GM's American workers wages more competitive.

This is not to say that GM's management is not grossly overpaid, however!

Damien said...

Daniel Barnes,

Here's Newt Gingrich's take on the bail_out_of_auto_industry

Daniel Barnes said...

Thanks Damien.

Newt is simply playing politics. It has been the Republicans who have by far the lead in crony capitalism, although the Democrats play the game too. Dean Baker's book
"The Conservative Nanny State"
gives us the detailed rundown (you can read it online). All that's happening is that in opposition, the Republicans are now trying to position themselves as anti-elitist. Too little, too late. For a while people might have believed George Bush was a brushcuttin' Texas reg'lar guy instead of the lacksadaisical Ivy League scion of wealth and privilege. But we've now had 8 years of mounting disaster, and now the media veil has disappeared, Newt's play for populism just looks desparate.

Damien said...

Daniel Barnes,

I never heard of that book before, it looks interesting.

Red Grant said...

___________________________________

Red, you said (in response to someone saying the government can't force automakers to make smaller cars)

"That wouldn't be a problem at all." - Jay
___________________________________


Jay, that wasn't the question Darren asked.

The question Darren asked was:

___________________________________

Or if the government forced Honda to redesign the Accord to make it smaller ...? - Darren
___________________________________





and my response to that question was this:





___________________________________

That wouldn't be a problem at all.

Honda has already been making Civic(which is the smaller version of Accord) for how many decades?
___________________________________





Do you disagree with my answer to Darren's question above?






As for your question:
___________________________________

Do you really want the politically-driven, hidebound, careerist, process-oriented government bureaucracy dictating what types of cars get made? - Jay
___________________________________






Does this mean you believe government intervention is always counter-productive economically?









As for your statement to my statement and question to Darren's question:
___________________________________

But what if I couldn't afford the Accord because the government forced Honda to make it an expensive electric or hydrogen car? - Darren
-----------------------------------

"Toyota makes Prius, and it's in hot demand.

Honda's subcompact cars are in hot demand, as well.

Why do you think is that?

Because people don't want them?" - Red Grant
-----------------------------------

No, because those companies aren't paying $70/hr union extortion wages for jobs that are probably worth $20-30/hr at most. - Jay
___________________________________






The question was about the affordability of electric and hydrogen cars to mass public.

If the affordability to the public was the issue, they wouldn't be selling hot, would they?

It wasn't about electric and hydrogen cars not affordable due to the labor costs, was it?


Maybe Darren is too poor to afford even entry level economy electric cars?

If he's that poor, then he can ride public transit.

Or he can go to "Crazy Eddie's" for a gas guzzling SUV selling for "peanuts" nowdays. (Now whether he could afford the gas bill is another question only he can answer for himself.)


I rest my case.

Red Grant said...

___________________________________

To answer your earlier question Red, I'm not sure what the domestic/foreign automotive wage differential was 10 years ago. Are you saying it was less than today? I wouldn't doubt it,... - Jay
___________________________________





GM had a record profit around 10 years ago, even when GM had a far more acrimonious relationship with labor unions.


If the labor cost is the reason why GM is in trouble


RIGHT NOW, then

why not only did it not happen around then, but also it had a record profit?


GM Has Record Profit for Year, Fourth Quarter
By Donald W. Nauss
January 27, 1998 in print edition D-1

http://articles.latimes.com/1998/jan/27/business/fi-12472




___________________________________

...but it's probably always been lopsided in favor of foreign automakers because they aren't unionized. - Jay
___________________________________



Toyota labor union seeks 8,400-yen hike in monthly pay
02.28.08, 1:20 AM ET


http://www.forbes.com/feeds/afx/2008/02/28/afx4707217.html



___________________________________

Jay: "I would say because the average United Auto Workers union employee salary is over $70 per hour and the American automakers can't compete when their labor costs are 50% higher than the competition. The unions have cannibalized the America automotive industry." - Jay
-----------------------------------


Well I'm glad that someone other than myself recognizes the real problem here. - Greg
___________________________________




Chevy lifting: GM shrinks labor cost gap with Toyota
Retiree health swap, other moves whittle per-vehicle divide to $800



By David Barkholz and Jamie LaReau
October 8, 2007 12:01 AM ET


http://www.financialweek.com/apps/pbcs.dll/article?AID=/20071008/REG/71004020



GM Has Record Profit for Year, Fourth Quarter
By Donald W. Nauss
January 27, 1998 in print edition D-1

General Motors Corp. on Monday reported record fourth-quarter and yearly net earnings as cost-cutting and improved sales of high-profit vehicles allowed it to overcome competitive pressures and problems abroad.

The strong report makes it certain that the nation’s Big Three auto makers–GM, Ford Motor Co. and Chrysler Corp.–will post combined earnings of about $15.5 billion, far surpassing the industry record of $13.9 billion set in 1994. The healthy earnings come even as the auto industry is facing intense competitive pressures, forcing manufacturers to hold prices or offer hefty incentives to sell cars and trucks.

http://articles.latimes.com/1998/jan/27/business/fi-12472



So how do you explain GM's record profit and big three's prosperity around 10 years ago?

If the labor cost is the reason the big three got into trouble TODAY, then how could GM have had a record profit then?

Because the comprative labor cost was more favorable for GM then?

Red Grant said...

___________________________________

Newt is simply playing politics. It has been the Republicans who have by far the lead in crony capitalism, although the Democrats play the game too. - Daniel
-----------------------------------
All that's happening is that in opposition, the Republicans are now trying to position themselves as anti-elitist. Too little, too late. For a while people might have believed George Bush was a brushcuttin' Texas reg'lar guy instead of the lacksadaisical Ivy League scion of wealth and privilege. But we've now had 8 years of mounting disaster, and now the media veil has disappeared, Newt's play for populism just looks desparate. - Daniel
___________________________________





Indeed.

Red Grant said...

Corrections:

I had said earlier:

___________________________________

The question was about the affordability of electric and hydrogen cars to mass public.

If the affordability to the public was the issue, they wouldn't be selling hot, would they?
___________________________________




I meant hybrid (electric/gas combo).

Still, the difference is superficial.

If electric and/or hydrogen cars are mass produced to replace most IC cars on the road, their price would be actually lower than IC cars. (Far fewer complicated machining, tooling, die set-up, which also tend to be heavily unionized.)

Not only that, the maintainence costs would be a lot lower as well.

Red Grant said...

___________________________________

Do you really want the politically-driven, hidebound, careerist,

process-oriented


government bureaucracy dictating what types of cars get made? - Jay
___________________________________







Toyota is



process oriented



and consciously and deliberately invests long term in
systems of people, technology, and processes that work together to achieve high
Principle 14: Become a Learning Organization . . . 251
Liker20.qxd 11/2/2003 3:25 PM Page 251
customer value. “Systems” are not information systems but work processes and
appropriate procedures to accomplish a task with the minimum amount of time
and effort. The philosophy of Toyota and its experience support the belief that if
it focuses on the process itself and continual improvement, it will achieve the
financial results it desires.


http://www.si.umich.edu/ICOS/Liker20.pdf

JayCross said...

Red,

Toyota is primarily results-oriented. Absent profitability they will go under (unless the Japanese government bails them out too.) The government will not and therefore are process oriented. I was simply referring to the different incentives at work.

Daniel Barnes said...
This comment has been removed by the author.
Daniel Barnes said...

Red:
>If the labor cost is the reason why GM is in trouble RIGHT NOW, then why not only did it not happen around then, but also it had a record profit?

Or, as Red might ask, did the labour unions bring down Citigroup?..;-)

No. Fact is that GM management were arrogant, out of touch and made bad long-term calls (hello, Citigroup), and thought they were still living in the cheap-fuel '90s. I remember 10 years ago one of Detroit's best know journalists telling an assembled conference of GM management that GM was the stupidest car company in the world! However, to be fair, a lot GM's lack of responsiveness is actually historical - the former Soviet Union was in fact built along the same principles of Scientific Management that GM was built on (back then the SU also got Harvard to help construct it too!). And you know what happened to the Soviet Union....

Red Grant said...

__________________________________

Red,

Toyota is primarily

results-oriented.




Absent profitability

they will go under (unless the Japanese government bails them out too.) The government will not and therefore are process oriented. I was simply referring to the different incentives at work. - Jay
___________________________________




Okay, so you mean profit-oriented when you say "result-oriented"?



Here are some food for thought:




The Same Mistake Twice

Should Detroit have seen that "tipping point" coming? "Maybe, probably," says MacDuffie, admitting benefits of hindsight. "When gas prices spiked in 1980, the U.S. was making very big, gas-guzzling vehicles. So they were very vulnerable to competition from the Japanese and European manufacturers who were used to selling [fuel-efficient cars] in a market where gas prices were much higher. So you would think the U.S. automakers, having lived though that experience once, might be guarded about letting that happen again."

One reason they might have dropped their guard was



the irresistible profit margin




in light trucks. "The trucks and SUVs had



fat profit margins.




http://www.upenn.edu/pennnews/researchatpenn/articleprint.php?1473&bus




So GM has been result-oriented ala profit-oriented per your definition all along!




So what do you think is the primary reason for GM's trouble TODAY?

Red Grant said...

___________________________________

Or, as Red might ask, did the labour unions bring down Citigroup?..;-)- Damien
___________________________________




Ah! You beat me to it.




___________________________________

I remember 10 years ago one of Detroit's best know journalists telling an assembled conference of GM management that GM was the stupidest car company in the world! - Damien
___________________________________





One of my friend who used to be a car salesman said the same.



___________________________________

However, to be fair, a lot GM's

lack of responsiveness

is actually historical the former Soviet Union was in fact built along the same principles of Scientific Management that GM was built on .... - Damein
___________________________________




So you think the obsession with short term (quarterly mainly) profit (instead of looking at long-term viability) and GM's failure to take optimum advantage of economy of scale manufacturing-wise early enough(like Toyata has done) was not the cause?





I don't think Soviets cared too much about short-term profits (in economic sense, that is.) or long term profits for that matter.

Damien said...

Red Grant,

Could you be confusing me with someone else? I don't remember saying any of the things you quoted me as saying in your last post.

Red Grant said...

Sorry, I meant Daniel. I was a bit tired last time.

Red Grant said...

Darren, Daniel, Damien... too many D's.

Damien said...

Red Grant,

Its no big deal, we all make mistakes. I have as well. Every once and a while I don't notice a typo or a misspelled word before I publish a comment.

Jelly said...

Speaking of the ObjectivismOnline Yellowbellies, they're having one of their cute little Objectivist home-field huddles about their fear of traveling to ARCHN Stadium:

http://forum.objectivismonline.net/index.php?showtopic=14712&hl=

It's really too bad that they're terrified of entering into debate here. It'd be fun to see Objectivists brave enough to leave their protected little huddles and defend their philosophy against criticism. Oh well, it's probably a smart move for them to forfeit and stay away since they'd just end up getting their asses kicked anyway.

The World Champion ARCHN Randmockers rule!

Jelly

Damien said...

Jelly,

I visited the thread you just mentioned. I'm not sure if they're scared or just uninterested in debating anyone who disagrees with them. Either way its their loss.