Tag Archives: Solution

Russian Styled Centralization Replacing ‘Big Three’ Cartel’s Control Over American Auto Industry

This article by David Herszenhorn and Jackie Calmes titled “‘Car
Czar’ prescribed for automakers” describes a fundamentally flawed proposal to rescue collapsing industries. It would have an
elite group of industry-wide managers led by an appropriately named ‘Czar’ guide the failing American auto industry.

The name Czar reminds us of Russia and its instinct to centralize control
over industries and the economy in general.  That kind of economic
management is what caused the collapse of the former Soviet Union.
Competition is suppressed along with innovation for various self-serving
reasons in economies that are managed this way.

Lack of competition and innovation is also why the American auto industry is failing in the face of foreign competition. The ‘Big Three’ are essentially a cartel that has ruined the American auto industry’s free market. This scheme to appoint a  body of central managers over the industry is only going to enshrine the industry’s fundamental dysfunction.

There is a better way to use the money that would be used
to fund the auto industry’s bailout; and the money used to fund the new bureaucracy meant to manage the industry. Give it to average taxpayers in the form of a voucher. These vouchers
would subsidize the purchase of energy efficient, environmentally
friendly, American made cars. This would let consumers decide what
American auto companies, either old ones or new start-ups, deserve
help from the government.

We can avoid the pitfalls of both Russian styled socialism and US styled free capitalism.  The corrupting and smothering affects of centralized market controls by governments and big businesses are kept in check.  We must restore the rightful status of consumers as the leaders of our economy, for freedom’s sake.

Advertisements

Congress Abandons Consumers

The reason why the economy is collapsing is because too many average consumers have lost their purchasing power. From the beginning of the crisis this has been obvious. So why are policymakers concentrating on implementing a trickle-down approach to rescuing the economy?

They have put their faith in the directors of big businesses to save our economy. Almost all of the cash meant to rescue the economy, (last count = more than 2.7 trillion), has been given to them. This is despite the widespread belief that free markets most efficiently direct investments to where they would be most useful. Our leaders need to remember why free markets work well.

Free markets democratize the economy. They give consumers the power to direct the economy. Consumers do this with their purchasing power. They give money to sellers and investors who offer the best deals for the things consumers want. In a free market anyone can hope to become a self-made business magnate. And the customers get to choose them. Free market economies serve the will of the people.

Our free market economy is quickly disappearing. The people have lost their purchasing power and Congress has abandoned them. Money for saving the economy has been given to the leaders of big businesses. They are not investing that money in people who would compete against them. The directors of big businesses are using their purchasing power to help themselves.  Regular consumers are left to fend for themselves.

Congress’s mistake must be corrected soon. The bailout money is being hoarded by big businesses that are laying off employees. More consumers are losing their purchasing power. If centralized control over the economy remains for the long term, then innovation would probably be stifled by timid bureaucrats and big business leaders eager to protect their profit margins. The situation is getting worse.

Policymakers and Congress can easily correct this situation. Simply direct the bailout money to average consumers. Let them choose which businesses deserve a bailout. Chances are almost everyone will get what they want.