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I think you'd have to blame Herbert Hoover for inventing that theory, although nobody realized it at the time. The inaction of his administration during the onset of the Great Depression is widely believed to have deepened the depression. The problem with laissez-faire is that when a big American manufacturer fails, one more Asian company rises up to take its place (or existing ones increase production). Sometimes they may manufacture the goods here in the US, sometimes not. One alternative to the possibility of big car manufacturers failing is to have a large number of smaller car companies, but we already ran that experiment in the early to mid-1900's. Consumers prefer cheap cars, which eventually means fewer, larger car companies. The small car companies, like Saab, have struggled for survival, and more have perished than survived. They can be innovative (Saab) and make luxurious cars (Packard), or unusual cars (DeLorean), but the big guys can always produce a cheaper car.
Another way out of this mess is to encourage companies to think about the future, so that they capture more of a global market. The SUV craze that GM participated in/encouraged was bad for GM, once gas prices topped out a couple of years ago. This put them on bad footing and left them needing a bailout. Other companies went to SUVs too, but GM in a big way. The manufacturing plant in a neighboring town here made Neons years ago, but they changed to SUVs recently. Guess what their employees are doing now?
But then those opposed to any government influence in business would say that we have to just let those market fluctuations happen, and so they do, and then you're right back at the beginning. (IMHO, the answer to this was to have a different level of driver's license for large vehicles - kind of like a commercial license; currently, folks drive SUVs as badly as they would a smaller car, but with a far greater potential for damage).
However, in the end, there may have been no good solution, just mediocre ones. As repugnant was many thought the GM bailout was (and I was one of them), it was probably the lesser of two evils.
posted by 99.72.240...
, Mon, 8 Nov 2010 17:11:25
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