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Incorrect economic model
Posted by Reality (more from Reality) on Fri, 20 Jan 2012 12:18:55
In Reply to: Re: Not my point, Noel, Fri, 20 Jan 2012 10:36:29
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Why would people stop working just because one of their best paying customer died? Employers are little more than customers for workers. Unless the government pay people not to work, most people would just move on and look for new customers/employers. Keep in mind, there are always more work to be done; lack of meeting on price is what prevents sale from taking place and prevents jobs from materializing.
GM itself was organized, and bought most of its brands, in the aftermath of the Panic of 1907. The 1907 episode was probably rather similar to the mid-80's crash: new technology (automobile in the early 1900's vs. personal computer in early 1980's) fostered a gaggle of new companies, each set up business plans and borrowed money as if each one of them would be as profitable as the first-mover (Apple). Well, the reality turned out to be different. Many of the debt obligations had to be liquidated, so the industry could keep growing without the burden of the old overbearing debt.
That's how the capitalistic free market economy works. It is the recessions that make the free market work. Earlier pie-in-the-sky malinvestment was the disease, and recession is the cure! So that workers and material can go to new owners at low prices, so the new operator can proceed with new production without the old debt. Businesses usually do not need saving during a bubble. If you keep saving malinvesting businesses during recessions, you end up have a soviet-style economy, making 1940's cars in the 1980's, literally turning out cars worth less than the metal and leather going into them.
The 2008-9 recession provided an opportunity to readjust manufacturing wage and debt levels (pension and benefit promises are forms of debt) to where American manufacturing would be competitive again on the world stage. That opportunity was spurned for political reasons. Therefore, unemployed workers, dealers and parts suppliers all have to suffer from the continuing low domestic production volume, along with the taxpayers who were looted to pay the bailouts.
posted by 75.67.1...
Posts in this Thread:
- Kodak's going down, Siegfried, Thu, 19 Jan 2012 11:27:47
- GM=Number one car company in the world, No Snaab, Fri, 20 Jan 2012 05:59:42
- VW wants you to wait for the Mann truck sales #s, JohnA
, Fri, 20 Jan 2012 08:54:30 - Did American Airline stop flying, Reality, Fri, 20 Jan 2012 08:47:05
- got your point, Siegfried, Fri, 20 Jan 2012 07:41:01
- Yes, No Snaab, Fri, 20 Jan 2012 09:21:14
- ok, Siegfried, Fri, 20 Jan 2012 12:27:11
- Re: ok, No Snaab, Fri, 20 Jan 2012 13:43:55
- Re:, Siegfried, Fri, 20 Jan 2012 14:50:20
- WAR, AdamSAAB2kAero , Thu, 19 Jan 2012 13:58:46
- you had plenty recently, Siegfried, Fri, 20 Jan 2012 04:53:47
- Wrong on every account, Reality, Thu, 19 Jan 2012 14:53:38
- Re: Wrong on every account, dtech, Thu, 19 Jan 2012 18:50:52
- Much more to Kodak than cameras and film, Noel, Thu, 19 Jan 2012 15:30:21
- Re: Wrong on every account, James, Thu, 19 Jan 2012 15:16:21
- Not so very wrong, IMO, 50N40W, Thu, 19 Jan 2012 15:03:33
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