America more communist than China?

December 18, 2008

Aside from the proliferation of Chinese food other than Cantonese world-wide, the coolest part of the People’s Republic’s grand opening 30 years ago was that the country started down the long road of disassembling State-run industries. If communism has proven anything, it’s that the government has no ability to properly run a business, any more than a corporation has any ability to run social programs (thank you capitalism for teaching us that nugget).

Now with the majority of State-run businesses at least partly privatized, and the future of an econimically powerful China prophecized, why is it that the Great Torchbearer of Capitalism seems to be taking economy lessons from Mao-era China?

I watched this GM-produced video about all the horrors that will befall the country as a whole should the American people not get behind the Big 3 Auto Industry Bailout:

And then I read “Chrysler shuts down all production“, where the company (somewhat following GM’s lead) has gift-wrapped an unpaid holiday for all its American employees. Though easy to excuse as the fault of “the times”, I can’t but see it as anything other than a thinly disguised ditch effort to rally the work/union voice for their bailout.

Aren’t we past fear-mongering for public support? Did a world under eight years of Bush control teach us nothing? Do we not understand that if a (semi)domestic industry is crying out for a patriotic duty to assist it in its time of need, everyone needs to back the Ford up and consider why it’s in trouble in the first place.

The reason, as if anyone didn’t know, is because it cannot compete. Sure, the flavour of the month is to blame the economic crisis, it’s the CFO equivalent of a Get Out of Jail Free card. But the US auto industry was in HUGE trouble LONG LONG LONG before people with no right to buy a sofa on credit were given hundreds of thousands of dollars in mortgages.

Definitely, should the big three automakers fall, jobs will be lost. Many jobs. Good honest people will need to find a new industry to employ them. Local governments will need to find new ways to attract new industry to keep their populations employed. This is the way things work. Invest in that.

Or consider the alternative. Consider this bail out. You will be investing in an industry that has proven NOT TO BE PROFITABLE. You will all, as tax payers, become part owners of companies that suck. We’re not talking about investing in Google, and waiting for the bounce-back. We’re talking about dating a invalid 90-year-old widower with no pension and no savings.

If these companies get their payout, how long will it be before the domestic steel and coal industries, the few remaining non-outsourced call centres, the American-made silicon chip manufacturers, and a sundry of other globalized industries just barley holding on come a-callin’, demanding like I did as a child “but it’s not fair, THEY got some, I want some too!”

And what will you have at the end of the day? A government that has “wisely” invested billions of your dollars (that it doesn’t have, and has had to borrow at high interest rates) into industries that have proven they do not have a sound fiscal model for profit – let alone repayment or eventual buyback.

China calls its brand of commucapitalism “communism with Chinese characteristics”, maybe it’s about time that the US take a good hard look at what its elected officials are rushing through before you have “capitalism with un-American characteristics”.

9 Responses

  1. I agree that the bailout is useless because the industries can’t compete on their own. The sad thing is that the Big Three have been propped up as far as they have…. letting them die slowly (and probably one at a time) over the last decade or so would have been much preferable to having them all die now, at once, in the midst of a monumental financial crisis.

    One thing that the economic meltdown has done, for good or bad (it seems that you would argue bad, but I’m not so sure) is cast a good light on the Chinese model of heavy state regulation within an ostensibly capitalist economic system. It remains to be seen if China can get out of the other end of this thing in one piece, but the vast amounts of corruption and inefficiency being uncovered in the United States by this whirlwind is certainly calling into question “capitalism with American characteristics.”

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  2. I don’t know if I’d say “bad”, but I would add that it needs to be taken as a whole. I don’t think there’s any argument for saying that absolute state regulation leads to tighter control of everything. That’s a given, and that the gov’t doesn’t need to answer to anyone other than history, but can (largely) just do what they feel is best does certainly have benefits in crisis. Benefits that the Bush admin could write novels about (and many are, I suppose).

    However, it’s a pricey sacrifice.

    The trick is finding a way where you can have both. Quick acting and empowered government that is still largely answerable to the population of which they govern.

    As it relates to the corruption and inefficiency in the US – there’s no shortage of that in China either. What we need is a better system of citizen-minded checks to balance out human/corporate nature for absolute greed.

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  3. Totally agree that the bailout is the wrong thing to do.

    While it’s very possible that if the big three go bankrupt that a lot of good paying jobs will disappear, it’s also likely that many of those jobs will be replaced by decent paying ones (like the ones Toyota and Honda have brought to America) by new car companies that buy up the assets of the big three. If they go bankrupt it doesn’t mean all of their capital, company-specific technology & production methods, and labor disappear into the ether. It’s very likely to be profitable at some price to buy up their assets, otherwise why would other (foreign) car manufacturers open new plants in America?

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  4. Yes- it’s darkly amusing that the only thing that Americans socialize is corporate loss. It’s almost as if we tell companies that if they get big enough, they quite literally don’t have to worry about failing because the taxpayers will bail them out. Meanwhile, should they profit they’ll be able to capitalize on regressive tax policies and other perks in the predator state…but I digress.

    Can anyone remember when Detroit last made a relevant car? 20 years ago, when everyone understood that the wave of the future would be economy cars, GM, Ford, and Chrysler geared up for SUVs.

    Republicans in the Senate say it’s the unions fault, and until the unions grant mass concessions, these “high-minded” civil servants won’t allow for a bailout.

    But what it really comes down to is innovation, or rather the lack of it. Can the union be blamed if the men and women actually running these companies failed to produce cars people actually wanted to buy?

    /rambling 🙂

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  5. Ryan, you are right from logic point of view. But at the same time you speak about it as someone who won’t be affected in anyway.

    Imagine you lived in Korea for many years, married a local, learned the language, happy with your job as an English teacher etc and then Korean government makes a regulations: all foreign English teachers must have a university degree. You won’t die but surely you will have a hard time.

    By the way, Ontario has Ford manufacturing facilities as well.

    Why don’t they bail out only GM?

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  6. 維特利, poor analogy. The government in Korea passing a regulation is in no way similar to the government in America refusing to bailout a company. One is making a choice that affects you, the other is doing nothing and letting YOUR choice (the choice of producing cars noone buys) affect you.

    I say let the companies die off, they deserve it.

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  7. @維特利, I’m with Chip, it’s a pretty convoluted analogy.

    It’s not a matter of looking at it from the perspective of people who will be affected should the companies fail. It’s a matter of looking at it from the point of view of should it be the taxpayer’s responsibility to bail out corporations that aren’t profitable because those companies scare people into thinking they are needed for the jobs they create.

    You’re damn right that if I was working for Ford, GM or Chrysler I would hope the companies were able to find a way to keep my job going. Of course. But these are two separate arguments.

    Again, the government should not use taxpayer money to prop up businesses that are not profitable and are going to continue sucking money from the public tit. They should invest in making sure that if/when all those workers do lose their jobs they have (a) re-training programs, (b) a social security net, and (c) new jobs.

    As for if I was the poor ESL teacher in Korea – it wouldn’t be convenient, but I would simply go get a degree. Why should I expect that the world’s not going to change the rules simply because I’ve grown comfortable with them?

    Not sure what your last point is.

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  8. http://news.yahoo.com/s/ap/20081220/ap_on_go_pr_wh/meltdown_autos

    ….Some $13.4 billion of the rescue money will be available this month and next — $9.4 billion of it for General Motors Corp. and $4 billion for Chrysler LLC, the two auto giants that have said they could be facing bankruptcy soon without government help. GM is slated to receive the remaining $4 billion in loans after more money is released from the financial rescue account. Ford Motor Co. says it doesn’t need federal cash now but would be badly damaged if one or both of the other two went under….

    This is an absolutely astonishing amount of US taxpayers’ contributions to their Government.

    I say : Let them fly into a mountain. All this whinging and grovelling to the US Government is demeaning.

    Begging for cash to keep them going. Producing inefficient cars for decades.

    I do pity the guys and gals on that slow moving production line when the sh*t hits the fan, and they get “released from their employment contracts”.

    Nice euphemism there eh ?

    Interesting to see what happens next.

    J.

    If they go down, it will be a lesson.

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  9. i think that bailout is useless, too. there are several reasons. the first one is that ,as we all know, the bailout is just a short-termed plan which just borrow other part’s money to compensate what is the most serious part.but you have to pay it back anyway.the second reason is that ,i think, the crisis is a good thing for automakers to make some introspections, then recover more better.the third one is that it is also a time for America to examine itself. history always change, we know that.

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