Why fear the feds “owning” GM and Chrysler?

A friend of mine on Facebook, posted the following question:

I am wondering, Is anyone else scared of the government being the majority owner in GM and minority owner in Chrysler?

Which got me thinking about why would somebody “fear” this; and of course being the ass that I can be at times, I voiced those thoughts…

He and I went back and forth a bit on Facebook, where he mostly ignored my questions and brought up his problems with sopocial security, and government regulation (both of which have nothing to do with my questions to him).

He then posted on his blog, and included his 6 “reasons”:

So let me see if I can answer this question.politicians are fighting for “their” district to get the work.

1) Is it not true that a government that runs industry is a “Socialism” country?politicians are fighting for “their” district to get the work.

2) The government now has a say in which kind of cars can and can’t be made – Supply and Demand are gone.

3) The government now has a say in the materials used to make the product.

4) The government now has a say in where these materials are purchased.

5) The politicians are fighting for “their” district to get the work.

6) The cars are going to meet “government” standards?

Here I reposted my comments from facebook, as well as posted specific answers to his “6 points”.

1) Is it not true that a government that runs industry is a “Socialism” country?
Ohh, it’s a big scary word that FOX News loves to use. But it’s meaningless in terms of what the real actual negative effect is. Yes there are arguments for and against different types of governmental and economic systems, but to say the word “socialism” is not an argument, it’s only purpose is to be used as a sound bite sized scare tactic with no meat.

2) The government now has a say in which kind of cars can and can’t be made – Supply and Demand are gone.
In case you have not noticed, the demand for Chrysler cars could not get a whole hell of a lot lower. But for the sake of argument let’s say that they are forced to make cars that even less people want. OH MY, they may be forced against their will to buy a Ford, or Honda, or (heaven forbid) a Toyota… *gasps in horror* OH THE HUMANITY!!! SAVE US!!!

3) The government now has a say in the materials used to make the product.
As I said previously:
“The government could tell them where to buy their materials from, and that is potentially an issue. But if the goal is to get them on their feet, one would hope that whoever is in control will let cost dictate, not other factors. Basically Obama needs to put somebody in control who can stand up to pressure from politicians.”

4) The government now has a say in where these materials are purchased.
Isn’t this the exact same as #3? Materials are materials are materials. If a company (government or otherwise) uses more expensive materials it hurts the bottom line. If the goal is to get Chrysler back on it’s feet, the bottom line is important, and should be one of the primary factors in all choices.

5) The politicians are fighting for “their” district to get the work.
What exactly do you mean here? Building new factories? Parts? Materials? Whatever the case may be, how is this not essentially the same as #3 and #4? Did you intend to only write a list of 3 and repeat one of them multiple times (and use a meaningless buzzword for another)? If there a real discernible difference between #3, #4, and #5?

6) The cars are going to meet “government” standards?
You mean like they do now? Last time I checked, each state has their own emission standards, the feds already have safety standards, etc… What’s going to change?

Now I know that at least some of those who read this blog regularly are Libertarians, and should probably disagree with me on this topic, so I am leaving the question open to all of you as well…

Why EXACTLY would you be scared of the feds taking over Chrysler and GM for a while?
What do you see as the negative effect? (and please, not just the word “socialism”, I’m looking for actual negative effects).

As I have already posted a number of my thoughts on the other blog, I would suggest checking there for what some of my other thoughts are, so you can respond directly to those if you would like.

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About Rodibidably

Jeff Randall is a frequent volunteer for free-thought organizations, including the Center For Inquiry – DC. Having been blogging since January 2008, he decided that a community of bloggers would be an interesting new experience (or at the very least a fun way to annoy his friends into reading his posts more frequently). Since finding out about about the existence of, and then joining, the atheist/skeptic community in 2007 he has been committed to community activism, critical thinking in all aspects of life, science, reason, and a fostering a secular society.
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10 Responses to Why fear the feds “owning” GM and Chrysler?

  1. Jim says:

    Since it is my Blog to which you are referring, I figured I would post a comment.

    Fears:

    1) The Social Security problem is proof that the government can’t run anything and because the government has proven they can’t run anything, this is a legit fear.

    2) Now that the government is running the company, and don’t think for a second they are not, how much of our tax dollars are going to be sunk into this failing company.

    3) The political influence on where materials are purchased. This is not always the cheapest and everyone knows that. This is just another line item that they can add to a bill, cost us more money.

    4) The government is not going to fight the labor unions, which is the reason the company failed to begin with.

    So what would I do….simple, let the company fail…that’s right close the doors. It’s seems that when companies close their doors and there is still a demand on the product – has a whole – their former competitors pick up on business and hire the people laid off from the old company.

    So in a nut shell my biggest fear is this company is going to not going to make it out of the current financial mess and when we get here again, because the government is an owner, we are going to throw more money to them in an endless cycle.

    I am also placing this on my blog

    • Rodibidably says:

      1) The Social Security problem is proof that the government can’t run anything and because the government has proven they can’t run anything, this is a legit fear.
      We agree Social Security is f’d up…
      As I mentioned on your FB comment when you brought it up:
      BTW, I do agree with you that social security is a mess. I also believe that by the time I retire I won’t get a penny from it.
      But what would your alternative to it be? Americans have shown we’re not exactly the “saving type”, and those at the lower end of the economic spectrum are even less able to save than a middle class household like me (or, I assume you).

      So if we were to get rid of social security, or make it optional, what would happen to those who don’t (for whatever reason) save for their own retirement? Would the government have to support them eventually anyways? Or would we as a society let them die on the street?

      As for SSI, and you being responsible.
      What would you recommend? Would you sit by and watch as people starve to death on the street because they failed to save on their own? Or would you expect some private organizations to take care of them?
      Obviously you’re stating you feel it’s not YOUR responsibility, so in your ideal world, who takes care of those who can’t take care of themselves (or does society allow them to die)?

      I agree we SHOULD save more. We also should not kill, rape, steal, enslave, etc. People do not always do what is in their best interest. People can bitch and moan and complain about SS all day long, but the fact remains, that a LARGE portion of people will not save on their own, and unless you’re willing to watch millions upon millions of people die in the street, somebody has to help them out.

      —–

      HOWEVER, even given the problems with SSI, do you want to use one example as conclusive proof the government “can’t run anything” efficiently? Does this mean that if I can show you one example of the government running something efficiently that your point will be null and void?
      I think you may want to reword this one, because as it stands, it only takes ONE EXAMPLE (which I have at least 2 in mind already) to make this “point” disappear.

      2) Now that the government is running the company, and don’t think for a second they are not, how much of our tax dollars are going to be sunk into this failing company.
      It’s still a private corporation. The only way more federal dollars will go into it is through that same process that any corporation would get government funds. Both previous administrations (including W, Clinton, Bush Sr, Reagan, etc) and the current Obama administration have shown willingness to give federal bailout dollars to private corporations; so how does the ownership change this is any way? How does this “takeover” change the potential for government funds to go to GM and Chrysler any more than the possibility for government funds going to Ford, CitiBank, etc…

      3) The political influence on where materials are purchased. This is not always the cheapest and everyone knows that. This is just another line item that they can add to a bill, cost us more money.
      This is still a private corporation that will be using their own funds to purchase things. The only time congress will be involved is if/when they ask for more funds from the feds.
      You seem to think that GM and Chrysler will become government entities in the same way that the military, State Department, etc are. Do you have some examples that can show this happening, or some statements from Obama or his administration to show this will be the case?

      Yes there will be more government oversight (obviously these companies need some type of oversight, or they would not have gotten in this mess in the first place.
      But oversight, and becoming a government entity are two VERY separate concepts.

      4) The government is not going to fight the labor unions, which is the reason the company failed to begin with.
      Again, do you have examples to back up this assertion?

      It seems like you’re setting up a worse case scenario straw-man to attack, without looking at what has been actually said by those involved.

    • Rodibidably says:

      So what would I do….simple, let the company fail…that’s right close the doors. It’s seems that when companies close their doors and there is still a demand on the product – has a whole – their former competitors pick up on business and hire the people laid off from the old company.
      If that is truly the case (that when one company gets laid off it’s work force is hired up by it’s competition), then we’d never have a rise in unemployment (or it would be followed almost immediately by a drop). But I don’t think that’s what we’ve seen historically.
      Again, I’m going to ask for evidence of such a phenomena. Did the people that lost there jobs when Enron went under get hired up shortly there-after by Enron’s competitors?

      So in a nut shell my biggest fear is this company is going to not going to make it out of the current financial mess and when we get here again, because the government is an owner, we are going to throw more money to them in an endless cycle.
      But does the government taking an ownership role make it less likely to recover? Where is the evidence to support this idea?

      and again, where is the evidence that the government taking an ownership role makes it more likely they’ll throw more $ at it. Historically the government has shown a willingness to bail-out companies where they have an ownership role or not.

  2. Jim says:

    Giving money to private industry and having a majority ownership is completely different. There are no examples because this is the first time in American History that the government has taken control of a company like this.

    Another example of a Failed Government program….Medicare.

    • Rodibidably says:

      There are no examples because this is the first time in American History that the government has taken control of a company like this.
      Which is one of my points… We CAN’T KNOW how it will be handled, yet.

      And therefor: “It seems like you’re setting up a worse case scenario straw-man to attack, without looking at what has been actually said by those involved.”

      And yet you’re acting as if you know EXACTLY how it will be handled. You’re acting as if you know what will happen. Nothing like this has happened before, it’s impossible to predict how things will be handled.

      And because of this uncertainty, we must listen to those involved to see what they actually say. And you’ve shown by your comments, that you have not done that…

      And now, right after you say how this is unprecedented, you use yet another unrelated example as to how you feel this will go?

      You’ve basically said (back-to-back mind you):
      1) We can’t know how (A) will turn out because nothing like (A) has ever happened.
      2) Because (B) is bad, we can infer that (A) will be bad.

      Do you not see the problem in your logic yet?

      • Jim says:

        Nope, because both (A) and (B) are being run by the same entity. Just because (A) has never been done, the entity has proven to fail based on (B). Not to mention the entity has zero experience in the (B) industry sets us up for failure.

        You asked why was I scared and I have answered that question. You have not been able to relive that fear, you may have argued it but did not relive it.

        I on the other hand, have given very valid and solid reasons that we need to fear this.

  3. Jim says:

    Not to mention the entity has zero experience in the (B) industry sets us up for failure.

    should read

    Not to mention the entity has zero experience in the (A) industry sets us up for failure.

    • Rodibidably says:

      So if an entity has made mistakes in the past, are you claiming that it will always make the same mistakes in the future?

      Even if it is a different enough scenario from the past as to cause you to say “There are no examples because this is the first time in American History that the government has taken control of a company like this.”?

      You seem to be saying on one hand:
      “There is no precedent for this, it’s totally unique”

      While at the same time claiming:
      “SSI and Medicare are screwed up, and therefor this will be screwed up too”

      Well, which one is it? You can’t have two mutually exclusive arguments at the same time, since anything that somebody says that discredits one will bolster the other…

      —–

      You also seem to be making the assumption that GM and Chrysler will be run like government agencies; but you’ve shown no examples of this in the past (because it’s never happened) or anything said by those involved (Obama, somebody from his administration, somebody from GM/Chrysler, etc) that would lead to this conclusion.

      Do you believe this is a permanent move (GM to government control), which would fly in the face of everything the administration and GM people have said?
      Or do you believe this is temporary?

      If it’s permanent, then perhaps your fears are justifiable. However, I’ve seen nothing that shows the feds are interested in getting into the car business long term.

      If it’s temporary (like every body involved has said repeatedly), then it seems unlikely that it would be treated like a government agency (since it would take a massive amount of time to set-up the oversight required for that type of move).

      From everything I have seen/read/heard it seems that Obama will assign somebody to oversee GM to watch how our tax dollars are being spent. I’ve seen nothing that leads me to believe this. If you’ve got evidence that shows otherwise, please let me know, I’d love to see actual evidence (i.e. something other than some blow-hard on FOX News spouting off that the sky is falling).

  4. oopsisharted says:

    The Government has a long indisputable history of spending way to much, and producing few results within the resources allotted… Just look at NASA. The only real way to save our auto industry, IMO, is to let those who failed at structure and organization of these companies die off and go bankrupt. This problem is akin to the problem every child has growing up. If you pay off the refs at your sons soccer game to ensure victory, He’ll never learn those crucial life lessons that failure delivers. Sure, our economy will suffer, and hence our people will for a time. But Humanity, as a whole, works harder when times a tough. Innovation is a result of necessity. Let them go, and let those who endure carry us on into the next era of human ingenuity. Stop asking for handouts, and business carry themselves, the way it should be

    • Rodibidably says:

      The Government has a long indisputable history of spending way to much, and producing few results within the resources allotted…
      This is true in many cases. But the government has also never been involved in a situation like this. We’re not talking about a government agency spending government funds in this case. We’re talking about a company that has already been given funds for a bail-out, and in this case the administration has decided that the public should have some oversight of that money.

      Just look at NASA.
      I’m not sure I’d agree that NASA has a history of “producing few results”.

      The only real way to save our auto industry, IMO, is to let those who failed at structure and organization of these companies die off and go bankrupt.
      Well that ship has sailed. Once the money is spent (and by this I mean congress has approved the bailout), then IMO we (the public) should have some oversight as to how the money is spent.

      This problem is akin to the problem every child has growing up. If you pay off the refs at your sons soccer game to ensure victory, He’ll never learn those crucial life lessons that failure delivers.
      The problem is when a child learns a life lesson, it typically does not involve thousands (or tens or hundreds of thousands) of people losing their jobs, and worsening our already unstable economy.

      Sure, our economy will suffer, and hence our people will for a time.
      I’d have to weight the suffering against the cost of the bailout. With the state our economy is already in, I believe the impact on the economy if we allow some of these companies to fail is significantly worse than the alternative.

      But Humanity, as a whole, works harder when times a tough.
      I’d like to see the stats on this actually. I’d suggest there is a certain point where humanity looks at something as hopeless and “gives up”. I’m not sure how close we are to that point yet, but I do believe we’re closer to it then I would like.

      Innovation is a result of necessity.
      In some cases, yes. In some cases it’s the result of genius. In some cases it’s the result of other factors… To say it’s always due to necessity is a narrow view of things.

      Let them go, and let those who endure carry us on into the next era of human ingenuity.
      Assuming we survive, of course. There are many examples throughout history of civilizations, empires, etc falling.

      Stop asking for handouts, and business carry themselves, the way it should be
      In an ideal world, yes. We don’t live in an ideal world.

      Besides, the handout ship has sailed. And since the money has already been given over, we should have some type of oversight.

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