Commentary Magazine


The Car Experiment

The domestic auto industry is dying under a trio of crippling factors — excessively lucrative labor contracts, poor management, and government regulation. Bankruptcy could have addressed the first two, but there is little remedy for the latter. Indeed, the conflicting federal policies which give with one hand and take away with the other would be comical if they weren’t so destructive. The Washington Post reminds us :

President Obama’s move last week to support strict California vehicle emission standards was another blow to the industry, already reeling from financial pressures and dismal sales; the Big Three automakers yesterday said that January sales were down — 55 percent at Chrysler, 49 percent at General Motors and 39 percent at Ford — compared with a year ago.

Faced with yet another threat to their existence, the car companies naturally stepped up their lobbying efforts. Ten million more in lawyer and lobbyist fees. But this is an outrage, declares the perpetually outraged Rep. Henry Waxman:

I voted for money for the bailout because I want them to survive, but this makes me think that they have not yet stopped being controlled by their own self-interest. . . They are being shortsighted. This type of conduct has done a great deal of harm to America and the industry.

Yeah, how dare a publicly-held company be controlled by self-interest. Don’t they realize? They are now a government-directed experiment. The test is to see what will happen if government gives them enough handouts, big labor refuses to recognize economic reality, and Congress enacts more and more environmental regulation (and allows states to compete with one another in self-righteous escalation of those regulations).

I think we know where this is headed. We’ll wind up with a very expensive and crippled auto industry still incapable of making a profit. But that’s fine with Waxman because profit is just what comes from self-interest and we can’t have any of that.