Motown Singing the Blues
The home of soul is singing the blues and they are doing it at the White House. The execs of the so-called big three of automobiles -- GM, DaimlerChrysler, and Ford -- came to the President of the United States looking for help. This after a year of pursuing the President without response. The President finally allowed the big three to make a visit a week after the Democrats took over the Congress.
Like the sudden resignation of Donald Rumsfeld the day after the election, many view this move as another step by the President to show an interest in the Democrats' priorities. Ironically, those who believe that Republicans only represent the interests of big business should know that the automobile industry in the US (and not just the labor unions) generally support Democrats. The auto markers are salivating at the opportunity of having John Dingell Chair the important House Committee on Energy and Commerce.
Executives from the auto makers are arguing that foreign competition enjoys unfair advantages over "health care, trade and currency manipulation." Although they claim to be arguing that they don't need a bail out, they are seeking help in these specific areas.
On health care, many are asking for the government to actually provide a single pay system (in other words, socialized medicine) in order to make up for the high costs. Others are looking for huge tax credits to at least create more fairness. Either way, there will be a cost to taxpayers, although one (the latter) is clearly better than the other in terms of quality of care and costs.
On trade, they want foreign countries to stop using quotas or tariffs against US cars. Many are saying we should retaliate. The last time (back in the 1970s) we made it difficult for imports it led to a massive decline in our auto industry's quality. Further, consumers had to pay more for foreign cars. Again, punishing the rest of the country in higher costs and poorer quality.
Finally, currency manipulation. In other words, they are making their currency cheaper and it more affordable to buy there goods. Frankly, ever sense the Gold Standard came to an end in 1972, every country, including the US has manipulated its currency. Some times the government prints more money in order to pay government debts (it is politically easier than raising taxes, although it becomes a form of sales tax in higher prices), some times it loosens credit in order to encourage home buying. In any case it is manipulation and we are hypocrites to criticize other countries.
The Democrats and the industry's solution to the auto crisis constitutes a bailout, regardless of the euphemisms they use. Socialized medicine, limiting the number of imports, or charging a fee for those automobiles that come in will equal the taking of the money from taxpayers (or consumers) to benefit the big auto companies. And if they take measures that "protect" the auto industry, US companies will become less competitive in the long run.
There needs to be reforms to help the auto industry, in fact to help all industry, but those are in the area of regulation and taxation, not in subsidy. Hopefully we will avoid such dangerous and short sighted policies.
Like the sudden resignation of Donald Rumsfeld the day after the election, many view this move as another step by the President to show an interest in the Democrats' priorities. Ironically, those who believe that Republicans only represent the interests of big business should know that the automobile industry in the US (and not just the labor unions) generally support Democrats. The auto markers are salivating at the opportunity of having John Dingell Chair the important House Committee on Energy and Commerce.
Executives from the auto makers are arguing that foreign competition enjoys unfair advantages over "health care, trade and currency manipulation." Although they claim to be arguing that they don't need a bail out, they are seeking help in these specific areas.
On health care, many are asking for the government to actually provide a single pay system (in other words, socialized medicine) in order to make up for the high costs. Others are looking for huge tax credits to at least create more fairness. Either way, there will be a cost to taxpayers, although one (the latter) is clearly better than the other in terms of quality of care and costs.
On trade, they want foreign countries to stop using quotas or tariffs against US cars. Many are saying we should retaliate. The last time (back in the 1970s) we made it difficult for imports it led to a massive decline in our auto industry's quality. Further, consumers had to pay more for foreign cars. Again, punishing the rest of the country in higher costs and poorer quality.
Finally, currency manipulation. In other words, they are making their currency cheaper and it more affordable to buy there goods. Frankly, ever sense the Gold Standard came to an end in 1972, every country, including the US has manipulated its currency. Some times the government prints more money in order to pay government debts (it is politically easier than raising taxes, although it becomes a form of sales tax in higher prices), some times it loosens credit in order to encourage home buying. In any case it is manipulation and we are hypocrites to criticize other countries.
The Democrats and the industry's solution to the auto crisis constitutes a bailout, regardless of the euphemisms they use. Socialized medicine, limiting the number of imports, or charging a fee for those automobiles that come in will equal the taking of the money from taxpayers (or consumers) to benefit the big auto companies. And if they take measures that "protect" the auto industry, US companies will become less competitive in the long run.
There needs to be reforms to help the auto industry, in fact to help all industry, but those are in the area of regulation and taxation, not in subsidy. Hopefully we will avoid such dangerous and short sighted policies.
posted by Kevin Price at 7:30 PM
2 Comments:
For a detailed discussion of the gold standard check out the following site: www.supplysideforum.com
Yes, that's a good idea. Most people don't remember, but the Gold Standard was a huge priority to Supply Side purists, like former Congressman, HUD Secretary, and VP candidate of the Republican Party, Jack Kemp. Kemp use to be called a "Gold Bug".
Supply Siders have an innovative view of Gold that is market driven. This is simpplistic, but they have no problem with the government increasing the money supply and would use consumer behavior to determine wheter the money supply should expand or retract, thus increasing economic growth withough fueling inflation. Kemp was about the only elected official who adapted the monetary view of the gold standard, which is why it didn't gather much steam and very few had even heard about their position.
Thank you for your thoughts.
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