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The Other "Big Three Bailout"

Part of the problem — most of the problem — with the Big Three automakers is that they have been and continue to be manufacturing vehicles that people don’t especially want to buy. Too big, too expensive, too fuel-inefficient, etc.

But GM, Ford and Chrysler do have one unswervingly loyal customer, one that has helped keep those companies afloat for decades — the government:

Americans love their cars, and so apparently does Uncle Sam. He’s got 642,233 of them.

The government owns or leases sedans, SUVs, trucks, limousines and ambulances for more than three dozen agencies, the U.S. military and the Postal Service.

This AP story was about wasteful operating costs of all these vehicles. But there’s also the question of how the government acquires them in the first place. And governmental Rule of Acquisition #1 is: Buy American, and buy only American.

The notion that “Buy American” (as opposed to “Buy Intelligent”) helps the American economy is the worst kind of economic illiteracy. An individual consumer who buys a less competitive product (more expensive, lower quality, etc.) in a misguided effort to “help the merchant” only does so by making herself worse off first. The suggestion that “the economy is better off” as a result is therefore retarded.

In the same manner, when the government, as a market participant (i.e., a customer) restricts its purchasing options in order to “help the economy” (e.g., by buying only American vehicles), it can only do so by making taxpayers worse off first, therefore having at best a neutral (but likely negative) net effect on “the economy.”

Could you imagine if the federal government suddenly decided to “borrow American” and refused to sell Treasury securities to foreigners, including China’s Communist thugs? Would the federal budget, and vicariously the American economy, be better off?

A government truly dedicated to “helping the economy” would acknowledge and heed its fiduciary duty to taxpayers by seeking the best deals possible — with any counterparty willing to do business with it.

(Incidentally, that 642,233 figure is the federal government. Imagine all the state trooper vehicles, muncipal police cars, city buses, county garbage trucks and snow plows, public hospital ambulances, state university vehicles, public school buses, etc., etc., etc., in which the relevant governmental authority deals either exclusively or preferentially with American manufacturers, to the detriment of taxpayers, in order to “help the economy.”)

Meanwhile:

The federal government has invested billions of dollars over the past 16 years, building a fleet of 112,000 alternative-fuel vehicles to serve as a model for a national movement away from fossil fuels.

But the costly effort to put more workers into vehicles powered by ethanol and other fuel alternatives has been fraught with problems, many of them caused by buying vehicles before fuel stations were in place to support them, a Washington Post analysis of federal records shows.

Under a mandate from Congress, federal agencies have gradually increased their fleets of alternative-fuel vehicles, a majority of them “flex-fuel,” capable of running on either gasoline or ethanol-based E85 fuel. But many of the vehicles were sent to locations hundreds of miles from any alternative fueling sites, the analysis shows.

Look past the sheer “only government could do that” incompetence of sending expensive alternative-fuel vehicles to locations with no alternative fuel. (What’s next — buying parkas for border patrol agents in Arizona to prop up the coat industry?)

The more fundamental observation is that the government, qua consumer, has no business (no pun intended) trying to steer (also no pun intended) a market in one direction or another. If the government needs a vehicle, then it should buy a vehicle — on the most taxpayer-friendly terms possible. No other considerations should be entertained, and no other policy goals pursued.

Elsewhere:

Jim Fouts, the mayor of Metro Detroit’s largest suburb, told his 40-plus appointees that he expects their next new-car purchase to be American-made. Those who don’t comply may lose their jobs, according to the Detroit News.

Fouts said he cleared the executive order with the city attorney. The affected staffers are employed on an “at-will” basis, meaning that either party can terminate their contract for any reason.

Warren [Michigan] is the site of several General Motors and Chrysler manufacturing and assembly plants, as well as GM’s sprawling Tech Center. That makes them Warren’s two biggest taxpayers and, according to Fouts, deserving of the city’s support.

It is of course a per se improper use of “at will employment” for a politician to coerce employees to do anything outside of the scope of their employment. But since all politicians are, by definition, moral defectives, this outlier anecdote should surprise absolutely no one.

Previously:
On the “Per Hour” Labor Costs of the Big Three Automakers
On the Calls for an Auto Industry Bailout
Mitt Romney Was For Detroit Before He Was Against It

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