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Pulling Plug On GM Would Help Both Auto Industry And Michigan
IBD Editorials ^ | November 11, 2008 | John Tamny

Posted on 11/12/2008 5:17:43 AM PST by Kaslin

Ludwig Von Mises once wrote that the entrepreneur who fails to use his capital to the "best possible satisfaction of consumers" is "relegated to a place in which his ineptitude no longer hurts people's well-being."

The latest losses at General Motors reveal yet again that it is the living embodiment of managerial ineptitude, and to ensure that it no longer fails its customers while harming the well-being of Americans more broadly, it's essential to let the firm die.

Many will of course blanch at the presumed loss of jobs that would result from GM's death, but judging by the high level of unemployment in Michigan, it would be more realistic to say that GM's continued existence under weak management has served as a capital repellant such that capital and jobs will continue to flee the state if GM is saved with the money of others.

Worse, business history, from ships to farming to mining, shows that sectors reliant on government help are invariably weakened as opposed to strengthened.

The above is the case because businesses rarely fail due to a lack of money. Instead, poorly run businesses find it hard to raise money in the capital markets. Government money allows the architects of bad decisions to continue making mistakes that cause a company to be capital-deficient to begin with.

(Excerpt) Read more at ibdeditorials.com ...


TOPICS: Business/Economy; Editorial; Government
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To: SmokingJoe

You’re right, but it won’t be the unions that get the blame. Never has been, probably never will be.


41 posted on 11/12/2008 6:01:37 AM PST by Travis T. OJustice (Change is not a destination, just as hope is not a strategy.)
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To: sickoflibs
But you see, they want to blame it all on BUSH, that is why they are pushing this so hard now. I say let the ONE take the blame, no more BUSH FAULT. Why should he? Time for Obama Fault. Stay out of it BUSH, you don't need anymore blame.

Let them fail, or at least negotiate all the salaries down. In any deal there is give and take. GM just wants the TAKE. If they won't cut wages from the top to the bottom and away with bonuses, then to hell with them.

If I were an auto worker for GM or any company and they said they were going out of business, I would volunteer to tell them to cut workers wages, perhaps cut wages for a % of profit, that way workers have a vested interest in how the company is ran, they will work harder and better to produce a good product. I know it is too simple for those Dem. Union members to think like this.

We are all in this thing together, (Not by our choice, we were injected into it), yet the union just does not want to give one dime, well when no one can afford their DIME and purchase the junk they produce, let them fail. Remember Obamas plan, trickle up Poverty, seems it's going to work out real well for them.

42 posted on 11/12/2008 6:03:20 AM PST by annieokie
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To: RegulatorCountry
Every single automotive manufacturer in the world is going to be in big trouble, if they’re not already, including Toyota, due to this economic crisis”

True.
But there is trouble, then there is trouble.
Toyota has had a fall in profits, yes. Difference is , they are still making profits, and their market cap is vastly bigger than GM’s.
GM on the other hand, is making huge loses, doesn't have enough money to stay in business, and GM’s market cap is currently under $3 billion. Bill Gates could buy GM from his pocket change.

43 posted on 11/12/2008 6:06:14 AM PST by SmokingJoe
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To: SmokingJoe

GM is burning through 5 billion a month...how long would 1/3 of 25 billion last?


44 posted on 11/12/2008 6:12:01 AM PST by joe fonebone (The libtard votes in every election, regardless of the candidate.)
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To: steelwheels
Sounds like my 'new' 1970 Ford Torino. Literally fell apart at 12,300 miles (12,000 mile warranty).

Like the Jews say ... NEVER AGAIN!
I wouldn't take a Ford on a bet.
45 posted on 11/12/2008 6:13:56 AM PST by Condor51 (Obama follows Karl Marx. I follow Sun Tzu. [Wanna come out and play Barry?])
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To: Patrsup
“And don’t get me started on the governor – Granholm is the worst thing I have ever seen in an elected official. She is in it for herself and those constituents who will contribute to her. And “Zero” wants her to be his economic transition coordinator – sounds good – look what she has done to Michigan in the last 6 years………”

But she has a new plan. She's going to raise taxes, again!

The sales tax, the gas tax, license plate taxes, toll roads,...

All the money that comes into the state currently goes to the teachers union and Grandmole has to keep feeding that beast.

46 posted on 11/12/2008 6:16:25 AM PST by Beagle8U (FreeRepublic -- One stop shopping ....... Its the Conservative Super WalMart for news .)
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To: annieokie

I partially agree and partially disagree. On MSN/liberal outlets we go after democrats and Obama by changing the subject to THEM, not defending Bush. Now as time goes on if Obama screws up then in some cases we use McCain for comparision, some cases Bush, whatever works. It’s PR war now, cynical PR war.

But within our circles we HAVE to admit how bad Bush was. Pelosi really had a great strategy, dont make waves, stay together, blame Bush for everything. Bush/McCain has a losing strategy, cut deals with democrats, destroy republicans with anti-republican bills cut with democrats.

If we continue to circle the wagons I fear we will not learn and revive. 1993 took a cleaning of Republicans.


47 posted on 11/12/2008 6:18:00 AM PST by sickoflibs ( Those who don't learn from (real big) mistakes are losers forever)
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To: SmokingJoe
Bill Gates could buy GM from his pocket change.

Gates and many others. Why don't they?

It's a crappy company with fatally high operating costs.

If private capital doesn't want it, why should the taxpayers have to buy it?

The company needs to be liquidated. It will be a far better use of capital and might be the positive turning point for Michigan's economy.

48 posted on 11/12/2008 6:18:57 AM PST by NoControllingLegalAuthority
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To: SmokingJoe

A “clarion call to energize the base”??

Wanting an American company to fail, energizes the base?

What have we become?


49 posted on 11/12/2008 6:20:58 AM PST by Cringing Negativism Network (PALIN 2012: No more RINOS... Ever!!)
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To: NoControllingLegalAuthority

Agree with everything you say there.


50 posted on 11/12/2008 6:21:31 AM PST by SmokingJoe
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To: RegulatorCountry

“Every single automotive manufacturer in the world is going to be in big trouble”

I think we miss the point in singling out the auto industry as being in “big trouble”. Everyone and everything is in BIG TROUBLE. The question is why, and how do we fix things. It seems to me that once upon a time this country enjoyed a level of income and prosperity unprecedented in modern times. It was a time when we imported very little and actually made things in the USA. Since so called “free trade” came along, followed by outsourcing of jobs, all hell has broken loose. Do you think maybe our financial crisis is simply caused by the decline in the ability of the american consumer to support our current standard of living?


51 posted on 11/12/2008 6:21:54 AM PST by Murp
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To: Murp

We’re in big trouble, because we have been deliberately sending America’s wealth OUT OF THE COUNTRY for three decades now.

It was called “free trade”.

That is the big trouble. Irrational hatred of unions, and flat-out greed has now demolished American manufacturing to the point we pay foreigners for EVERYTHING WE BUY.

We’ve spent all our money. Now we’re broke.

It’s not complicated.


52 posted on 11/12/2008 6:24:22 AM PST by Cringing Negativism Network (PALIN 2012: No more RINOS... Ever!!)
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To: Patrsup

Thirty-eight years at Chrysler I heard and saw, “Steal all you can, while you can at the TOP.” ALL the price stickers on each vehicle (and all other auto manufacturers too) should list all the FREE trips;including lodging and transportation for families and employee, tickets for any and all entertainment and sporting events, food, vacations, cars, gas, health and life insurance, bonus payments,etc. Which the uninformed buyer paid out of their pockets for. The American auto manufacturers WERE NOT and DO NOT CARE WHAT THE CUSTOMER WANTS. In the 80’s Management was sworn to secrecy as to their Million dollar bonuses they received on top of their salaries. AND, the MEDICAL industry copies this practice too!


53 posted on 11/12/2008 6:26:56 AM PST by themitten
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To: Cringing Negativism Network
Wanting an American company to fail, energizes the base?

You obviously do not understand capitalism. An American company so badly mismanaged SHOULD fail. The failure of GM will trigger a much better use of capital and assets. That's how things GET BETTER AND GROW under capitalism.

Investors understand what a dying dog looks like.

Clinging to something once successful but now failed is in NOBODY'S best interest.

54 posted on 11/12/2008 6:28:43 AM PST by NoControllingLegalAuthority
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To: steelwheels

Hey Mr. GM, remember that 2002 Bonneville you sold me that has numerous broken gages,a sagging headliner, premature worn parts, door locks and windows controls that don’t work? Then remember you charged me $100.00 to tell me that you needed $500.00 to change the plugs and plug wires? I still remember the nightmare it was to do the work myself. I guess your engineers do not solicit advice from auto mechanics. Or do they, so the ordinary Joe cannot work on their cars? Don’t even get me started on my wife’s Saturn Vue, because you do not want to hear about the transmission you recently replaced is now leaking. You are making it very difficult for me to buy American. I can’t wait to see what happens when I hit 100,000 miles.


55 posted on 11/12/2008 6:29:23 AM PST by dhouston
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To: Cringing Negativism Network
“That is the big trouble. Irrational hatred of unions, and flat-out greed has now demolished American manufacturing to the point we pay foreigners for EVERYTHING WE BUY.”

Irrational? Paying $70 hr for tightening bumper bolts is irrational!

56 posted on 11/12/2008 6:30:07 AM PST by Beagle8U (FreeRepublic -- One stop shopping ....... Its the Conservative Super WalMart for news .)
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To: NoControllingLegalAuthority
An American company so badly mismanaged SHOULD fail. The failure of GM will trigger a much better use of capital and assets. That's how things GET BETTER AND GROW under capitalism.

Yeah, just like it did with bad American steel companies, right?

The real, core problem with the auto industry is very simple: Unions. Unless the UAW and all that comes with them are eliminated, no American car manufacturer will ever survive, regardless of what else is done with capital and assets.

57 posted on 11/12/2008 6:32:10 AM PST by TChris (So many useful idiots...)
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To: Cringing Negativism Network
Wanting an American company to fail, energizes the base?”

You still don't get it.
Wanting to save American taxpayers billions of dollars in wasteful spending, and preventing our children from being saddled with even more billions in government debt, energizes the base.
It's not the business of government to pump taxpayer money into private badly run companies. They rise or fall with the competence of their management and how they are able to cope with competition. Government bailouts never save badly run companies.

58 posted on 11/12/2008 6:32:59 AM PST by SmokingJoe
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To: Beagle8U

Those Michigan union auto workers were loyal, patriotic Reagan democrats. Joe the Redneck.

Before so-called conservatives decided it was more important to have cheap shelves of crap in Walmart, than it was for America to manufacture things.

Now China is the world leader in manufacturing, we’re bankrupt, and that pickup-driving former Reagan democrat at GM is the problem?

And we wonder why that union autoworker now votes for a party which is run by homosexual activists who hate America?

Because WE CHASED HIM OUT OF OURS.


59 posted on 11/12/2008 6:34:58 AM PST by Cringing Negativism Network (PALIN 2012: No more RINOS... Ever!!)
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To: Cringing Negativism Network

“We chased em out of ours”!!

BINGO


60 posted on 11/12/2008 6:36:35 AM PST by Murp
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