The Detroit 3 automakers are squealing for a turn at the Federal bailout trough. Some people have pointed to this as an example of badly run companies looking to survive at taxpayer expense. After all, Japanese automakers such as Honda and Toyota can make cars at an average of thousands in profit while Detroit loses over a thousand per vehicle.
But that's not at all what's happening. The truth is actually much worse.
The reason the big 3 are failing is not because they do bad business or made the wrong moves. The most famous explanation I've seen is that they're failing because they've been making gas-guzzling SUV's while the smart Japanese are making the fuel-efficient vehicles that consumers demand.
This is, in actuality, a complete load.
In fact, SUV's and other "gas guzzlers" are very much in demand, even now. They are also very profitable. They are pretty much the only thing that has kept Detroit alive for the past 20 years. Detroit was making the right move by selling trucks and other "gas guzzlers." While environmentalists have popularized the idea that there is a huge demand for fuel efficient vehicles, there is actually no such demand. Consumers in America have shown, over and over, that when confronted with the actual costs and compromises of fuel-efficient vehicles, they would rather pay for power, size, style, safety, and other basic attributes.
They will say that they want efficiency, but only when confronted with the idea in a vacuum. But car characteristics don't exist in a vacuum. Each comes at a price: either a monetary price, or the price of compromising some other vehicular trait. And American consumers, by and large, are not willing to pay or compromise for efficiency.
Furthermore, it is a myth that the Japanese have succeeded on efficiency. Toyota, the largest and most successful of the Japanese automakers in the US, produces many large trucks that get very low mileage, such as the Tundra and the Sequoia. These are, as with Detroit, among their most profitable models and they owe a great degree of their success to their fuel in-efficient vehicles.
So why, then, does Detroit lose money where the Japanese make it?
The reason is that the government forced Detroit to meet the onerous terms of the Unions - the United Auto Workers - and therefore they must pay thousands and thousands more per vehicle in wages, health care costs, and retirement benefits.
(Did you see that link I just gave there? Please go and read the article it points to. Also note that it was written in 2006.)
So, simply put, the government has forced them to pay for the unions' unreasonable demands and when the money ran out they are now coming for our wallets as well. I find it particularly repulsive that these companies, rather than asking for the government yoke to be removed from them, are asking that it be fixed upon us instead.
This isn't the first time they've done so, either. Union costs have held them in a state of near-bankruptcy for over a decade now, and they've periodically petitioned Washington to socialize the medical system. Yes, you read that correctly. You see, if the government socializes medicine, forcing the taxpayer to pay medical costs, then Detroit won't have to do it for their workers.
Other countries are socialists, they say, and so it isn't fair that they have to pay for their workers' health care while foreign competitors get to pass this on to their taxpayers. This is nonsense: Japanese cars made in the USA in factories not bound by the UAW are plenty profitable without socialized medicine.
But beyond this, of course, the whole idea is morally disgusting! Here you have a company in a perfect position to point out how the yoke of socialism is driving them, and the economy, into ruin. But the idea of removing the yoke doesn't even occur to them. They just want to clamp it onto the rest of us, that we might share in their misery.
It reminds me of a joke I once heard, speaking of the Russian mentality:
There were once two farmers who were neighbors: Boris and Ivan. They were both very poor, only able to farm just enough to barely survive. The only thing that brought any joy to them was Boris' cow, which gave good milk. Boris would share the milk with Ivan, and they both enjoyed drinking it very much; it was their only luxury in life.
One day, while Ivan was plowing his field, he found an old lamp in the dirt. When he rubbed it, a genie appeared and said, "I will grant you one wish, anything in the world you want."
He replied, "I wish that Boris' cow would die."
That mentality has now come to America.
We won't last long unless it is defeated.
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