Friday, November 14, 2008

Taking Lessons from China (or "Obama's First Mistake")

As I pay much attention to the news and to political goings-on in general, I find it quite easy to see what Obama's first mistake as President will be: the Big 3 bailout.

We as a nation have risen and then forgotten all about the muscle of any country's economy; and that is manufacturing. Other nations have seen how to rise by following our example, and then began to buy out our market when we lost track of that crucial factor.

The best example of this is China. After a time of failed Marxism under Mao, China opened up its economy to free trade, using the world's greatest economic power (us) as its example. They PROTECTED their own economy, putting a "Country First" (sounds familiar...) methodology into practice. They slashed the value of their own currency, doubled import tariffs, cut export taxes in half, and focused primarily on manufacturing. This protected their economy from foreign interference/control; and their manufacturing power gave them the revenue to loan money to other countries (again, primarily us). In each individual industry they entered, they would first only begin to make parts for certain things, until eventually they would buy up US grants and patents to create their own finished products. As the world market stumbled a bit last month, they were buying these at fire-sale prices. They have been making auto parts for other companies for decades, and will soon be producing their own car to sell here at a much cheaper price than our domestic cars.

Here in our country, our manufacturing and industrial power was unparalleled during and after World War II. Over time though, our economy shifted its focus and lost sight of that most paramount element in a nation's economy, as unionizing and high capital gains taxes made it much cheaper for companies to build factories elsewhere. Though unionizing was a great thing back when it was first started, it has become a plague in our nation, from the auto industry unions to the teachers' unions, they are crumbling our economy and hurting themselves a lot more than they realize. The benefits they have been demanding in the auto industry have crippled the companies themselves, who are now having to shell out $100,000 per employee in combined salary and benefits- this, for the lower-level workers. These costs are OF COURSE passed onto consumers, making domestic vehicles more expensive than their Japanese, non-unionized companies' counterparts.

Now the companies are finally starting to go under, and Democrats (who measure the need for government intervention very differently than Republicans) are clamoring for an auto bailout.

They're forgetting the Chrysler bailout thirty years ago, which didn't stop bankruptcy and the taxpayers lost a good $50 million. Saving Detroit means saving it from bankruptcy. As we've seen with the airlines, bankruptcy can allow operations to continue while helping shed fatally unsupportable obligations. For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48), massive pension obligations, and unworkable work rules such as "job banks," a euphemism for paying vast numbers of employees not to work.

The point of the Democratic bailout is to protect the unions by preventing this kind of restructuring. Which will guarantee the continued failure of these companies, but now they will burn tens of billions of taxpayer dollars. It's the ultimate in lemon socialism.

Democrats are suggesting, however, an even more ambitious reason to nationalize. Once the government owns Detroit, it can remake it. The euphemism here is "retool" Detroit to make cars for the coming green economy.

Liberals have always wanted the auto companies to produce the kind of cars they insist everyone should drive: small, light, green and cute. Now they will have the power to do it. Let's forget that Ford actually has a car that can get 68 miles per gallon but cannot be sold here in the United States- because of government (read: Democrats') regulations on diesel fuel.

The one thing that can save the auto industry is bankruptcy; so they can finally boot the unions or at least tone them down a bit. But Obama and the Democrats would rather see the continuation of unions and the nationalization of what was once our greatest manufacturing center then ensure that a true free market economy (the kind that would, you know; work) is allowed to survive.

Feel free to quote this prediction, fellow conservatives.