If there’s one thing which aggravates me about the state of government circa 2008, it’s their practice of complete interference in the free market.
Almost a month ago I came across this story in the Gazette by Lindsey Robbins which talked about Maryland-based solar energy businesses being excited because some of the pork slathered on the bailout bill was an extension and enhancement of certain tax credits related to the use and installation of solar energy equipment.
Quite honestly, I could probably write several hundred words on why this isn’t such a good idea, but to me it wasn’t really enough to do a story on by itself. Solar energy has its uses, but I happen to believe the industry needs to sink or swim on its own merits and not rely on incentives placed in the tax code to gin up a market for the items.
What the story did provide for me though was a nice lead-in to another large handout to an industry which somehow can’t seem to compete in the marketplace without federal help, or at least that’s what they claim. In their case though, some of the problem does have to do with overregulation and gaming of the market by the federal government.
Detroit has come to Washington hat in hand looking for $25 billion to retool and make themselves more competitive with automakers from around the globe. And unlike their city’s football team, who is 0-21 in Washington all-time, these guys have a very good chance of winning this game. They definitely have the pundits on their side and surprisingly to me have an ally in conservative firebrand Pat Buchanan.
Unfortunately, while Buchanan does have somewhat of a argument, the key point has been missed by many of the pundits. No amount of money is going to help Detroit automakers in the long run because their business savvy is the problem. They have allowed their unionized workers to absolutely run roughshod over them (sort of like the Lions’ opponents over the last decade) with one exception: as of the latest set of auto industry contracts ratified last year, the UAW is now going to take a larger share of responsibility for their members’ and retirees’ health care expenses. But even that came at the cost of much of the Big Three’s treasure as they had to establish a fund for the UAW to tap into and defray the initial costs.
If the federal government truly wanted to help Detroit automakers, there are two things it could do. Sadly, neither of these has a chance in hell given the party in charge inside the Beltway.
One would be to not just roll back but rescind the CAFE standards. Let Detroit build the cars as the market desires, because fuel economy will still be a selling point – it just doesn’t need to be regulated.
The second is to bring the tax burden on businesses down. Not only would this help the Big Three but thousands of other large-scale employers by reducing their costs. In turn, a better profit outlook should help the ailing stock market.
Without CAFE standards, Detroit doesn’t need the $25 billion to retool. (They may still ask for it, but at that point we know for sure it’s a simple money grab.) They’ll also save billions more if business taxes are restructured and simplified. As things stand now, the scenario we’re probably heading for is eerily similar to that which many financial institutions are facing: their primary stockholder is the federal government and regardless of actual number of voting shares Fedzilla calls the tune.
As a nation we’re seeing that long slide down a more and more slippery slope and the sled is careening ever-closer to the forest of fascism. By the time we as a public can get to the corrective action necessary in two years it may be far too late to change course.
The UAW is now going to take a larger share of responsibility for their members health and retirees benefits? How will they manage this when could only raise a paltry $200+ million for Democrat Party political campaigns in the last year?
Because the Big Three is providing billions in seed money. Here’s an article talking about GM’s part.