Hey General Motors, Who is John Galt?
One of the books that played a role in shaping my thinking in college was Ayn Rand’s Atlas Shrugged. It’s basic premise is that of rational self interest. Rand portrays independent achievers as ones whose achievements are interfered with by the state, and she argues that any state intervention — be it fascism, socialism or communism — is fatally flawed from the get-go.
I was always troubled by the completely unfettered freedom she espoused as a necessity, in the same way that free markets, left completely unregulated, never made sense to me. Though both are ideas which I believe we should aspire to (rather than a welfare state or other non-motivating policies).
With respect to where we are in financial markets, housing and now the automakers, if there’s not catastrophic downside to risk taking, then we might as well risk it all, every time, right?
I must admit my wife and I are really pissed off having made decisions NOT to leverage over the past several years, pay off the house, save, invest for our retirement, and position ourselves well for the future. Others I know (many others) took out huge second mortgages to take vacations or buy cars, condos, HDTV’s or boats. Some bought their McMansion with a huge jumbo mortgage, and now are under water in value, owing more on it than it’s worth and are hoping for a governmental loan restructuring.
Then you have smart, forward looking strategic leadership in firms like Schwans, who decided after the oil shocks of the 70’s to never go through that again or put their company in jeopardy. They’re looking pretty brilliant today with their propane powered trucks as I talked about in this post.
So why is it that the American car companies couldn’t make great products that get great gas mileage, and not wail to the government over CAFE standards as being oh, so restrictive to them selling gignormous guzzlers?
I haven’t purchased an American car for years since the Germans and Japanese make cars of better quality and intrinsically higher value IMHO. Argue with me all you want, but I vote with my pocketbook as do many others, making Toyota the world’s #2 automaker, for instance. So rather than being smart like a Schwans or a financially conservative gomer like me, the big three automakers acted like the world had all the oil we’ll ever need, would be cheap forever, and they made those behemoth vehicles that are destroying their companies now…
…and they want YOU AND I to bail them out!?! Yeah, I’ve heard all the arguments about the job losses and economic ripple effects, but how could oil supplies globally, competitive vehicles and capacity issues not be obvious to a company that could afford the best strategists in the world? In my view, let ’em go bankrupt and restructure. The sky won’t fall in and maybe they’ll get hungry like Apple was when Steve Jobs came back in 1996 (just about everyone was seeing them a heartbeat away from being out of business) and figure out how to make cars people want to buy, instead of gigantic gas hogs with the fit and finish of a Yugo.
Take a look at their YouTube pitch to us about how the world will collapse if we don’t give them a loan. Mark my words, if this does go through, they’ll be whining for more by the end of 2009.
About Steve Borsch
Connecting the Dots Podcast
Podcasting hit the mainstream in July of 2005 when Apple added podcast show support within iTunes. I'd seen this coming so started podcasting in May of 2005 and kept going until August of 2007. Unfortunately was never 'discovered' by national broadcasters, but made a delightfully large number of connections with people all over the world because of these shows. Click here to view the archive of my podcast posts.