Wednesday, December 10, 2008

Bailouts Revisited

Jeffrey Tucker is a Sacred Music Correspondent for New Liturgical Movement. As a music director and scholameister, he is also a leading educator and proponent of restoring Gregorian chant to its rightful place in Catholic parish life. But never mind all that. He is also a true renaissance man, and his essays on a variety of subjects never disappoint. Today, he throws the prerequisite bucket of cold water on the prospect of bailing out the American automobile industry.

We couldn't possibly be a real country and a powerful nation without our beloved auto industry, which is so essential to our national well-being... What about the time before the car? Between 1870 and 1930, the biggest ticket item on every household budget besides the house itself was its piano. Everyone had to have one. Those who didn't have one aspired to have one. It was a prize, an essential part of life, and they sold by the millions...

As cogent as his point is, he does not mention one critical difference with respect to the automobile. In the last fifty years, we have succeeded in building a society where it is virtually impossible to get anywhere without a privately-owned vehicle. Lawmakers who think nothing of subsidizing a road project to reach the nearest "big-box" store, would scoff at doing the same for public transportation in a metropolitan area -- something much of Europe takes for granted. When you consider that the price of gasoline has always been much higher there...

Be that as it may, Tucker's historical perspective gives us food for thought, as we prepare to leave our grandchildren with the bill for our stupidity.
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3 Comments:

At 12/10/2008 01:45:00 PM, Blogger Dad29 said...

Jeff bamboozled you with a neat trick: comparing pianos and cars.

A piano is a one-time capital investment meant to last about 100 years (or so.)

Cars are NOT. Further, automobiles are not useful for education in the arts, nor are they regarded as iconic representations of truth, beauty, and goodness.

Jeffrey's jihad is aimed at manufacturing, which he and Mises think is sooooooo, ah, 19th Century, that it's no longer important to the US economy.

Of course, Jeffrey hasn't explained how financial engineering has replaced manufacturing; nor how the enormous profit margins in manufacturing are replaced by the thin-margins in finance; nor how the common man is elevated by financial engineering (as opposed to having a decent earning opportunity in manufacturing.)

Nice trick--but all smoke and mirrors.

 
At 12/10/2008 02:18:00 PM, Blogger David L Alexander said...

Dad:

The comparison here is with supply and demand. Assuming everything you say is true (and I'll go so far to concede that a sound economy is dependent upon diversity, including its manufacturing base), how does what you're saying invalidate his comparison?

 
At 12/11/2008 03:31:00 PM, Blogger Dad29 said...

First off, to clear up any mis-reading of my post: I believe that the remedy for the Big Three is Chapter XI, not a "bailout."

Having said that, the US consumer purchases around 15 million cars/light trucks/year; GM alone provides about 25% of that volume.

This year it will be different--about 10 million units will be sold.

If Jeff is trying to make the case that automobiles will disappear, he's out of his mind. It's possible that demand will remain at ~10 million/year due to quality enhancements. But to propose that on-shore manufacture will (or should) go to zero is so impractical as to be ludicrous.

 

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