Well, with the excitement over the constitutional crisis over, and a new Liberal leader, the polls are indicating things are back to where they were after the election in 2006. The polls are indicating that Ignatieff and Harper are essentially tied in terms of how "Prime Ministerial" they are. I think this shows right away that the last election is less about hating the Liberals as it was hating of Dion. Ignatieff is largely unknown to most of the public, and I think they are optimistic that things will be better organized in the opposition ranks with him.
And in the big surprise of the week (that's sarcasm), a poll has found that Canadians don't really know how are government works. In a democracy, it is incredibly important that the people voting know how the government works, otherwise we might as well just have a dictatorship. With the responsibility of the vote, people should at a minimum realize some of the basic functions of how the leader is chosen and who the head of state is and what they do.
The story of the weekend is Auto Bailout. I really don't see the reason to bail out an industry that has plenty of variety in the marketplace already. The "Big 3" got to their position through a combination of overpayment to manual labour jobs that could cheaply be done in other countries, poor marketing of more fuel efficient lines, focusing on huge gas guzzlers that are no longer profitable, and large amounts of consolidation.
I have always had the opinion that having large corporations is bad for the economy, because if a single large corporation goes down, it has a huge ripple effect on the entire economy. This is the fatal flaw of those who advocate for the free market, as it has shown that it leads to consolidation as companies do not want to compete against each other. What would have happened if GM, for instance, was split up into individual companies that focused on different products, like small cars, trucks, and parts. If one of those companies failed, then it would only have minor affects on the entire economy.
Even so, with the Hondas, Toyotas, Kias, etc., why do we even need to save the Big Three? If the Big Three collapse, will that mean that people will stop buying cars? That is silly. The other companies might be foreign, but most of the cars are actually built in North America. In Canada, those companies are putting their plants exactly where the closed Big Three plants are.
In the US, things are complicated by the fact that the foreign companies set up their plants in the south, where Republicans are dominated, while the Big Three are in the North, which is dominated by the Democrats. There will be a bailout, but I don't see how it will end up saving these companies. They are bleeding money from a combination of low sales and the inability to borrow money from banks due to the credit crunch. They will not be able to all of the sudden make products that people will buy in just a few months, about the time that that 14 billion bailout would amount to. Ultimately, the big three are done, and should be allowed to follow in the footsteps of Lehmann Bros.
2 comments:
It is impossible to avoid consolidated ownership amongst modern car companies, as the capital needed for investment and operation is so mammoth and the gains for foreign companies who might not operate under the same rules are so huge. I'm not advocating for monopoly capitalism here, but it seems to me that a powerfully competitive vertically integrated corporation would flense a non-niche auto company. After all, that is essentially what Britain was reduced to with the implosion and continental scavenging after theirs collapsed.
If I am pushed to come up with an alternative solution, I want to see central planning being adopted as part of the bailout. As unlike as that is, even a partially active auto czar, as I hear it being called, would be preferable to relying on 2-year attention span CEOs.
Certainly there needs to be a more long term vision for all large companies. Maybe then these bubbles wouldn't happen as often. When companies are only focused on the next few quarters, it is not good for the long term prospects, as we are very much seeing now. The same thing applies to government, as we watched our surplus disappear under the boom time tax cuts by the Conservatives.
I'm still not convinced that having large companies is necessary for something like the auto industry. For the most part, all cars are essentially the same, and it doesn't take much to design one. Most of the main innovations in the industry are not developed by the auto makers directly, passing things off to smaller companies and universities (though they do provide funds for the research). That may not necessarily be true for the Asian makers, but they aren't the ones that are failing. With the collapse of the big three, they will not be spending money on innovation, and I think that they should spin off the more successful products and close down the ones that don't work. They don't even have to be completely separate entities, but allow them to be semi-independent.
Post a Comment