Posted by
Brian Koenig on Monday, April 13, 2009 6:20:09 PM
Along with government bailouts of the American auto industry comes a preconceived notion that foreign competitors are the leading factor in our auto companies' collapse. May it be true that Japan has become a dominant force in the marketplace, American policies and regulations have exceedingly contributed to the "Big Three's" demise.
Government intervention into the global economy and the abolishment of free trade has had a devastating effect on the importation and exportation of American goods. With the intent of preventing inflation and the outsourcing of jobs, the government has artificially manipulated foreign trade. Raising tariffs and increasing regulation discourages the positive effects of American trade.
Many see workers' unions as a preeminant force in establishing "job security" and maintaining competitive wages and benefits. This is yet another archetype of the selfishness and ignorance of the American people.
The UAW (United Auto Workers) has prodigiously affected the viability of GM, Ford, and Chrysler. The average expense per employee for auto union workers, consisting of the "Big Three", is $130,000, whereas the average expense for nonunion employees, consisting of the foreign auto companies, is only $80,000.
If it costs Honda 40% less to pay their employees, don't you think it will have an exorbitant effect on the success of their company? This is not about greedy CEO's, but the success of American companies. Why? Because the more successful our corporations are, the better our economy, and the better our economy, the better our unemployment rates. Which is preferable, being in a union that is crippling your company, forcing you into unemployment, or being a non-union worker yet retaining your job?
Lastly, is the overwhelming restraint imposed by the United States government to regulate and restrict American auto companies. In 2007, Congress passed new Corporate Average Fuel Economy Standards (CAFE) which costed the U.S. auto industry $110 billion in research, manufacturing, and production costs. Experts predict that when everything is said and done, consumers will pay an average of $5000-$6000 more per vehicle.
The process of producing the corn in ethanol is a supreme example of wasteful research bestowed on private enterprise. This brilliant idea that intended to "save the world" ended up being a massive failure. It consumed energy to cultivate and grow the corn, it consumed energy to transport the corn, and guess what, it consumed energy then to produce ethanol. Billions of dollars flushed down the toilet.
This example of government imposition creates inefficient research and development, inflates manufacturing costs, and initiates production complusion. Along with such coercion, the government has destroyed the SUV and truck market by skyrocketing the price of oil, which again is a result of government regulation and restrictions.
The free market is the only answer for the revival of the Big Three.