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Different Sensitivies
"[P]reduction location is a corporate decision, but when it's on the taxpayer dime, there are different sensitivities..." ~ Harley Shaiken, "a professor at the University of California at Berkley who specializes in labor issues"
I pulled that quote from a news story about a GM plan to import automobiles manufactured in Mexico, South Korea, China, and Japan to the US for sale. Ordinarily this wouldn't be much of a story, but since the government is propping up GM with billions in loans and is effectively running the company (remember this story about the government-mandated firing of GM CEO Rick Wagoner?), it becomes big news.
In ordinary circumstances, the purpose of a business is to make a profit. Decisions such as where the business is located, where and from whom it purchases raw materials and parts, and what sales and marketing strategies to employ are made by executives who answer to the board of directors and ultimately to the owners of the company; in the case of big corporations, the owners are typically stockholders. These executives are judged based on a pretty objective standard: profit, which is the ultimate purpose of any business.
In an enterprise where the government is involved, however, making a profit is not the ultimate goal. What actually is the purpose of the business becomes convoluted, subject to the whimsies of whoever is in charge of the government; the ultimate goal becomes not necessarily profit, but securing re-election. The company in search of profit answers quickly to the demands of the market or suffers; the company in search of political benefits answers to bureaucrats not known to act quickly and not necessarily mindful of the demands of the market.
Key aspects of free market capitalism are free trade, division of labor, and specialization. It sometimes makes good business sense, from an efficiency and economic viewpoint, to import certain raw materials, parts, or even products. Doing so can provide more profit for a particular business, and benefits the consumers by providing them with lower prices and more choices. The competition helps promote innovation and lower prices from other businesses, and using lower-skilled and lower-wage workers for certain jobs frees up higher value workers for more complex jobs.
But what makes good economic sense isn't always politically astute. With the government and the United Auto Workers poised to become the largest stockholders in General Motors, there is now pressure on GM to make decisions that are pleasing to the union and the government. In the case of the UAW, this means promoting more and higher-paying jobs for UAW members, not economic efficiency; in fact, increasing efficiency and productivity is actually counter to the UAW's goals — as workers become more productive and efficient, fewer are needed. In the case of the government (at least as it is currently constituted), the goal is pleasing the unions and making cars that are more "green" — regardless of whether or not there is a market for such cars.
Such are the perils of nationalization, either in actuality or in practicality: profit ceases to be the primary motivator and simply becomes one of many competing "sensitivities".
I pulled that quote from a news story about a GM plan to import automobiles manufactured in Mexico, South Korea, China, and Japan to the US for sale. Ordinarily this wouldn't be much of a story, but since the government is propping up GM with billions in loans and is effectively running the company (remember this story about the government-mandated firing of GM CEO Rick Wagoner?), it becomes big news.
In ordinary circumstances, the purpose of a business is to make a profit. Decisions such as where the business is located, where and from whom it purchases raw materials and parts, and what sales and marketing strategies to employ are made by executives who answer to the board of directors and ultimately to the owners of the company; in the case of big corporations, the owners are typically stockholders. These executives are judged based on a pretty objective standard: profit, which is the ultimate purpose of any business.
In an enterprise where the government is involved, however, making a profit is not the ultimate goal. What actually is the purpose of the business becomes convoluted, subject to the whimsies of whoever is in charge of the government; the ultimate goal becomes not necessarily profit, but securing re-election. The company in search of profit answers quickly to the demands of the market or suffers; the company in search of political benefits answers to bureaucrats not known to act quickly and not necessarily mindful of the demands of the market.
Key aspects of free market capitalism are free trade, division of labor, and specialization. It sometimes makes good business sense, from an efficiency and economic viewpoint, to import certain raw materials, parts, or even products. Doing so can provide more profit for a particular business, and benefits the consumers by providing them with lower prices and more choices. The competition helps promote innovation and lower prices from other businesses, and using lower-skilled and lower-wage workers for certain jobs frees up higher value workers for more complex jobs.
But what makes good economic sense isn't always politically astute. With the government and the United Auto Workers poised to become the largest stockholders in General Motors, there is now pressure on GM to make decisions that are pleasing to the union and the government. In the case of the UAW, this means promoting more and higher-paying jobs for UAW members, not economic efficiency; in fact, increasing efficiency and productivity is actually counter to the UAW's goals — as workers become more productive and efficient, fewer are needed. In the case of the government (at least as it is currently constituted), the goal is pleasing the unions and making cars that are more "green" — regardless of whether or not there is a market for such cars.
Such are the perils of nationalization, either in actuality or in practicality: profit ceases to be the primary motivator and simply becomes one of many competing "sensitivities".
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