Posts Tagged ‘GM’

Business 1, Government 0

April 12, 2009

In another striking blow to liberals who assume that Government is the answer to all of life’s problems and businesses are inherently evil, Hyundai has introduced a deal on cars that is better than Car Salesman In Chief, Barack Obama’s deal on the terrible GM Cars. Hyundai’s deal is better on more than just one level though. Let’s say, for example, you lose your job, and after 3 months, you still don’t have one and you trade your car back to Hyundai (without damaging your credit) the loss is solely on Hyundai. If your GM car breaks down (very likely) and the Government steps in and covers your warranty, the loss is solely on you. That’s right kids. The Government cannot create¬† wealth or profit.

This is what is so hard to understand for a lot of people on the left (The Brookings Institute understands it well though and liberals should take note). The government does not create wealth. The only money that the government has is money that it takes from citizens via taxes. So the money that the government used to be the money that you had. The government takes no “hit”, as it were, just you. If you thought it took forever to get a warranty replacement before, just wait until the government takes control of it. If I were GM, I would sit on the 60 Days Obama gave them to reorganize. It is very doubtful to me that he would cut off ANY government aid and let them file for Chapter 11. It would make him look like a jackass for the months of fear-mongering he did saying that GM was too big to fail.

The Case for Bankruptcy – Contrary to what most people think, Bankruptcy (Chapter 11) does not mean that a company will cease to exist. It means that all of their debts will be forgiven and they would have to reorganize. They can get rid of management, renegotiate contracts and present their case to an arbitrator and they will decide if it is viable to keep the company going like that, or if it needs to be sold. Circuit City recently went out of business because the reorganization effort did not satisfy the judge and no one wanted to buy them because no one thought that they would be profitable. If anyone thinks that a business will be profitable, someone will buy it. GM and Chrysler defintely have the potential to be profitable and they would have been bought.

The ONLY thing that Government intervention does is keep the bad policies of the management in place, along with contracts that may, or may not be justified afloat with federal tax dollars. This creates a problem. With the government as the chief benefactor of funds, there is no way for GM to be profitable. The government cannot create wealth, it can only redistribute what is already in the monetary system. It becomes a net gain of zero because the worker is being paid by taxes instead of from the profits of a company that actually creates wealth.

Remeber in about 1999 when K-Mart went bankrupt? What happened? Nothing. They were bought by Sears, and now are more profitable then ever. Sears had a business plan and executed it. The government has no business plan. The governments plan is to ask people WHO HAVE ALREADY FAILED what the plan should be. That’s the governemt for you. As inefficient as ever.
Todd Thurman