By admin | December 9, 2008
By Richard Allen
As a social studies teacher by trade I have often taught lessons on free enterprise and capitalism. I try to teach my students that in a capitalist society business owners who produce legal products or services, pay their taxes, abide by the law and see to the needs of their workers and customers have the right to succeed. At the same time, however, those same businesses also have the right to fail.
Sometimes, even when meeting all of the requirements above it does not work out. Many businesses started and run by hard working, intelligent people simply donâ€™t make it.
However, the odds of a business failing increase dramatically when they do not meet one or more of the requirements above. And, when that business is not run in an intelligent way its chances of exercising its right to fail are almost a certainty.
The United States Congress appears to be on the verge of passing a $15 billion bailout of the American auto industry.
Under normal circumstances, if I were speaking to my classes, I would say these businesses have been poorly run for years and have indeed exercised their right to fail, and they should be allowed to do so. However, this is not a normal circumstance.
The failure of these companies would hurt far too many people. Too many jobs, both directly and indirectly, would be lost and too many people who had little or nothing to do with the financial mess these companies now find themselves in would be left with no where to turn.
General Motors, Chrysler and Ford have been poorly managed. They have too many redundant components. They have produced big, fuel guzzling, inefficient, overpriced cars for too long. Now, they are reaping what they have sown.
Add to that, the unions have overcharged for their bloated labor force and have gotten away with it for too many years.
For the U.S. government to get in the way of this colossal failure seems to me to be Un-American. It flies in the face of all we have been taught. As Americans we have been told that we will be rewarded for doing things the way they are supposed to be done, but conversely, we will fail when things are done in the wrong way. That is the American way.
The act of the government to bail out these poorly run companies is nothing more than a reward for doing something the wrong way.
The bailout is supported by NASCAR, a company that may be facing some of the very same issues as the auto makers. NASCAR chairman Brian France sent a letter to lobby Congress in favor of the planned aid to Detroit. “I’m writing you as a concerned American who wants what is best for our general country,” France wrote. “Of course, the domestic automobile manufacturers play a very important part of the heritage of NASCAR, but more importantly, it is vital for all of America.”
Needless to say, NASCAR depends on a healthy auto industry and would directly benefit from the bailout through the auto makers support of NASCAR teams and the sanctioning body itself.
At one time, the American auto companies were among the strongest businesses in the world. Somehow, they lost their way. They forgot their purpose and let short sighted vision replace long term planning.
Now, they are reaping what they have sown, but not really. The rules of free enterprise are being set aside. Adam Smithâ€™s economic principles are not being allowed to play out.
As Un-American as it may seem and as many laws of economics as it may violate, it is probably best to rescue these companies, once. Hopefully, they will learn from their mistakes and move forward in a positive way, for all our sakes.
Richard Allen is a member of the National Motorsports Press Association. His weekly column appears in The Mountain Press every Wednesday.
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