Products that would not exist without subsidies are products that are not worth having. General Motors announced this week that it will cut 15 percent of its work force. Kevin Williamson writes:
Never mind the moral hazard, the rent-seeking, the cronyism and the favoritism, and all of the inevitable corruption that inevitably accompanies multibillion-dollar sweetheart deals between Big Business and Big Government. Set aside the ethical questions entirely and focus on the mechanics: Businesses such as GM get into trouble not because of one-time events in the wider economic environment, but because they are so weak as businesses that they cannot weather one-time events in the wider economic environment. GM’s sedan business is weak because GM’s sedans are weak: Virtually all of the best-selling sedans in the United States are made by Toyota, Honda, and Nissan. The lower and middle sections of the market are dominated by Asia, and the high end of the market by Europe: Mercedes, Audi, BMW. GM can’t compete with the Honda Civic at its price point or with the Audi A7 at its price point. Consumers like what they like, and they aren’t buying what GM is selling. It isn’t winning in the dino-juice-powered market, in the electric-car market, or in the hybrid market, either: GM is not exactly what you would call a nimble corporation.
So, things are grim for GM.
On the car front, anyway. GM has a much healthier business selling trucks and SUVs, a business that it now will focus its resources on — as it should have done long ago. Why didn’t it do that?
In part, because we — you and me, suckers — paid them not to. We were told that we simply must bail out General Motors during the financial crisis because if we failed to, that would lead to a bloodbath of job losses and cascading business failures. But the job losses were always going to come: Paying people to build things that consumers don’t really want isn’t a sustainable business model. That’s a reality you cannot bail your way out of.
[Kevin D. Williamson, “The Bailouts at Ten: I Told You So,” National Review, November 28]
