People want more cars now. Therefore, that proves that bailing out the car industry was the right thing to do.
Can you say “non-sequitur”?
Yet, that’s the logic in an Associated Press story Tuesday, the main thrust of which is that demand for cars is rising so
fast that Detroit can hardly keep up.
That’s great news, of course. We’d like to see a renaissance in every sector of American manufacturing. That’s really the only thing that will pull us out of the economy’s funk for any amount of time.
But the AP story went on to claim this: “The hiring surge (in Detroit) bolsters the argument of those who supported the federal bailout of General Motors and Chrysler in 2008 and 2009.”
That’s just not true.
For one thing, consumer demand has nothing to do with Detroit’s ability to fulfill it. If consumers need cars, they need cars. Period. They’ll get them from anywhere they can. Consumer demand – absent artificial government intervention – is organic. It happens naturally in a free market.
The likelihood is that the president’s “Cash for Clunkers” program artificially moved auto sales up in time – and that now, demand is starting to recover from that manufactured surge and to bud again spontaneously. Another reason that may be happening: People just haven’t had the money, or the confidence, to buy until now.
The other problem with the AP’s logic is that the bailout wasn’t the only way to preserve the American auto industry. Fact is, a managed bankruptcy might even have worked better – by allowing the companies more legal leeway to cut costs and become leaner and stronger for the future. It might have rescued the industry from the crushing legacy costs of antiquated union contracts and control.
The article seems intent on ginning up a fallacious political argument in favor of heavy-handed government involvement in the private sector – when the more likely lesson is that it’s simply ordinary people, acting in their own interests rather than in the interest of a government or a particular company, who hold the keys to the economy.
Sorry, central planners. It’s free Americans that drive this thing, and always will.