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Friday's Misguided Economics Question

"A recent study by the Cato Institute, a right-wing think-tank, found that the federal government spent some $92 billion subsidising business in 2006 alone."

It's been a popular line recently, but when did we turn into a socialist country? US car makers are asking for $50 billion in subsidies to be able to meet "tougher" fuel efficiency standards, then turning around and paying lobbyists to try to overturn or delay those standards. Given globalization, I'm at a loss for why I should be funding shittily-run companies. Show me the error in my math here when someone buys a Japanese car that was built in this country,

  • car sale puts money in the pocket of the salesman and the dealer
  • car's fuel efficiency puts money in the pocket of the owner
  • profits after dealer's cut go back to Japan into the coffers of a publicly-traded company anyone in the world can invest in
  • US shareholders of that company get profits in their pocket

Why should we, as a country, be loyal to a company simply because they started here a hundred years ago? They'd move somewhere else tomorrow if it would make them money. That's capitalism. If they're not efficient and can't compete, let them die. That's capitalism. Our economy won't shrivel up. It's not like there aren't Americans who would jump into the business if it were profitable. The car business seems to be an indicator of a country's standing in the world economy; your country sees car companies spring up as you enter the first world. Maybe once you're firmly established in the economy you move out of the car business into jobs that are more knowledge-based, less-cyclical, less dependent on physical labor and less polluting. Pollution, not in the sense of carbon emissions by cars but rather the effects of manufacturing affects the area you're in and that becomes a more expensive proposition as you establish a middle-class who doesn't want to live near smokestacks and electrical wires, so it becomes cheaper to move that elsewhere.

It's just a random thought, based on empirical evidence and not on any hard theory. But look at the trend in worldwide car manufacturers:

  • US, early 20th century
  • Japan, post-WWII
  • Korea, 1980s (I suppose we could throw Yugoslavia in here as well, but let's not)
  • India & China, now

Japan's a little different because much of their success was based around creating efficiencies in the manufacturing process and different management theories (which left British, Italian and French companies as regional players; only US manufacturers had the muscle to compete), but the rest of it is entirely a move to cheaper labor pools.

Video on Flickr

Because, why not?

There Are No New Stories

The ancient Greeks wrote them all. For example:

"Mr. Spitzer’s suspicious financial transactions at North Fork might never have been discovered were it not for a Suspicious Activity Report filed by HSBC about the shell companies linked to Emperor’s Club V.I.P. in October, according to several people with knowledge of the inquiry, who spoke about the investigation on condition of anonymity.

As it turned out, both the North Fork Bank and HSBC had faced inquiries into their lending practices led by Mr. Spitzer when he was New York attorney general. In the case of North Fork, Mr. Spitzer announced a settlement in 2003 requiring it to refund more than $20,000 to dozens of homeowners and cease what he said was its practice of charging homeowners illegal fees."

Good thing you woke them up, Eliot.

Mitt? Primaries Are That-Away

Filed under: Better Late Than Never