Posted by
Always To The Right on Tuesday, January 13, 2009 3:07:07 PM
Ford separated itself from the other two major American carmakers by
refusing to take part in the federal bailout of the industry from the
White House and Congress. Instead, they hoped to build a stronger
customer base by standing on their own two feet and providing better
product. Has it worked? Yes and no.
While Ford has increased market share and built sales, the government
bailout will wind up subsidizing their competitors and damaging their
business
Ford did more than just offer credit. They have improved their
product, introduced cutting-edge technology, and built the kind of
efficient vehicles the incoming Obama administration wants. The
pricing is still not as competitive as it needs to get against Toyota
and Honda, but Ford has moved in all the right directions — and they
have built buzz in the car industry which they hope to convert to
better sales.
And after doing all of that, the government plans to restore the credit of the two companies who have not
succeeded in improving their product or their sales. This is what is
wrong with government bailouts of private enterprise at their core.
They subsidize failure and penalize success. The government will wind
up distorting this market just as surely as they did the housing and
lending markets, pushing Ford to the side as GM and Chrysler get a head
start on their domestic competition.
Instead of picking winners and losers, and of burdening
manufacturers and other markets with social-political engineering like
CAFE standards, Congress should butt out and let private enterprise
fend for itself. Only when the Congress ex machina ceases to
exist will the stakeholders in the auto industry — management, labor,
and suppliers — start negotiating in earnest to rescue their own
pocketbooks. Now, though, that healthy process ends up being a
“competitive disadvantage” to subsidized competition.