PrintDecember 3, 2008
Products that Nobody Wants
Lawmakers plan to stage more inquisitions again this week, scolding Detroit auto executives for everything from product design to travel expenses. Not that the Democrat-controlled Congress intends to let them go bankrupt. That would hurt the unions more than any other campaign contributor, and labor unions just raised $80M to get Obama elected. The UAW PAC alone spent $11.5M this year on Democrat candidates, including a $3M ad campaign for Obama, so congress inevitably will acknowledge those "bribes" with a taxpayer-funded bailout.
But that inevitability won’t let the auto company CEOs avoid more symbolic water-boarding. Torturing auto execs benefits lawmakers in three ways: First, public opinion is against bailouts, so the hearings let lawmakers pretend they are spending this taxpayer money reluctantly, rather than gleefully; Second, since union leaders already have ginned up militant “solidarity” among workers by vilifying management, the hearings let lawmakers obligingly reinforce the union’s portrayal of management as greedy and evil; And finally, lawmakers always want press coverage.
As lawmakers compete for sound bites on the evening newscasts, we almost certainly will hear that tired phrase, "Detroit is building products that nobody wants." That may have been true back when Detroit had no US competition, but foreign challengers over the past few decades forced dramatic changes. Today, Detroit builds products that everybody wants: multiple brands, models, and dealer networks. In fact, Detroit probably will have to reduce the variety of choices it gives consumers in order to gain some competitive efficiency.
Most lawmakers aren't engineering, marketing, manufacturing, or finance experts. And they certainly can't predict what car buyers will want three or four years from now, when these Washington-designed models debut in dealer showrooms. Most lawmakers are lawyers. Lawyers don't produce consumer or durable goods, so they hardly are qualified to act as management consultants to the automotive industry.
Jaded by the congressional grandstanding, Americans actually think it's the lawmakers that produce products that nobody wants. According to the most recent Rasmussen poll, Congress's approval rating has been hovering around 9-12 percent for the past six months. On a ten point scale, congress would get a "1".
Meanwhile, those brilliant lawmakers demand that Detroit curtail production of SUVs, even though the SUV is one of the few products saving America's economy right now, with plants running overtime to meet demand. Recent SUV buyers also are quite happy with those products. For instance, the Ford Expedition gets a consumer rating of 9.1 on a ten-point scale. That's nine times as good as congress's rating.
Busybody lawmakers also pass fuel economy regulations that make full-size family sedans an endangered species, yet the powerful Chrysler 300 sedan also gets a consumer rating of 9.1. What was Congress's rating again?
Sports cars are likely to be the vehicle most despised by our congressional product-marketing wizards. Leftists might paraphrase the Communist Party official in the movie Doctor Zhivago to declare that transporting only two people in an automobile is "unjust". No doubt many lawmakers share that philosophy, but recent buyers of the Chevrolet Corvette love their two-seat sports cars, giving them an average rating of 9.3. Granted, Congress has been getting lots of 9.3 ratings too, but that's on a 100-point scale, not a ten-point scale.
Despite the rise in fuel costs, if a typical family drives 20,000 miles annually, its vehicle expenses are less than $12,000, according to the IRS. That includes purchase or leasing costs, as well as fuel, insurance, maintenance, and all other expenses.
What does the typical American family pay for the "products" that Congress produces? Before the bailout frenzy, Congress was spending at an annual rate of about three trillion dollars. With about 110 million households covering those expenses, each family pays Congress directly or indirectly an average of more than $27,000 per year in taxes and loans. Remember, corporations don't really pay taxes; they just pass the bill on to consumers in the price of their products.
And now that Congress has virtually doubled this year's federal budget with "emergency" spending, they will take an average of about $50,000 per family out of the private economy and redistribute it to their favorite "charities". That might save the jobs of a few wealthy New Yorkers and UAW members, but a lot of productive small businesses could have been started with that money in places like Louisiana or Utah. Or if credit really is our biggest problem, think how much money we withdraw from our local banks to pay taxes. Much of that money could be used instead to fund car loans and mortgages in our local communities.
What products does Congress produce with all that money? Just a century ago, the primary job of Congress was to fund our national defense. But now they belittle our military leaders, including those leaders that ultimately are phenomenally successful. Conversely, just a century ago, government wealth transfer was deemed immoral and unconstitutional. Today, governments do little more than transfer wealth, while skimming a bit off the top to fund their own bureaucracies each time they touch it.
Congress actually gives products to many of its customers, free of charge. More than half of Americans now "receive significant income" from government programs. And more than 40 percent of households now have a negative effective federal income tax rate, mainly though refundable income tax credits. Given that, how can Congress possibly have an approval rating that's less than 40 percent? I certainly would rate Ford as "excellent" if they gave me free cars, gasoline, insurance, and maintenance.
If organizations are to be rebuked for making products that nobody wants, the United States Congress deserves the harshest punishment of all. As the big three auto CEOs deliver their recovery plans to lawmakers, Congress itself is being criticized for having no recovery plan of its own, despite writing a flurry of checks with “insufficient funds”.
Perhaps it’s time for Congress to slash payrolls, sell off unproductive units, and design more efficient products. After all, they’re asking taxpayers for trillions to bail them out. Where’s their austerity plan?
Perhaps it’s time for Congress to slash payrolls, sell off unproductive units, and design more efficient products. After all, they’re asking taxpayers for trillions to bail them out. Where’s their austerity plan?
