Friday, December 05, 2008

Nader Should Rejoice

Tibor R. Machan

Ever since I became aware of American politics, way back in the 19060s, I kept hearing from Ralph Nader, the so called consumer advocate--who appointed him that I don’t know--that corporations are our major problem in this country. In particular, Nader had ranted and raved about how powerful corporations are, how invincible they have become, and how this hurts us all.

Well, it looks like some of the biggest corporations aren’t actually that invincible and, to tell the whole truth, they have never been. Over the many years of corporate commerce in America alone, hundreds have gone belly up--most notably Montgomery Ward sticks out in my memory! Even Sears and Roebuck was near demise, and K-Mart is nearly always on the brink.

But in our day it is the three huge, politically protected American automakers that are verging on going kaput. They ought to have a long time ago but the federal government has protected them from foreign--and even potential domestic--competition. Vis-a-vis the foreign companies they did this mostly by way of tariffs and various irrational requirements imposed on them. As to potential domestic rivals, just check out the movie Tucker to get an accessible picture of how the Big Three behave when their dominance is threatened in the market place!

I was teaching for a year or so in Switzerland in the early 1980s and at one point ran across a very nice Saab at a used car dealer in Lugano and inquired about buying it and bringing it back to the USA with me. I was quickly apprised of the fact that this would be an extraordinarily difficult thing to do because the US government requires all cars brought into the country to meet a bunch of standards that successfully manage to remove competition from the market place and leave the Big Three relatively protected. And it worked for a while, at least until the Big Three stopped having the clout in Washington that it used to.

By the way, automakers are by no means the only ones who play so dirty. Big agricultural firms are notorious for managing to get protection erected against foreigners--indeed, this is a real embarrassment to the American government which keeps giving lip service to free trade for everyone else but some of its own special interest groups. Even television networks had such protection against potential competitors until cable finally broke their oligopoly. For a long time if you wanted to start a new TV station, you had to go to Washington and prove to the Federal Communications Commission that you would not take any viewers away from existing stations, most of which were owned--directly or indirectly--by the three Big Networks. Can you imagine this? You were disallowed from going into business if some existing firm producing what you planned to produce could show that you might lure some of its customers away? How would this work with restaurants, movie theaters, grocery stores? What would competition amount to?

Now that finally some reality has descended upon the Big Three automakers--aside from some troubles not related to their lingering dominance--I want to see Ralph Nader appearing all over the tube hailing the fact. Finally his wish is coming true--big corporations are going bust, just he has wanted them to do for decades.

But suddenly I sense a deafening silence from Mr. Nader. I guess he has realized that big corporations are actually not just a few fat cat executives--who are easy to demonize--but thousands of people who work in various capacities that result in the production of the cars made by the Big Three. And to wish for the demise of the Big Three isn’t merely to wish ill on the suits in Detroit but also on all the workers who have benefitted from protectionism, from many years of keeping foreign competitors away or making it very tough for them to enter the domestic market.

What is needed is a completely depoliticized economy, one in which, like referees at a game, government does nothing but make sure that everyone plays by the rules--respects private property rights, the integrity of contracts, etc. But instead what governments at all levels tend to do is both play referee and enter the game, bet on the teams, console the looser, heal the injured, sell players their uniforms, you name it!

And they say our current economic mess is the result of free market fundamentalism. What a crock!

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