This morning on MSNBC, Joe, Mika, Pat, and Willie were denouncing foreign cars and bemoaning the news that Chrysler was closing all its auto plants for a month. But what are the alternatives? Keep producing rattletraps that no one wants to buy at current prices, or be subsidized to do so. Either the firm is wasting what little money it has left, or it is wasting other people’s money coercively obtained. Neither is a good thing at any time, let alone in a depression.
By the way, I have the answer to the Medium Three’s problems: cut prices until the market clears. Chrysler, try 75% as a start. A $20,000 Dodge might be attractive at $5,000, and the whole warranty question would be much less important. Society would benefit from cheap cars, too. Once the inventory is gone, you can try to reorganize in a rational fashion, and maybe even survive. Or not. Perhaps better minds will make better use of those resources. But in any case, there would be less wealth destruction.
But what becomes of the featherbedding, $80,000 union members, the Toyotaphobes would ask? Well, what becomes of any of us in a Federal Reserve depression? We get poorer, we try to learn why, and we do our best. But if the multi-millionaire central planners want to make personal donation to the UAW health and welfare fund, feel free. Just don’t tax the single mother working two jobs to do so.
7:58 am on December 18, 2008
