Obama in Wonderland
Obama in Wonderland. That is the only thing I can think of as I watch the CEOs of Detroit’s automakers beg for money from Congress. I am dumbfounded by how truly bizarre this spectacle is and what it portends for the future.
What if a year ago someone had told you that Nancy Pelosi would be in the business of reviewing the business plans of companies and deciding whether or not they would receive funding? I mean, Nancy Pelosi demanding a business plan? Harry Reid and Barney Frank as well? This is truly nuts!
It makes one wonder if perhaps the financial crisis were actually engineered to force the world of finance to go through federal gatekeepers. Such a strange world would allow the political class to make American business into an extension of political correctness. Want money? Well, first you have to have a labor union. Then you need to show us (Congress) how “green” you are. Your executives can’t make more than we (members of Congress) do. What has your business done about “social justice” lately? Prove to us that you do not have a gender pay gap. And on and on. Looks like the Soviet Politburo.
I mean, this kind of vetting of business for political motives can be the only purpose, because the idea that the political illuminati know how to evaluate a business plan is preposterous. Look at the demands, after all. While the price of oil has dropped to near $40 per barrel, Detroit is being told that they must produce more “green” cars. With the price of gasoline headed back down to $1.50 or less, does anyone seriously think that Americans will change their appetite for large and safe SUVs? If anything, Detroit should stick even closer to producing the type of cars in which they have a competitive advantage: trucks and SUVs. In a sane business environment, Detroit would be abandoning the sedan market altogether. And this is not to say that I think electric cars are a bad idea – I LOVE THE IDEA.
What about those green cars? Electric or otherwise? Well, who ever thought Detroit had a competitive advantage in producing these cars? The only way for Detroit to enjoy a market for such cars would be for Washington to protect the Big Three from competition – both domestic and foreign - in this arena. Not something unthinkable as Democrats would like to protect the UAW above all else.
In a sane business environment nobody would be looking to Detroit to produce disruptive technology. There are other companies, entrepreneurs, and boy geniuses that are better suited to usher in these exciting new products. Detroit’s competency is in producing gasoline powered large vehicles. It is also in lobbying for market restrictions that limit not only imports, but creating artificial barriers for even new domestic entrants (ever looked into what is required to get a car certified to be driven on public roads?).
I know this is hopeless, but in a sane world, our political illuminati would know something about disruptive technologies. They would have read Clayton Christensen’s “The Innovators Dilemma.” Christensen shows clearly in his landmark book that new technology that disrupts and replaces old technology, almost always at a lower cost, with increased efficiency, and greater capability, hardly ever comes from the powers-that-be in any particular industry. And trying to guess just where it will come from is a fool’s game; unless you are in venture capital, in which case you have a say in who will produce these new technologies. Of one thing you can be sure, it will not come from the oversized beasts that ruled the last era of technology.
Automobiles that are not reliant on the internal combustion engine, if the free market were allowed to prevail, would not come from Detroit and its massive bureaucracy. It would come from people and companies that understand these new technologies. Or that can dream up entirely new technologies. Did IBM invent the personal computer? Did AT&T create the Internet? Even though the answer to both of these questions is no, did true innovators that did create these incredible things cause a massive loss of unemployment in the computer and telecom sectors? No, quite the opposite. Thanks to these innovators, I am holding an iPhone in my hand that surfs the Internet wirelessly, makes incredibly cheap phones calls, takes photos, holds my entire collection of music, does all sorts of neat things that help me organize my life, and even provides a source of entertainment (in addition to music) when I’m stuck on a long, miserable flight (provided by another lousy government subsidized and unionized industry).
Unfortunately, it appears to me that the spectacle of the past few days is poised to increase, perhaps to the extreme that comparison to the Soviet Politburo is more than just rhetoric. I hope he proves me wrong, but I fear that this is the world that Obama feels he has a mandate to create. Congress and Bush appear to be doing the groundwork for him.
What if a year ago someone had told you that Nancy Pelosi would be in the business of reviewing the business plans of companies and deciding whether or not they would receive funding? I mean, Nancy Pelosi demanding a business plan? Harry Reid and Barney Frank as well? This is truly nuts!
It makes one wonder if perhaps the financial crisis were actually engineered to force the world of finance to go through federal gatekeepers. Such a strange world would allow the political class to make American business into an extension of political correctness. Want money? Well, first you have to have a labor union. Then you need to show us (Congress) how “green” you are. Your executives can’t make more than we (members of Congress) do. What has your business done about “social justice” lately? Prove to us that you do not have a gender pay gap. And on and on. Looks like the Soviet Politburo.
I mean, this kind of vetting of business for political motives can be the only purpose, because the idea that the political illuminati know how to evaluate a business plan is preposterous. Look at the demands, after all. While the price of oil has dropped to near $40 per barrel, Detroit is being told that they must produce more “green” cars. With the price of gasoline headed back down to $1.50 or less, does anyone seriously think that Americans will change their appetite for large and safe SUVs? If anything, Detroit should stick even closer to producing the type of cars in which they have a competitive advantage: trucks and SUVs. In a sane business environment, Detroit would be abandoning the sedan market altogether. And this is not to say that I think electric cars are a bad idea – I LOVE THE IDEA.
What about those green cars? Electric or otherwise? Well, who ever thought Detroit had a competitive advantage in producing these cars? The only way for Detroit to enjoy a market for such cars would be for Washington to protect the Big Three from competition – both domestic and foreign - in this arena. Not something unthinkable as Democrats would like to protect the UAW above all else.
In a sane business environment nobody would be looking to Detroit to produce disruptive technology. There are other companies, entrepreneurs, and boy geniuses that are better suited to usher in these exciting new products. Detroit’s competency is in producing gasoline powered large vehicles. It is also in lobbying for market restrictions that limit not only imports, but creating artificial barriers for even new domestic entrants (ever looked into what is required to get a car certified to be driven on public roads?).
I know this is hopeless, but in a sane world, our political illuminati would know something about disruptive technologies. They would have read Clayton Christensen’s “The Innovators Dilemma.” Christensen shows clearly in his landmark book that new technology that disrupts and replaces old technology, almost always at a lower cost, with increased efficiency, and greater capability, hardly ever comes from the powers-that-be in any particular industry. And trying to guess just where it will come from is a fool’s game; unless you are in venture capital, in which case you have a say in who will produce these new technologies. Of one thing you can be sure, it will not come from the oversized beasts that ruled the last era of technology.
Automobiles that are not reliant on the internal combustion engine, if the free market were allowed to prevail, would not come from Detroit and its massive bureaucracy. It would come from people and companies that understand these new technologies. Or that can dream up entirely new technologies. Did IBM invent the personal computer? Did AT&T create the Internet? Even though the answer to both of these questions is no, did true innovators that did create these incredible things cause a massive loss of unemployment in the computer and telecom sectors? No, quite the opposite. Thanks to these innovators, I am holding an iPhone in my hand that surfs the Internet wirelessly, makes incredibly cheap phones calls, takes photos, holds my entire collection of music, does all sorts of neat things that help me organize my life, and even provides a source of entertainment (in addition to music) when I’m stuck on a long, miserable flight (provided by another lousy government subsidized and unionized industry).
Unfortunately, it appears to me that the spectacle of the past few days is poised to increase, perhaps to the extreme that comparison to the Soviet Politburo is more than just rhetoric. I hope he proves me wrong, but I fear that this is the world that Obama feels he has a mandate to create. Congress and Bush appear to be doing the groundwork for him.
posted by Iguana at 4:46 PM
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