Defenestrating Thoughts from the Bivouac

In addition to teaching journalists some science and common sense, it seems like they should really teach some history in journalism school.

Let’s take this op-ed from Pulitzer Prize winning columnist Dan Neil titled, “Let’s Nationalize GM.” Basically Neil says that we should do a complete nationalization of the American auto industry.

History clearly tells us that this in a bad idea. Central planning is notoriously inefficient for many reasons; one reason is that you have a handful of out of touch bureaucrats sitting in their ivory tower and unilaterally deciding how to allocate the resources and efforts of hundreds of millions of people.

And that’s an impossible task for someone to do: no one is smart enough to run an entire industry. Central planning caused the collapse of the Soviet Union. The Soviets were unable to figure out seemingly simple things like the how much bread to bake. Why would cars be any easier?

And for fun, let’s go through Neil’s op-ed:

Detroit makes some amazing cars. The Ford F-150 pickup I drove recently flat-out humbles rivals from Toyota or Nissan. Considering that the domestic carmakers are shouldering titanic “legacy” costs, just being competitive in any segment is a signal achievement.

Um… the Big 3 are going out of business from inability to create products people want to buy. Neil may think Detroit makes “amazing cars”, but the market says otherwise.

If you feel the gall of free-market ideology rising, consider that the measures being bruited about as preconditions for a bailout – firing GM’s top management; forcing a bankruptcy-like renegotiation of [labor] contracts with the United Auto Workers, … creating a czar of product development … – are nationalization in all but name.

Sorry, that’s a classic false-dilemma. What about the option of “let them go into bankruptcy“? Neil just provides a few bad options and says, “See mine is better!”.

GM is full of talent and potential. The company spent $8.1 billion on research and development last year, second only to Toyota.

Spending money doesn’t equal talent and potential. More importantly, if the companies fold, the talent doesn’t disappear. Other companies would snatch that talent up quickly. The companies’ designs and intellectual property can be sold on the open market; again, it wouldn’t disappear.

[T]he federal government can sell the company – at a profit – once it’s righted and sailing forward again.