Monday, June 23, 2008

Eat My Voltage

A great article on GM's last-ditch effort to pull itself back from the brink: the Chevy Volt.


Rene said...

IMO, this kind of company-wide drive from the top of an American juggernaut is triggered first and foremost from the impending spectre of failure.

Its the promise of the capitalistic system, and in this case it's a completely good thing. Sink or swim baby, and if you get too heavy then you'd best invent a good flotation device.

Companies that are heavily federally subsidized do not reach this type of sink-or-swim tipping point, and therefore are not forced to innovate to the peak of their capabilities.

I'm speaking specifically about the airlines and banks here. If the US govt would just quit subsidizing failure after failure, then the people in charge of these companies would be forced to operate viable business models, and if they failed to do so then they would fall away and newer, smarter companies would spring up in their places.

For capitalism to work it requires a government willing to do 2 things:

1)let companies fail if they suck
2)break companies up if they become monopolies

we've got a pretty poor track record on those two things lately, and GM is setting a shining example for what can happen if we actually regulate these things the right way.

el ranchero said...

My sentiments exactly. The article made me root for GM, and gave me a little more confidence that the marketplace for cars, at least, is still somewhat how it's supposed to. I was actually thinking while I was reading the article, "GM's current situation is what happens when a big business gets to rest on the last generation's gains (and its own government influence) for too long. It gets slow and stupid because it doesn't have to fight as hard, and eventually a leaner, faster company that's been duking it out in the marketplace with everyone else comes along and knocks it over." It's nature, baby! Sure, GM hasn't enjoyed perhaps the same favoritism that American Airlines and Bank of America have, but it does get a lot of favors with its money, especially when its needs dovetail with Exxon's.

The airline and bank situations are even worse because we're flagrantly subsidizing their risk and privatizing their profit.

But yeah, you're absolutely right. Innovation is hard, and risky, too; nobody does it unless they have to. The government's duty is not to float bloated corporate giants, and at the end of the day it's actually bad for those companies because it allows them to delay innovation, sometimes until it's too late. Rather, the government's job is to keep one company from smothering the market and to protect workers from destitution when their companies fail.