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Now, Detroit

November 18, 2008

In a free market economy there are inevitable ups and downs. Companies vie in the marketplace for market share and some grow big. Eventually, I think, they get too big and inefficient. Maybe too stuck in their ways and unable to react to changing market conditions. Eventually they fail. It’s like yeast in a sugar-water solution: as the yeast grows, bubbles grow, getting bigger until they burst only to be replaced by other bubbles.

That’s what we are seeing in Detroit today. The big three bet the farm on more of the same: more big, gas guzzling SUVs. Market share is falling and labor contracts remain expensive. They’ve had almost 40 years to develop and produce alternative cars–and indeed they have the technology to do so. But it’s Honda with the hydrogen fuel cell car and Toyota with the Prius. Not only does Detroit rely on fossil fuels, they are dinosaurs in their own right.

They do not deserve to be bailed out. The free market is Darwinian: survival of the fittest. (The left is usually all about Darwinism.) If they fail, 100,000 jobs won’t be lost. GM will declare bankruptcy, reorganize and continue to produce cars, just like Delta and Frontier and virtually every airline has declared bankruptcy and continued to fly. Hyundai, Toyota, Mercedes and Honda are doing just fine with their US plants.

Some overpaid union jobs will be lost but that, of course, is really what Obama wants to avoid.

No more bailouts. No more taxpayer dollars wasted, no more government intervention in the free market economy. Last statistic I read was that at least 40% of Americans are adamantly opposed to this. If any of those 40% voted for Obama, too bad for them: they just weren’t paying attention.

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