Posts Tagged industry

Celebrating the Artificial: General Motors and the Skeletons of American Industry

GM is Alive, Government Motors, bailout, subsidy, taxpayerThe Treasury Department is reportedly feeling pressure from General Motors to “sell the government’s entire stake in the auto maker,” a move that, at the moment, would result in an estimated $15 billion loss for U.S. taxpayers. But such are the realities of dysfunctional private-public-private back-rubbery:

GM executives have grown increasingly frustrated with that ownership, and the stigma of being known as “Government Motors.” Executives have said the U.S.’s shadow is a drag on its reputation and hurts the company’s ability to recruit talent because of pay restrictions.

Last week, I explored these tensions over at Values & Capitalism, critiquing the government’s malinvestment in GM as well as the Democratic National Convention’s overt attempt to romanticize such failures:

“GM is alive, and Osama bin Laden is dead,” said President Obama in his recent speech at the DNC. The crowd responded with resounding cheers, energetically waving signs bearing the same slogan. Now, just a week later, bumper stickers are already primed for your Prius.

The problem is: Osama bin Laden is actually dead, and GM has resurrected into a zombie of sorts, fumbling and stumbling about under the control of autocrats—licking its lips for another round of taxpayer flesh.

Yet of all of the tall tales of glorious GM resurrection, the Obama’s administration’s underlying attitudes about human potential are made most clear by none other than Vice President Joe Biden, whose DNC speech rails against the “Bain way” (i.e. the profitable way), arguing that “the Bain way may bring your firm the highest profits, but it is not the way to lead our country from the highest office.”

And there she blows:

Profitability, we are told, should no longer be a priority of the American people. Further, we are told, it shouldn’t be a priority of the United States government. And this is what garners cheers from the ruling party of our nation.

We now live in a country where government-appointed know-it-alls waste tens of billions of taxpayer dollars on failing companies, only to then be hailed as “defenders of industry.” We now live in an era in which viewing government in terms of “balance sheets and write offs” is demonized; in which waste and inefficiency are downplayed; and in which those who pursue economic growth in a traditional sense are viewed as obstacles to human flourishing.

The truth, of course, is that “the Bain way” secures higher profits by discouraging wasteful behavior and drawing on everything that’s good in humanity. It is this—value creation and the reward of earned success—that makes the market much more than a market, empowering us to attain the American Dream.

The market can only be a source for good if it remains a free market: an arena where contributions come before rewards, not after. And the moment Americans forget this—the moment we join this overt celebration of government-subsidized failure—is the moment we start down the road that invariably makes America like every other entitled, vacuous Western democracy, rather than the exceptional nation we’ve always been.

If this is the contrast the Democratic party wishes to draw—a battle between Artificializer Obama vs. Realistic Romney—so be it. Americans will know what they’re buying, and if the pollsters’ current predictions hold true, we’ll get all the skeletons of “industry” and “economic progress” that we ask for.

To read the full post, click here.

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The Magic of Regression: Following the Leader in Reverse

I recently posted my thoughts on Hans Rosling’s TED Talk, “The Magic of the Washing Machine,” which does a fine job of illustrating how progress can feed progress, and how human ingenuity is at the heart of it.

In my most recent post at Common Sense Concept, I focus on a different phenomenon: our tendency to greet such progress with opposition:

If humans are really the “ultimate resource” as Julian Simon suggested, it’s no wonder that the continuous maximization of human time and freedom will lead us toward ever-increasing output. Yet just as the fruits of industrialization and widespread innovation seem to be evidence of some kind of “magic,” various opposing forces seem intent on demonstrating their own variety of bizarre tricks. Alas, just as society seems to progress, we exhibit a strange tendency toward regress.

Yet not all opposition leads to regress. We should indeed meet each new technological innovation with plenty of skepticism and criticism. In some sense, that’s what being a conservative is all about. So how do we properly discern? How do we know what will truly lead to progress and what will actually push us backwards?

We don’t. At least not always — which is why I think the more important question has to do with who is doing the discerning rather than what we are discerning about. As Thomas Sowell says, and as I quote quite frequently, “The most basic question is not what is best, but who shall decide what is best.”

Here’s more from the post:

We will always have error, and we will always have disagreement, particularly in the realm of progress. But when we as individuals truly screw up, the consequences come quickly. When disruption comes, we humans are pretty good at responding and adapting. Nobody likes to look stupid and nobody prefers to be on the “wrong side of progress.” In a society guided by self-interest a la Adam Smith, the invisible hand typically spanks us when we need it, and progress gets back on track accordingly.

So what happens when the central planners mess up? What happens when lofty bureaucrats and paper-pushers start making decisions about what light bulbs we use, what toilets we flush, and how much salt goes in our French fries?

An inescapable, large-scale game of Read the rest of this entry »

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Monopolies and Competition: Mom! Dad! AT&T’s Not Sharing!

AT&T, T-Mobile, cell phone, acquisition, monopoly, competitionIn my most recent post at Ethika Politika, I comment on AT&T’s recent plans to acquire T-Mobile, a move that has garnered cries of “monopoly!” (or “duopoly!”) from all sides.

But although many see AT&T’s actions as “anti-competitive” in nature, I see no such thing. From where I stand, the acquisition has great potential to improve the company’s output, which could indeed benefit consumers and invigorate competition in the industry:

With a newly expanded network, AT&T could greatly improve its ability to expand service to rural areas. Due to increased economies of scale, it is likely that prices could decrease across the board. Additionally, although critics claim that the tightening of the market will have a negative impact on innovation, many believe it will raise the stakes (“mono y mono!”), leading to improvements on any number of company weak spots, from customer service to overall quality of service.

Yet whether the deal will be good or bad for (anyone’s) business is secondary; such matters remain debatable. The core issue, as I see it, rests in the mindset of those who adamantly oppose the deal on limited evidence, particularly those trying to prohibit it from happening altogether.

As I argue, the problems with such a mindset can be broken into three main areas: (1) a fear of competition itself, (2) a misunderstanding of the company-consumer relationship, and (3) a corresponding pessimism and all-around static view of human ingenuity and potential.

I expound on each, but regarding the third (and most important), here’s an excerpt:

Do we really believe that markets are that unmovable, or that we as innovators, explorers, and dreamers do not have what it takes to meet whatever challenges and needs may arise? Are we really so short-sighted that we Read the rest of this entry »

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The Magic of Industrialization: Washing Machines, Productivity, and the Gospel

Hans Rosling recently gave a TED talk on the immense productivity that has come with industrialization (HT). To demonstrate such benefits, Rosling centers his discussion around the washing machine, a tool most Westerners simply take for granted.

Watch the video here:

Although Rosling puts significant emphasis on the silliness and hypocrisy that permeates the green movement, he concludes his talk by pointing back to the productivity factor. When products assume tasks for us — particularly labor- and time-intensive tasks — we are free to pursue other endeavors.

In the case of Rosling’s mother, the washing machine gave her time to go to the library, teach herself English, and inspire a love for scholarship in her son. Such stories should prompt all of us to think critically about Read the rest of this entry »

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Opting for the Artificial: “Just Do Something!”

Today at Ethika Politika I talk about the difference between artificial security and authentic struggle. As individuals, families, and communities, what is at stake?

Here’s a tidbit from the article:

We all want security and we want it now. It doesn’t matter if real value is being produced or if efficiency is being maximized. It doesn’t matter if a price floor is set, a dying industry is being propped up, or our neighbors are being forced to pay for it. “Just stop the bleeding,” they say.

We all want some kind of assurance – some tangible, visible, immediate sign – that everything will be okay. Thus, we are usually content if getting that assurance means settling for the artificial.

I center much of my discussion around Frédéric Bastiat’s essay, “What Is Seen and What Is Not Seen.” If you are familiar with the now-famous Broken Window Fallacy, it originates in the same place.

Bastiat talks about “man’s necessarily painful evolution” from ignorance to foresight — a struggle that eventually leads to authentic prosperity. Economics aside, what do we sacrifice when we cower from such a struggle?

To read my answer, check out the full article.

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Business as Philanthropy: Gates, Buffett, and Transformative Change

Bill GatesBill Gates and Warren Buffett recently pledged to join 40 of America’s wealthiest people in donating at least half of their riches to charity. For Gates and Buffett alone, such a pledge will translate into at least $115 billion in charity.

This sounds wonderful on the surface, but philanthropist Kimberly O. Dennis is a bit skeptical. In last week’s Wall Street Journal, Dennis argued that “the wealthy may help humanity more as businessmen and women than as philanthropists.”

As Dennis explains:

What are the chances, after all, that the two forces behind the Giving Pledge will contribute anywhere near as much to the betterment of society through their charity as they have through their business pursuits? In building Microsoft, Bill Gates changed the way the world creates and shares knowledge. Warren Buffett’s investments have birthed and grown innumerable profitable enterprises, making capital markets work more efficiently and enriching many in the process.

In the end, Dennis’ criticism seems to serve as a simple reminder of which approach is most promising when it comes to bringing about transformative change.

While businesses may do more for the public good than they’re given credit for, philanthropies may do less. Think about it for a moment: Can you point to a single charitable accomplishment that has been as transformative as, say, the cell phone or the birth-control pill?

On this last question there is bound to be disagreement, particularly because we all view value differently. For one person the birth control pill is extremely important. For another, feeding one hungry mouth is Read the rest of this entry »

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Culinary Luddites: The Historical Distortions of 21st-Century Food Faith

Hot dogs

For many culinary Luddites, hot dogs are the ultimate blasphemy.

Rachel Laudan has a great post over at Utne Reader called “In Praise of Fast Food,” which is actually an excerpt from the book The Gastronomica Reader. I came across the article via Nick Schulz over at the Enterprise Blog.

In the article, Laudan criticizes what she calls “culinary Luddism” — a creative spin on the term used to describe anti-industrialists in 19th-century Britain.

Where the original Luddites had an irrational fear of free trade and technological advancement, the new “culinary Luddites” have an irrational fear of processed and preserved foods.

As Laudan explains:

Modern, fast, processed food is a disaster. That, at least, is the message conveyed by newspapers and magazines, on television programs, and in cookbooks. It is a mark of sophistication to bemoan the steel roller mill and supermarket bread while yearning for stone-ground flour and brick ovens; to seek out heirloom apples while despising modern tomatoes; to be hostile to agronomists who develop high-yielding crops and to home economists who invent recipes for General Mills.

The strange part is that Laudan describes her culinary background as being rooted in the very principles of such anti-industrialization. Why then does she depart from her Luddite collegues?

Culinary Luddism has come to involve more than just taste, however; it has also presented itself as a moral and political crusade — and it is here that I begin to back off. The reason is not far to seek: because I am a historian.

Wait a minute. Isn’t “history” what this is all about? Aren’t we supposed to hearken back to the good old days when everyone knew how to Read the rest of this entry »

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David Letterman Meets the Tea Party: Are You Satisfied with a Life on Welfare?

A few weeks ago, I was tickled by watching Pamela Stout appear on David Letterman.

Stout is the president of the Sandpoint Idaho Tea Party Patriots, before which she was a homemaker, a business owner, and a social worker for low-income housing residents. Like many in the Tea Party movement, Stout was never very politically active, but has since been aroused by out-of-control spending.

When Letterman asks her to explain why she thinks things are getting worse in this country, she replies with this:

I think [it’s] the fact that we demonize business… We need to give [individual responsibility] back to people. We need to give them a sense that America is a great place to live and that you can succeed. To be satisfied living on welfare and in public housing, to me that’s sad. I want people to believe that they can do better.

This is what I like about the Tea Party movement. It is so varied and so disorganized, and there is plenty not to like, but Stout represents the Read the rest of this entry »

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