Tuesday, June 2, 2009

How Foolish Are We to Stand for Government Motors?

Wayne Root, who ran for VP on the Libertarian ticket points out that every time the government tries to run something, it's driven bankrupt or nearly so: Social Security, Medicare, Amtrak, education (large and mushrooming budgets yielding insignificant improvement). And now it's going to attempt to, with our tax dollars, run GM, allowing large amounts of car costs to go into union pockets instead of into increasing the quality of its vehicle parts and assembly. And we, like sheep, continue in our Obama-induced stupor and say okay to Government Motors. Here's Root's argument, which is an excerpt from his forthcoming book: The Conscience of a Libertarian.

Government Can't Run a Brothel
By Wayne Allyn Root

So we've just put government in control of General Motors? Well that should solve the problem. The same people that have run the American economy into the ground now think they can run an auto company. Has anyone thought this through? Government loses money at virtually everything it does and touches. Virtually every level of government operates at a loss (deficit). Government can't spell, let alone achieve, profitability at anything. Government is the most disastrous and inept failure at everything it does of any organization in the world. It only survives its colossal mismanagement of everything by raising taxes and therefore confiscating more money from the private sector- filled with people who are competent and do know how to run a business and achieve profitability. In other words, government only survives by confiscating money from smart people in the private sector to pay for its mismanagement, waste, corruption and nonstop failure and losses.

Government runs Social Security. It is fast approaching bankruptcy. Government runs Medicare. It is fast approaching bankruptcy. Government runs education. Education runs through tens of billions of dollars each year and yet somehow manages to produce worse results virtually every year (and always demands more as a reward for utter failure). When government took over education, America's children were ranked among the best in the world. Today our children's educational record is among the worst in the industrialized world.

Government took over Amtrak in the same way it took over GM, promising a quick return to profitability. Amtrak bleeds losses every year for the U.S. taxpayer. In 1970 when Amtrak was founded, $300 million was approved by Congress to run it. The government predicted profitability within 5 years. That was 39 years and over $30 billion dollars in losses ago!

Government is promising (again) a quick return to profitability. Yet these are the same government bureaucrats who have produced a deficit of $1.75 trillion per YEAR. These same government bureaucrats have produced a national debt of somewhere between $60 trillion and $100 trillion (depending on how many years out you predict the responsibilities of Social Security and Medicare). Our national debt is now larger than world GDP (every dollar created in the world each year). You actually think these same people (with the track record above) can takeover GM and turn a company that loses billions per year into a profitable company in a short period of time? We've now put the world's most inept and corrupt bureaucrats in charge of GM, and we expect improvement?

But here's the clincher. In my adopted home state of Nevada, prostitution is legal (and always profitable). It is impossible to lose money in the world's oldest profession. The most profitable brothel ever was the infamous Mustang Ranch. The owner earned so many tens of millions of dollars, that he grew fabulously wealthy. But he “forgot” to pay his taxes. He was indicted for tax evasion, escaped to Brazil, and is still today a fugitive from justice. The U.S. government took over the Mustang Ranch. The most successful and profitable brothel in America went bankrupt in one year under government management. That ladies and gentleman, no matter how you feel about brothels, tells you all you need to know about the ability of government to run a business.

One more “small problem” with the government's plans for GM. They are keeping unions in charge. Virtually nothing has changed. The same unions that destroyed GM with bloated salaries, pensions and healthcare for life go on running the workforce (with a few small changes for “show”). Yet the government is also demanding that GM change strategy and focus on building small cars with green technology. Those same smaller cars are the least profitable that can be built. There is very little profit per car. The big gas guzzling cars and trucks actually had the highest profit margin. Yet even these big trucks and SUV's could not pay for the bloated union compensation plan that destroyed GM and Chrysler. Now we have the worst of all worlds- companies run by Obama and his minions- all people with ZERO business experience- demanding that we keep paying unaffordable union wages, while we build small cars with lower profit margins. Are you starting to understand why our country is $100 trillion in national debt? Our country is run by people who couldn't run a lemonade stand. The only thing that Obama and his hand-picked executives are capable of doing successfully is fining or arresting the lemonade stand owner for not getting the proper government licenses.

The moral of the story? Nevada is a state where the constitution bans income taxes and politicians (we limit the time politicians can meet and serve), but welcomes guns in the hands of law-abiding citizens. We have common sense in plentiful supply. Here's my common sense tip of the day: If the federal government can't run a brothel, they certainly can't run GM. The same people responsible for massive deficit and debt, losses, waste and mismanagement on the federal level as far as the eye can see, should not be put in charge of any company. We are in deep trouble.


Anonymous said...


I appreciate you publishing this Wayne Allyn Root article I sent you.

John Lennon said it more succinctly than Root: "Everything the Govt touches turns to shit."

Lord Acton explained why: "Power tends to corrupt, absolute power corrupts absolutely."

The perverse incentives of power lead to bungling bureaucracies, unintended consequences, and self-interested decisions.

Comparatively, free market competition produces products and services of higher quality and lower price.

Dr. Michael R. Edelstein

Anonymous said...

And excuse me, who was running GM before the government takeover? And excuse me, who was running Merrill Lynch, Bear Strearns, TWA etc??

It is unfortunate that what we have in the US is what Ralph Nader calls
"Lemon Socialism"-- whenever the "free market" screws up government rushes in to bail them out...

Marty Nemko said...

The question is in the batting average. Sure, some companies fail. But can you point to one enterprise that the government has taken over that has succeeded, that is, is a worthier investment of our tax dollars than if we had been allowed to keep and invest or spend those dollars ourselves?

Anonymous said...

It is interesting to see - even in the wake of a complete exposure of business 'leaders' in the fiscal sectors as complete frauds, and in the auto sector, of the companies reaping the rewards of decades of bad marketing and design decisions at GM - how the conservative community will bend over backwards to avoid criticizing management.

Government? Step up and take your lumps. Unions? You're the real problem - the government just enables your dysfunction, but you've got the real problem, demanding annual raises.

Management? [crickets chirping.]

I think it's because many libertarians and conservatives want to be businessment when they grow up. And they don't want to admit the truth about what kinds of people succeed in salesmanship and business.

I'll close with my favorite joke of the last year or so:

Q: What is the difference between a car salesman and a technology salesman?

A: The car salesman knows when he's lying.

Marty Nemko said...

Let me be clear that I am not saying that corporate leadership is infallible. None of us are, especially when we're in large bureaucracies, public or private. But given that someone's gotta run an enterprise, I'd bet on the more merit-based, accountability-rich private sector than the government sector.

I believe the best type of entity for pursuing any enterprise is a micro-business: If possible just one person. It that's not possible, two. If that's not possible three or four.

Anonymous said...

I had not known that quote was from Lord Acton - somehow I'd thought it was Jefferson.

I like the entire quote, the last phrase of which is new to me:

"Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."


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