GM/DC

Just in case you missed cartoonist Ward Sutton’s hilarious rendering of the General Motors bailout in last Sunday’s NYT, “GM/DC: Back in the Black,” here’s the link.

And in case that whets your appetite for the old school video of AC/DC’s original . . .

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3 Responses to “GM/DC”

  1. Richard Says:

    So has GM become a government jobs-creation program? Or is Obama finally done breaking windows?

    The epic saga continues…

  2. Ranjit Says:

    I think there may be a broken-windows-fallacy fallacy, in which everything reminds one of the broken-windows fallacy.

    (Those unfamiliar with said fallacy can consult the infallible Wikipedia:
    http://en.wikipedia.org/wiki/Parable_of_the_broken_window .)

    In GM’s case, the window seems to have already been very much broken. I’m not a fan of the GM bailout myself, but I think the bailout is more a decision to replace the window (yes, it might be better to let resources flow elsewhere and chalk that window up to ‘creative destruction’) than a case of destroying productive resources in order to save them.

  3. Richard Says:

    Replace the window? What do you mean? Note that the broken-window-fallacy is a parable of the fallacy of avoiding what is not seen. What is not seen is that the resources to bail out GM must come from somewhere. If the government taxes, they obviously come from taxpayers. If the government borrows, then it must crowd out other borrowers; if the interest rate is forced down through money expansion, then the price of capital goods and labor purchased with the funds borrowed to bailout GM must rise or at least fall more slowly in order to signal the now greater scarcity of these resources. If the government simply creates money, then there will be price inflation, relative to what prices would have been without the government creating money. There’s no way around it. The government bails out GM–it takes the resources from somewhere–and these others are denied the utility of their efforts. This is breaking windows precisely because everyone sees that GM is still around, and “thank God!” they shout, “thank God for our glorious State!” but they do not notice that other productive endeavors must see their wealth siphoned off to feed GM.

    It’s obvious why GM failed. Their labor costs were too high. They made crappy automobiles relative to the competition. The company was submitted to the profit-and-loss test of the market–and it failed. Bailing out GM is the equivalent of you giving your worst-performing student a 50 point bonus because it will seemingly make everybody happy.

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