Our anti-business policies are starting to catch up with us:
Toyota Takes Over?
Yesterday, news that Toyota sold more cars and trucks than General Motors for the first time in the January-March quarter stunned Americans. With Americans buying more cars and trucks than anyone else, it takes some time for the shock to sink in. Our great General Motors has been pushed into second place by a foreign car maker. What would our fathers have thought?
This is one result of globalization and world-wide competition.In the old days, of the British (1888 to 1914) and American (1945 to 1989) hegemony, most high value added goods were manufactured in the industrialized countries and sold to the rest of the world at great profit. Trades unions in the so-called developed “Western” world exerted their great political power of a “job franchise” to seize massive benefits for their employees, particularly guaranteed pensions. These added greatly to corporate overhead. These same trade unions also used their power to resist the advent of technology in favor of job protection. This kept production costs high. In addition, high-spending governments increasingly passed the burden of their social policies to the corporate sector.
Due to increasing competition from foreign owned companies, American auto producers were unable to pass on the massive financial burden — of increased worker benefits and government obligations — to customers. Instead, they cut back on quality, including design. Soon, they began to lose market share, even domestically, to foreign competitors. With the collapse of Communism in the late 1980s, a new wave of globalization hit the world. This time, millions of people, who worked extremely hard for a fraction of Western wages, entered the producer market. They were often financed by Western capital. Much of the old Western world has been slow to meet this new competitive challenge, by deep restructuring. Germany is one example of a Western country that has accepted much of the political agony of some deep restructuring. In February of this year, Germany displaced America as the world’s largest exporter. More recently, in March, China pushed America into third place.
Today’s announcement of Toyota displacing General Motors as the leading auto maker, is another vivid example of the massive erosion, even of our American domestic markets, by foreign competition. It should serve as a major wake-up call to Congress to reduce government regulation and to encourage the major restructuring of our corporate and government practices. It even begs the question of whether America is currently prepared for continued globalization.
We believe that America will adapt to the new globalization, but it will take time. In the present dire circumstances, the prospect of a Democratic President does not bode well in the short-term.We continue to urge those of our readers who hold equities, to increase their emphasis on overseas allocations.
Not that GM is any paragon of brilliance, but what is this - Atlas Shrugged?
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