Send a Tweet
Most Popular Choices
Share on Facebook 6 Share on Twitter Printer Friendly Page More Sharing
OpEdNews Op Eds   

Economics 3.141592... Who's to Blame for the Big Three Failure?

By       (Page 1 of 1 pages)   No comments
Become a Premium Member Would you like to know how many people have read this article? Or how reputable the author is? Simply sign up for a Advocate premium membership and you'll automatically see this data on every article. Plus a lot more, too.
Author 12937
Message Dwight Black

If you are wondering, the number is a reference to the infinity of  mathematical Pi.  Because our lives and times and thought streams are not infinite, we eventually have to stop.  However the “butterfly effect” of any economic policy change does not stop just because we do.  Ever heard two people in an economic debate who have two completely different beliefs but you find they are both making agreeable valid points?  First, you need new friends and a better life if you are listening to an economic debate.  Second, the reason is that they might both be right depending on where along the chain of events you would like to stop the reasoning. 


Let us look at a few examples.  Many Americans from both sides of the isle hold disdain for welfare recipients.  What if the government just ended it?  Money will no longer flow into the hands of people who patronize small liquor stores to Wal-Marts around the country. Farmers and textile producers will no longer receive the revenue generated by these consumers.  That will force these producers and distributors to cut staff.  That means even more people who will no longer be able to buy goods.  I mean, welfare is gone.  Many of these newly unemployed actually made enough to buy cars, houses, and an occasional lap dance.  Now you are starting to take a bite out of the consumer base of “hard working middle class Americans.”  And the collapse will continue. 


Now let us apply this ripple effect to how the Detroit Big Three ended up before congress begging for money.  There are a few forces at work here and enough responsibility to go around.  Overall, the encompassing problem is that American business decision makers and our legislators have made policy changes to the delicate economic system as if the effects were contained in a vacuum. 


I remember in the '70s and '80s that Japanese auto reigned king in quality.  One company introduced its first product into the world’s strongest economy in 1957.  The fact that they were allowed to offer a fuel efficient, low priced auto into the system caused ripples.  Until that point, the American auto industry had no competition.  The winner of that local competition just hired more Americans and the accounting remained balanced.  Their wage structure and benefit plans were based around wholly built American products.  Even if the US had wanted to build the exact same car, it would have cost them at least 15 to 20% more.  Some would argue that if you look at the full impact of costs and lost opportunities, it is closer to 50% more.  The US allowing this product, not regulated by the same costs, into the market was irresponsible -- like allowing an invasive species into to lake system. 


Let us look at the pickle the Big Three were in at that time.  If they managed to muscle the very powerful UAW into accepting a huge cut in wages and benefits in order to lower the cost of their current product and/ or retool to meet the new demand for Japanese type products, they would take money way from the consumers who buy their product.  Not a problem for the Japanese manufactures to deal with.  Wage cuts seemingly a bad idea, the other option is to cut quality.  Spend less time on R&D and revamp the marketing strategy instead.  The problem was that many of the design flaws were not caught until after they reached the market.  This developed a product image problem.  The other option was to employ people outside the economy to lower costs and build the new products.  This was ultimately the medium that they settled on.  There was no winning option for the Big Three. 

Also in the '60s, instead of sending our crop of bright but maybe not financially endowed young men to college, the government sent them to die in the rice patties of Vietnam.  Economically, this leads to post high school entities with a smaller consumer pool.  That required them to charge more to cover the expenses.  

The ripple effect continues on infinitely and in all directions.  I mean we haven’t even considered the global ramifications. 


Rate It | View Ratings

Dwight Black Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

It is my hope that the people reading my work would not actually care "About Me". I have an education, a job, and a place to live. I am, for all intents and purposes, as "average" as any American can be, at least in background. It is by my ideas (more...)
Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEdNews Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

SSRIs (Prozac): The Unidentified Marriage Killer

Partisan Politics And Presidential Powers

The New Poor

Economics 3.141592... Who's to Blame for the Big Three Failure?

Credit In The Simplest Terms Possible. I Think

The Good, Bad, And Ugly About Bail Out Fest '08

To View Comments or Join the Conversation: