Friday, May 29, 2009

The Slow Creep of Socialism, Starting With GM

The federal government just announced it will own about 70% of GM. For all intents and purposes, that's nationalization. GM will be run by the federal government. Now, GM is dependent upon all sorts of resources. Suppose, to get GM back on its feet, the bureaucrat in charge decides GM needs to sell cheaper cars. What is a good way to get cheaper cars? Cheaper materials. If GM cannot get steel for the price desired, what will it do? Since it a government company, it can rather insist on lower prices for steel. Perhaps threaten. Or perhaps find a steel company and nationalize it so that it can make steel at the cheaper price (how can it make steel at a cheeper price? subsidies, of course), or even open up its own steel company to make steel at subsidized prices, which, being cheaper, will drop the price of steel and drive out competitors, creating a government monopoly on steel (which is essentially nationalization of the industry). The government would then be able to determine who gets steel and who does not. But now, to cut the price of steel, we need cheaper iron and coal . . . you see where this is going?
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