It’s now becoming clear: The new Administration is developing a radical, anti free-enterprise economic system which will forever change America if not somehow reversed. Specifically, it shifts major decision-making from the marketplace to Washington. It picks “winners” and “losers” and treats each differently. Is this socialism, as some have claimed? Well, not exactly. It’s called central planning or industrial policy.
Washington intends to control many of the major industries in our economy — autos, financial, health care, energy, and education, as starters. It wants to command organizations to do what it wants and then control activities and people to follow the commands. Using the current recession as justification, Washington is undertaking the most extensive power grab in the nation’s history.
For example, consider the auto industry: When the CEO of GM submitted the company’s latest “restructuring plan” to the President and others in Washington, the President simply rejected it, fired the CEO, and put his own man in charge; this man answers to a government task force. The board of directors, elected by the shareowners, seemingly had no input.
The decisions of auto executives, with thousands of years of aggregate experience, are being replaced by a car czar. This czar may ultimately supercede the marketplace as to car models produced, in which plants, and with what fuel ratings, labor rates, executive compensation, management, etc. The list is endless.
By controlling GM this way, Washington will also exert at least partial control over virtually every industry and service in America. The old expression that “As GM goes, so goes the nation” certainly is true today. If certain rules apply to GM, in fairness they would have to apply to every other auto producer. Suppliers to GM would soon have to comply. And, next would be the suppliers to the suppliers, ad infinitum.
How will Washington decide what cars people will be permitted to purchase, at what prices, with what accessories, with what warranties, etc.? And, how could Washington’s judgment involving the various factors of production be more accurate than those from the marketplace? What happens if people wish cars other than those commanded by Washington? And finally, will GM ever earn a profit by producing vehicles as directed by Washington?
So, command and control economics raises the question: Do we Americans honestly cherish freedom — or do we wish to be mere wards of the state?
David R. Dilley is a retired economist living in Pelican Landing. Dilley received his master’s and doctoral degrees from Indiana University. He has taught at Indiana, Pittsburgh and NYU’s Graduate School and retired from U.S. Steel in 1985 as chief economist. Reach Dilley at email@example.com.