To disagree with Dave Ramsey on GM
I love Dave Ramsey’s daily radio program, though naturally I get to listen to it only occasionally. If you do not yet listen to Dave (as he asks to be called), why, I would recommend his show most heartily to you.
Yesterday, Dave broadcast half an hour on the federal bailout of GM. Listening to my car radio at the time, without a cell phone, I was unable to phone in until it was too late, but Dave invites e-mails and I did send him one on the topic later. For readers whom this sort of thing interests, the e-mail follows.
Dear Dave:
Nearly everything you and many of your listeners have said about union greed and management turpitude is probably true, but you and these listeners may be missing the main point in the GM fiasco.
Historically, the U.S. grew from an agrarian backwater in 1816 to become the mightiest industrial power the world had ever seen by 1939 under a general system of stiff tariff protection, averaging about 40 percent on all imports over the lengthy era in question. This is no abstract theory but rather our nation’s actual experience.
Free-trade ideology has instead ruled the U.S. since World War II. Free trade seemed a very good idea at the time and, like you, I used to be strongly for it; but I am not oblivious to the burden of accumulating experience. I have changed my mind and respectfully suggest that you might do so, too. The nation is deindustrializing. GM is bankrupt because our Congress has turned its back on the longstanding, empirically extremely successful American System of Alexander Hamilton’s tariffs. When the Panic of 2008 struck, that was the final blow that broke GM’s dam, so to speak; but it was never what fatally weakened the dam in the first place, was it?
You have mentioned Ross Perot’s service on GM’s board. Well, Mr. Perot has reminded us that we want to remain a country that makes things. Mr. Perot is right. We Americans have been headed in the wrong direction on trade. The time has come for us to re-evaluate, to remember our own history, and moderately to correct our disastrous anti-industrial course.
This means, not shutting imports out, but putting American manufacturers first—not because American manufacturers metaphysically deserved special treatment but rather merely because they are ours. We ought to be no more neutral between Toyota and GM than between Japanese and American citizens. (Advisedly, GM no longer manufactures solely in the United States, and this must be taken into account, but is even this not an artifact of our own, unwise trade policy?)
We ought to begin by adjusting our tax code to kill the structural advantage imports often currently enjoy but we ought to go further than merely this. It is time to refill the Treasury, rather than by the perpetual increase of income taxes, by means of an honest, traditional, straightforward American tariff.
The federal bailout naturally is shameful, but is it not preferable to our not having an auto industry any longer? In any event the bailout ought to be kept in perspective. The GM bailout represents less than 1 percent of the total 2008-09 federal bailout. Less than 1 percent! Most of the rest seems to have gone to irresponsible but politically better connected financial institutions, especially including the same big banks that helped to get us into this mess in the first place, as you yourself have so ably chronicled. In some media venues it seems that GM is targeted with 99 percent of the criticism. The UAW should not be getting taxpayer money in principle but, in practice, something is out of balance here. If it is federal imprudence that has destroyed GM then, on balance, some awkward federal action to save GM is not wholly out of line.
There is much, much more to say on the topic but one must keep the e-mail to some semblance of brevity, so let me cut it short here. My family and I love your show. Thanks for all that you do.
Howard
June 4th, 2009 at 9:50 am
“The UAW should not be getting taxpayer money in principle….”
The UAW should not be getting taxpayer money at all.