Friday, May 22, 2009

There's a good reason why the Detroit automakers are failing

Harvard economics professor Greg Mankiw is car shopping and has the following thoughts on the Detroit automakers:
I got a copy of the Consumer Reports auto issue (April 2009).

Page 15 was particularly enlightening. There, in their "Automakers report cards," Consumers Union summarized their findings for each of fifteen major car companies.

Dead last was Chrysler. CU recommended zero percent of the Chrysler vehicles they tested. That's right—zero. Second to last was General Motors. CU recommended 17 percent of GM models. By contrast, most other companies had half or more of their models get the thumbs up. Honda was the top ranked brand; CU recommended 95 percent of its models.

Is it any surprise that Chrysler and GM are now in the process of going out of business? From the perspective of the Consumer Reports advice, it looks like their business model was to count on the ignorance of the buying public about the quality of their products. Their bankruptcy should perhaps be viewed as a success of the market system.
I subscribe to Consumer Reports, and I had a similar thought when I read that issue, but didn't think to blog about it. Here's a scan I made of page 15. Ford is fourth from the bottom. Click on the image to see a full-sized version:

Why are we spending billions of taxpayer dollars to bail out these underperforming automakers again? Oh yeah, unions vote Democratic.

Monday, May 11, 2009

It's time to repeal the Patriot Act

The Patriot Act can take away American citizens' constitutional rights.

Friday, May 8, 2009

Democrats are hurting the poor

The public school monopoly keeps millions of the inner-city poor trapped in inter-generational poverty, because they can't get a decent education. The Democratic Party opposes systemic changes to this failing system.

Monday, May 4, 2009

The American vs. French economy

A lot of people on the far left are almost filled with glee claiming that American-style capitalism has failed. They leave out a few facts. First, this is just the downside of the business cycle. Our economy will be back to normal before you know it. Second, it was a quasi-governmental agency, the Federal Reserve, that is primarily responsible for the housing bubble, and thus the housing bust. Third, even in this downturn Europe's economy is doing worse than ours.

The benefit of the American economic system is that it produces greater economic growth (and thus greater overall wealth) in the long run, but the trade-off is that you get greater economic disparity.

Note: In the video, she claims that "the American way makes everyone better off." This overstates the case. The American way makes most people better off. In general, Americans are better off in the middle and top of the economic ladder, but worse off at the bottom.