President Bush’s Eulogy for Capitalism
By Art Carden • Sunday December 21, 2008 6:24 AM PDT • 2 Comments
I got this email yesterday morning from my former colleague Mark McMahon, a Rhodes legend who retired after my first year here and a wonderful mentor:
I finally figured out what Bush is up to!
I just couldn’t see how he could praise capitalism as he did in his recent speech on the benefits and virtues of markets historically while doing so many things to hinder the work of markets.
After the bailout of the UAW and inefficient, non-innovative auto firms, it’s now clear. Like Mark Antony, he came to bury capitalism, not to praise it!
In related news, a planned Toyota plant near Tupelo, MS, has delayed the beginnings of its operations. This hasn’t been mentioned in any of the news reports I’ve seen, but it’s a fair bet that they would be proceeding more rapidly if the government weren’t propping up inefficient competitors.
Cross-Posted at Division of Labour.
Tags: Bailouts, Business, Economics, Labor, Nationalization, Presidential Power 
Toyota is likely going to post a loss for this quarter and the next few quarters, at a minimum. The downturn took them completely by surprise and they’re still in reaction mode rather than pre-emption mode. They’ve instituted silly corporate name-game cost cutting initiatives (such as “GAME ON”– Gain Advantage, Maximize Efficiencies, Overlook Nothing) all while group vice presidents and other top executives continue to fly first-class to Japan for pre-pre-meetings at a cost to the company of $15,000 per trip.
They likely are slowing the rollout of the Mississippi plant because they have way too much capacity, not necessarily because “competitors” are getting bailouts and they aren’t. Toyota is also well aware that the reason they have a cost advantage over the Big Three is because they have a smaller pension/legacy benefits roll... open a new plant that you don’t need right now, and you further compound your current and future costs problems. Toyota actually recently came out in favor of the bailouts, because they’re worried about Chery and Tata occupying abandoned GM facilities and REALLY providing competition.
Prior to the downturn, Toyota was rapidly expanding capacity in preparation for becoming number one in the marketplace and absorbing larger and larger amounts of market share. It wasn’t long ago (a few months) that management was still convinced that this downturn would be an opportunity for them to take up GM’s marketshare as the company imploded... but that’s changed because Toyota has learned that GM isn’t selling any cars in this environment, but neither are they.
The new plant in Mississippi was to help build Priuses, I believe. There was a time when dealers were getting $7,500 over sticker for Priuses in public auctions. This time was in June-August when oil hit a peak. Now, Toyota is offering $750 dealer-cash on Priuses to help push them out the door.
Toyota has thousands of units of inventory sitting idle at the port of Long Beach in CA... I don’t think they’ll be expanding their production anytime soon.
Taylor | Dec 21, 2008 | Reply
Vietnam War, “We had to destroy the city to save it”.
Independent Accountant | Dec 21, 2008 | Reply