Dec 15
Nash Metropolitan – awesome cars, defunct company
It seems that way more automobile manufacturers end up defunct than make it.
Carpe Diem calls it “creative destruction”.
It is an ugly & harsh but ultimately creative destruction yields much good. What has separated us from the rest of the economic world was how willing we were to participate and live with the destructive side of creative business competition.
As we shy away from it, we much more rapidly move towards stasis and decline.
December 15th, 2008 at 3:46 pm
Schumpeter’s “creative destruction” does keep capitalism vigorous. But that does not mean that the society should accept excessive pain of sudden collapse of major players. The whole thrust of government welfare programs is to ease the transition and to avoid boom-and-panic that typified economic swings in the 19th and first half of the 20th century. While saving a specific company should not be a societal goal, neither should it be cold turkey for a million employees of the comp[any and its suppliers. . The stock holders are presumed to be able to fend for themselves. To be sure, it is a delicate balancing act to get the right level of succor and to have a permanent government machine that eases to worst transitions. We already have an economic damping mechanism in place with programs like unemployment insurance, COBRA, food stamps, and a steady flow of economic activity in government programs that re-cycle about 30% of the GDP. Before World War II it was boom-and-bust of raw capitalism that present advocates of raw capitalism find convenient to ignore as they focus on their ideal theories and the present. Although GM may have to go the way of Bethlehem Steel and the New York Central RR, we do not need to dump a million jobs all at once on the economy which is already hurting.
December 15th, 2008 at 4:02 pm
Bankruptcy is not being defunct. There are valid things to try before handing my money to a losing enterprise.