Posted by
Andrews on Friday, June 05, 2009 2:32:41 PM
In "
Bureaucratic Management" and "
Misunderstanding Profits" I argued that even when a for-profit enterprise is run by the government, because of political meddling it inevitably takes on the characteristics of a bureaucratic organization. Those features, notably the preference for avoiding blame over taking risks and receiving credit, tend to cause a decline in performance, undermine efforts to improve efficiency, and generally destroy all the benefits the free market brings.
And today the
WSJ confirms that impression with a tale of how Barney Frank intervened to keep open a GM distribution center slated for closure. It sounds like an innocuous act for a politician, fighting for his district, but it is a harbinger of something bad. Think of it this way. You run a business. you need to make hard decisions to cut costs and increase profits. Do you want to have those decisions countermanded by 535 regional legislators? What chance would you have of cutting any waste if you had to have every decision vetted by congress?
That is the fate of government run enterprises, be they the postal service, the army or GM. And while the graft and waste in the army may be worthwhile due tot he many other benefits the army brings, they certainly are not worthwhile when the government runs GM, as we know a car company can be profitably run by private enterprise. So why should we accept a tax payer funded patronage machine, when a private individual will supply us with cars, much more cheaply, and without taxpayer support?
I suppose for politicians the answer is to keep UAW support, but for the rest of us, I can't think of a single justification.