At first, I immediately reflected on the microeconomics I had been catching up on for my final over the past few days. It's all well and good to right about "average variable cost" and companies "exiting the industry in the long run," but those are real people who's marginal cost and marginal revenue curves aren't lining up the way they used to.
People like the Arnolds, who opened their Pontiac dealership in 1916, are the real victims of the economic downturn. They really didn't take part in GM's idiotic decision making. They didn't negotiate an unsustainable deal with the union, and they didn't want GM to focus on gas guzzlers while oil prices skyrocketed. They simply tried to sell Pontiacs and make ends meet.
Or so the media and the economy-planning left would have you believe.
There is another family of Pontiac dealers mentioned in the article: the Mikans. Ivan Mikan started selling Pontiacs in the 1920s after trying Chryslers for a while. His grandson, who now runs the dealership, said Pontiac sales have steadily declined recently. But here's where the Mikan's stand out:
"David Mikan, who runs the dealership now, says their sales of Pontiacs have steadily declined: 100 sold last year, compared with twice that in 2000. Although the emphasis has shifted to their Volkswagen line and their used cars, he says, the Mikans have always considered themselves a Pontiac family.
Still, a few days ago he removed all the preening Pontiacs from the front of the dealership and replaced them with shiny Volkswagens. Partly out of anger, he says, and partly because Volkswagen, not Pontiac, is central to the Mikan future.
Back in Houston, there is no Volkswagen fallback. The Arnolds have been hitched to Pontiacs since 1926, the year the car made its debut."At some point, the Mikans looked at the auto-selling situation in their town, and made a decision. They realized that people didn't want Pontiacs as much anymore, for whatever reason. They wanted Volkswagens. Maybe it was the quality of the car, or maybe the prices. In any case, real people decided that Volkswagens were better than Pontiacs, so they bought them instead.
The Arnolds, on the other hand, romanticize selling Pontiacs, like its some sort of family custom.
"Because of Pontiac, Bob Arnold the elder attended the General Motors Institute in Flint, Mich., more than a half-century ago. Because of Pontiac, then, he happened to meet his future wife, Angela, at an institute dance. “Girls got in free,” recalls Ms. Arnold, whose first car was a 1955 Pontiac Star Chief Catalina, turquoise and ivory. Now she drives a 2005 Pontiac Bonneville, candy-apple red."
Here's the problem. I really like Babe 2: Pig in the City. True, it's not as good as the original, but I've been watching Babe movies all my life. I just think that pig is the cutest thing. It's basically my childhood.
Let's say I love Babe so much, that I open a dvd store. I decide to only sell Babe and Babe 2. The thing is, nobody wants to buy Babe or Babe 2. Even though I really really love it.
If the government bails me out to save the "American Babe 2 industry" and all the other businesses it serves, including dvd box manufacturers and pig trainers, I'll keep my store. But the American people already decided they don't want a Babe 2 industry. When the government takes money away from productive businesses through taxation and gives it to unproductive businesses like Babe 2 Stores, it basically says, "People, you don't want Babe 2, but guess what? You're going to buy it anyway with your tax dollars. Let's get the economy going again by producing more things nobody wants, like Babe 2."
Madness, right? Perhaps, an auto company may have to sell its cars at too-high prices because of sales taxes, taxes used to subsidize the production of goods no one wants to buy. Sales taxes probably weren't the downfall of the auto companies, but the point is, once the government tries to get involved in economic planning, everything gets messed up.
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