Monday, May 07, 2007

Barack Obama, Central Planner

Barack Obama visited Detroit today with a plan to revive the American automotive industry. While foreign firms invested in fuel efficiency, he said, American companies didn't. Rising to this challenge is how the American auto industry will return with force.

Despite their obvious incentive to increase profits, Obama thinks he should force them to engage in his idea. AP reported that his plan "...would require automakers to invest half of their health care savings into technology to produce those vehicles." I suppose Mr. Obama thinks American automotive firms are too stupid to invest in technology that, by his own admission, will save them. They have to be forced to do what is so clearly (in Obama's eyes) is The One Best Way.

If what he said was true--that the people really want fuel efficient cars and digging into health savings is the best way to get them--then the government doesn't need to force them to do anything. But if Obama is wrong--which would explain why the firms aren't doing these things--then his plan will be disasterous for the very industry he claims to cherish.


Jb1125 said...

The automative firms are currently moving to more fuel efficient vehicles without Obama. He is offering to help them speed up this transition, which is beneficial for the automakers and America, and is providing the necessary assistance.

The full details of his proposal are here:

Obama's economic advisors aren't idiots. Greg Mankiw called them "a great group."

David said...

I don't understand how forcing automakers to spend their money X, Y, and Z way (which is what I commented on) is beneficial to them. The best I can come up with is it gets around a collective action problem, but assuming the patent system still works that's hardly a good argument.

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