GMAC GEts Another $20B, Govt Takeover Inevitable

One reason the bailout of Chrysler failed 25 years ago is because of the intellectual property monopoly the US auto industry maintains. To build a car in USA, you have to pay into a consortium of auto makers who pay no royalties on auto patents. This is how it works: for engines, brakes, turn signals, windshield wipers, and very many other things, long ago the big automakers agred to pool their patents among themselves, and let each other enjoy them royalty free. Anyone else would have to pay royalties to use common equipment, often government required, in order to build cars in USA. Of course this killed off smaller car makers in USA at the time and pretty much assured there would be no new competitors..

The democrats were looking to raise duties on Japanese cars to protect USA automakers and the Chrysler bailout when the Republicans were swept into power in 1980. These "free market" republicans instituted voluntary restraints instead of duties to suppress the importation of Japanese cars. The Japanese loved the idea. When there are less cars on the market than demand requires, the price of each car goes up So the Japanese make the same amount of money they just ship us fewer cars. Chrysler, Ford, GM and at the time American Motors loved the idea because as Japanese cars prices increased after 1980, the US automakers could raise their price too. US automakers profits rose. The pro-bailout set keeps referring to the "success" of the Chrysler bailout 25 years ago, when in fact is was a disaster for the consumer and only put off a worst disaster today for a light matter of yesteryear. We are told the taxpayer turned a profit. What nonsense! Under the democrats, the government would have gotten the increase... under the republican plan, the Japanese businesses got the increase, under either plan the consumer is screwed, but in government work that constitutes success.

GM got $20 billion more today, and these commentators are astonished no one mentioned it. Well, the game is up... the government will now own the big three automakers, and when government and business is one, the system is called fascism.

There was a fellow who challenged the status quo back at the time of the Chrysler bailout. A hotshot executive who had saved various automakers, John De Lorean, went on his own and developed a new car called the De Lorean. It was of course financially a challenge, but he pulled it off. At the same time Federal agents were busy stringing him along on a complicated financing scheme at which it became clear over time the heart of the deal would be drug smuggling. Federal agents suggested they would bash his daughter's head in if he defended himself, and the jury saw this on tape. In any event De Lorean was acquitted of any charges, but his finances and business was in ruins. This story is widely known and reported, so you can see why business executives go along with whatever a president says when say a Bush or an Obama threatens an executive.

One way to restore the auto industry in the United States would be to open source all of the patents on automobiles. We, the government, now own all of the auto makers, so there is no reason to maintain these patents. Once open sourced, then no one entering the auto business will be at a disadvantage vis a vis the patent protections. And since these businesses are moribund anyway, there is no reason for federal agents to destroy the lives of our best and brightest through entrapment to suppress competition.

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