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Why We May Be Bailing Out Chrysler Again

October 3, 2012, 2:13 pm

I work in a small, four-story suburban office building.  I have seen our fire drills and can look out at our parking lot, and I would be surprised if there are 200 people in the building.    A few months ago some division of Chrysler moved in and took a bunch of the space.   A lot still remains empty (which is why I am here -- cheap!)

The Chrysler folks put a sign downstairs a few days ago saying that they would be hosting a luncheon for the building.  Great, I thought, a free hot dog and some fruit salad.  Imagine my shock when I saw this when I arrived today:

Chrysler sent three full semi-trailers, one of cars and two of convention-type booths and displays, plus a whole crew of people to set this up, all for a lunch in our building with less than 200 people.  I thought maybe that we were just getting a preview of a larger public event, but I am looking out my window now and they are tearing down again.  Crazy.

One thing that even many libertarians get wrong:  Wasting money is not unique to government entities.  Private and public entities can become senescent, and grow bureaucracies that lose focus on what they are supposed to be doing.  The difference between the private and the pubic sphere, though, is that for private companies, markets eventually enforce discipline (either forcing change or killing off the bloated entity).   There is no similar mechanism for state agencies short of perhaps absolute bankruptcy, and Greece is proving even that is not enough to force change.

Of course, when the government gives large private entities with political pull special protections and bailouts, then no such accountability is enforced.  The same people are operating the company with the same false assumptions and unlearned lessons.

Tags: , , , , ,
Category: The Corporate State
  • FormerCreative

    I got your "pubic sphere" right here. ;)
    (4th paragraph)

  • http://twitter.com/tjic tjic

    > One thing that even many libertarians get wrong: Wasting money is not unique to government entities.

    I make this point (along with dozens of others) in the libertarian science fiction novel I'm working on now. One of the villains is an entrepreneur who can't bring himself to cut costs. This puts him in tough financial straits, which in turn...

    Well.

    Read the book (when it comes out!)

    http://morlockpublishing.com

  • LarryGross

    hmmm... don't they get to write that off as a business expense? :-)

  • http://www.facebook.com/matthew.slyfield Matthew Slyfield

    Will it be available from Amazon for the Kindle?

  • Frank Waleczak

    Ok, what I want to know, was how was the lunch??

  • John Moore

    Indeed, Big organizations, government or not, are subject to a number of pathologies. Government is usually worse, since it has no competition and the rational ignorance of voters allows it to get away with a lot. A third case is non-profits, which also often go off the rails (and, by O'Sullivan's 2nd law, normally end up being left win).

    BTW, Warren, just what is the government doing to the street in front of your office? It's an favorite short-cut if mine, except it's been blocked for quite a while. Based on the amount of equipment and dirt in the nearby Walmart parking lot, they seem to be tunneling to China. I'm curious.

  • James T
  • LTMG

    Chrysler was successful. In your post you clearly mentioned the good public relations and marketing deed that Chrysler did. Regardless of your objections you trumpeted Chrylser's positive community action. How many of the other building tenants did something similar? Nothing like the power of word of mouth advertising.

  • dagoof

    Good post here.

    I've thought the same thing for a long time.

    The amount of money spent by corporations on advertising and associated stuff like this baffles me. I'm no expert on the business world, but I'm sure it's promoted by a tax loophole or some other type of unbalance in the real world marketplace.

  • DensityDuck

    "One thing that even many libertarians get wrong: Wasting money is not unique to government entities. "
    Actually, the libertarian attitude is that *any* entity can waste money. The difference is that when a private entity wastes money, it loses the ability to do other things, and eventually it loses so much ability that it fails and disappears. When a government entity wastes money, it responds by raising taxes to replace the money it lost.

  • nehemiah

    What a silly thing to do. Probably spent $10-$20,000 for it.

    I'm glad Government Motors isn't wasting the money we gave them on foolish promotional schemes. They had the good sense to make a big marketing deal with Manchester United for hundreds of millions.

  • nehemiah

    Great sarcasm. I had to read your post twice before I figured out you were pulling our leg.

  • nehemiah

    Its hubris, not tax deductions. Usually you have to actually spend a dollar to get a tax deduction on that dollar, which then only benefits you based on your tax rate.

  • nehemiah

    You have to spent it to write it off and you only benefit based on your tax rate. Besides, I think Chrysler may still have net operating losses to work off and may not be paying taxes yet.

  • John David Galt

    What's unique to government entities is that they can waste *other people's* money without ever having to answer to them.

  • markm

    First, you've got to make a profit. Without that, tax deductions are worthless. Second, if you can claim the deduction, it's still only worth the tax rate % of the expense - that is, you're still out most of the money.