By I guess we owe J.S. Abbot and Lewis Downing an apology for letting them down. Too bad for them they weren’t “too big to fail.”
You see, in 1885, when German engineer Karl Benz invented the world’s first gasoline-powered automobile, it was most certainly the death knell for horse-drawn carriages. Although the makers of such carriages, like the Abbot-Downing Company—producers of the high-ticket Concord—did not go out of business immediately, eventually they did. Stagecoaches simply could not compete with automobiles. Pure and simple.
One day when the history of today’s society is written, it will actually have to be explained to students that companies back in those days were allowed to fail. A better idea comes along? A company makes bad decisions? Tough luck. The company folds and the people have to find new jobs. It’s called “life.”
It was no different with the horse-drawn carriages, and it applies equally to today’s automobile industry, which if reports are to be believed, is on the brink of failure. Without immediate government intervention, the socialists contend, and federal welfare administered to these ailing giants, America’s auto industry will become a thing of the past. They’re “too big to fail”, they say.
Only it’s a lie. And the real goal is to nationalize yet another industry under the guise of protecting the economy.
The fact is, auto companies have entered into a Devil’s pact with the UAW, have consequently driven up their labor costs, have failed to build modern factories, and generally speaking, overproduced their product. Overall, the industry has failed to maintain a profitable business model. Just like Abbot and Downing did.
And it must be allowed to fail. These are businesses. Not iron-clad institutions. The sky will not fall if they do. When a business fails to be profitable, it ceases to exist, and its assets are sold off.
But that is not the end. Bankruptcy is an option for failed businesses. Eventually new automobile companies will emerge from the ashes, new modes of transportation will be developed, etc. The same could be said for failing insurance companies or investment firms or banks or every other institution that the Treasury is now busy buying equity shares in.
Now the socialists, sensing their best opportunity in decades, want to nationalize every industry they can get their hands on.
But what if this thinking had been applied to Abbot-Downing? Would taxpayers have been asked to subsidize the failing carriage industry that could not keep up with the motor-powered automobile? Would America have socialized risk? And would we all now be housing a stagecoach in the garage just to keep the Concord company churning?
Because that’s what we as a nation are doing now. Round and round the bailouts go, where they stop, nobody knows.
But perhaps it’s not just Mr. Abbot and Mr. Downing that deserve an apology. Perhaps it’s every American who ever dared to take a risk and failed deservingly. America is no longer the land of opportunity. It is now the land of obsolescence.
So, westward ho the wagons!
Robert Romano is the Editor of ALG News Bureau.
