Sorry, i wasn’t trying to claim that this is exactly what would happen.
My main point was simply to argue that, when a company fails (for whatever reason, and in whatever specific way), there are generally other companies ready to fill any vacuum created in the market. Too many people seem to be saying, “Well, if GM failed, think how bad things would be,” without taking into account that even the failing GM was doing a lot of business, and that business would not simply have disappeared, but would have been absorbed by other players in the market.
Sheesh, I enjoy a Sam pitting as much as the next guy and in fact have started at least one of my own, but this one is weak.
That said, seems like no one remembers that second big reason for bailiing out GM and Chrysler is the fact that key tier 1 and tier 2 suppliers would very likely have gone out of business. For those of you that don’t know the auto industry that well, the Tier 1 and Tier 2 suppliers provide parts to most if not all of the auto manufacturing done in the US. A not completely unlikely doomsday scenario would have had several suppliers going bust that were the sole suppliers to vehicles produced in the US. In other words, bankruptcies in the supply chain could have stopped production at Ford, GM, Chrysler, Toyota, Honda, BMW, Nissan, etc.
The just in time supply chain, and lack of suppliers that could fill a gap in a timely fashion could have really been disasterous for the US auto industry.
Fun fact, China figured out 30+ years ago that there were zero industrial powerhouse nations that did not have a domestic auto industry. They made auto’s a key pillar of their economy, which has been proven correct. Last I checked the China auto market is still bigger than the US.
The article also notes that the Treasury Department predicted a $48 billion loss - and that article came out at the same time Sam was making his prediction. No Pitting for the U.S. Treasury Department, though.
Given that Chrysler and GM had shed 16,500 jobs since then - contrary to Hentor’s trying to imply that they have added workers, or more precisely using an LA Times quote that implies that - I think there are certainly valid arguments that the bailout was a bad idea. I’m not sure I buy the arguments without further studying it, but I don’t see how anything presented by Hentor proves his side of it either.
[QUOTE=China Guy]
Fun fact, China figured out 30+ years ago that there were zero industrial powerhouse nations that did not have a domestic auto industry.
[/QUOTE]
Is this accurate? Generally when these big companies fail they don’t disappear, but instead they are taken over by their creditors and continue to run, after restructuring in bankruptcy court.
I’m not claiming that this was expected to be the case here - my memory of the details is not so clear. Perhaps someone else has a better recollection or is interested in researching it.
The Times article cites GM and Chrystler as adding jobs, so if your cite is accurate, that would undermine the argument.
What’s not clear from the article you linked to is when in 2009 they stated their window. From Jan 2009 to the point of the bailout was an overall job loss, but post bailout to now was a different storybook, according to bureau of labor statistics cited in the Times article.
I would guess it might also be different time periods. If you start at the lowest point of GM/Chrysler employment and compare to today, then you get added jobs. If you start at some other point you get different numbers.
[There’s a lot of statistical jive along those lines in the media and studies. If you’re trying to make the point that such-and-such is increasing, you measure from a very low point in history. If you’re trying to make the opposite point, you find a high point.]
It might still do that. Subsequent predictions of lower losses are dependent on optimistic assumptions about things like GM’s stock price and other factors.
Here are two articles that might refresh your memory. Numero uno
Numero two-o
The concern was that if GM and Chrysler failed (and I don’t know who would have stepped in and rescued GM if not the government - it was hard enough selling the smaller Chrysler) the companies supplying the parts for the cars would no longer be economically viable, and the entire US auto industry would collapse. I invite you to think what the impact of the Japanese earthquake would have been with no US makers to pick up the slack.
Sam specifically predicted that US ownership in GM would cause the government to favor them - that is quoted in the OP. However
If the government didn’t do it when it had majority ownership, it sure wouldn’t do it now.
I was heavily involved in some of those threads, and if you went back in time and posted a prediction of the results giving the actual data, Sam would have told you that there was no way such a good thing would come from government meddling. I wouldn’t be surprised if he popped up and said that the US auto industry is actually in terrible shape. Sure in the long run things make get worse; in the long run we are all dead.
BTW, I’m not sure but I think Washington did try to get the carmakers to improve their mix of fuel efficient vehicles. Or they might have done it themselves - Ford did. But this time when gas prices spiked the US companies benefited. That never happened before.
I don’t see that those articles address the issue I was discussing, and in addition, they are an article about Obama Administration claims and an Op-Ed piece, respectively.
I’m not inclined to argue about what Sam would have said back then if someone had made some sort of prediction, or what he might pop up and say now. I’ll leave that for Sam himself, if he is so inclined.
That’s true, and if you say in the long run we’re all dead and someone came back two years later and declared you to be wrong because we’re still alive, I doubt if you’d be impressed.
Both articles give specific information about the risks people worried about at the time and the amount of GM the US now owns. Do you remember the concerns about supplier infrastructure at the time? It was on Marketplace, at least. I didn’t expect you to believe me if I just stated this, so I gave a cite.
To put it more plainly, you were doubting that Sam made any incorrect predictions. Those quoted in the OP were specifically about special treatment to GM based on government ownership, and significant ownership. Sam was hardly the only person saying this. You agree of course, since this did not happen. Given that the government no longer has majority ownership, and, given the new strength of GM, much clout, I think it is safe to say it is not going to happen. Thus, Sam was wrong. I don’t have time to find other instances.
Keynes allusion missed.
If some says that the world will be destroyed during the Obama administration, and it is still here when he leaves, saying that the world will be destroyed in the long run is not a reason to say the prediction was correct. Sam saying the government will intervene due to their ownership is wrong because they are no longer majority owners.
I made my snarky statement because Sam also predicted dire consequences from Cash for Clunkers, specifically a crash in new car sales when the program was over. I showed data indicating a linear growth before and after that period, ignoring the spike. He claimed that sales would somehow have exploded if there were no program, why during the depths of the recession is beyond me.
He also said there would be an increase in used car prices due to them being bought and junked, which was far more plausible. I’m not sure how bad that was - I didn’t hear much about it - but it seems to be better than right now, when I could sell my 18 month old Prius for nearly what I paid for it.
Yeah, that would be bad: favoring people who actually work over the bondholders. What the hell happened to the idea of risk and reward? The bondholders took a risk in return for a higher interest rate. Their bet failed. The idea that we would not honor the contracts with union members so that we could payback bondholders is repugnant, but not atypical of today’s conservatives.
Firstly, a lot of Sam’s so-called prediction were, in fact, hypotheses about the possible consequences. For example:
He’s talking here about pressures and temptations in a situation where the institution making the law is also the institution with a major stake in the company concerned. Many people express concern, quite rightly, when Dick Cheney makes national security decisions after having such close connections with companies like Halliburton. The principles surrounding conflict of interest are important, and worth being aware of, even if the worst apparently didn’t happen in this case.
Second, even if you’ve caught him making a prediction that didn’t come true, i don’t know why that’s such a huge deal, or what this really accomplishes. Economics is a social science, and even the best economists have always acknowledged that prediction is a rather inexact thing is economics. Furthermore, getting a prediction wrong doesn’t mean that you’re a bad economist, or a bad analyst. Karl Marx was, IMHO, one of the most brilliant economic thinkers in history, but he was still disastrously wrong about the rise of communism and the dictatorship of the proletariat. He would have been stunned to learn that the communist revolution would happen in Russia, and not in some advanced industrial nation like England.
I can’t really speak for all Sam’s predictions in this case. My main interaction with him on the issue was after the program, when Edmunds came out with its report.
I thought then, and i still think, that the program was a rather pointless exercise, and that it cost too much per increased sale to be worth the time and money that was put into it. And this position is tenable even without making any argument about whether there would be a “crash in new car sales” at the end of the program. For me, it’s not necessary to show that the C4C had a detrimental effect; it’s enough to show that any positive effect it had was minimal, and not worth the cost, and i think that there’s pretty decent evidence to support that argument.
Also, from a politics/economics point of view, i disagreed with the program because, given that it was partly promoted as an environmental thing, it was too lenient on the fuel consumption issue. If you’re going to push the environmental benefits of a program like this, i don’t think you should include pick-ups and SUVs that struggle to get 20 mpg. You also shouldn’t include cars like the BMW 335d. People who can afford a $45,000 luxury import don’t need $5,000 of public money to help with their purchase.
This. The thread title is horsepucky: one bad prediction doesn’t undermine any forecaster.
Sam made some claims that could be evaluated. I maintain that the test period will end when the Federal government sells its last share of GM. Then we’ll know that Sam was wrong: whatever government meddling the Feds do, it will be small potatoes relative to the alternative (paceVoyager). And it will not rise to the level of “a very bad idea.” That’s my prediction anyway. Now if Sam had said, “Highly problematic” then such a prediction/claim would be tougher to evaluate.
I seem to recall Sam also criticizing the US intervention into the California electricity market, when Enron was manipulating the market. So there’s example #2 for the OP.
Sam is bright guy with a definitive world view. It might be fun to evaluate his predictions systematically some day. But while such an analysis would belong in the pit, none of his predictions will prove pit-worthy, IMHO. Wrong yes, pitworthy no: there is no shame in making a prediction not borne out by events: indeed it constitutes a fine opportunity to battle ignorance.
**Sam Stone **is very very dogmatic. He reminds me of 1970s Marxists.
For some reason, he kinda of serves as the “Conservative that I would piss on if he was on fire” by many liberals of this board. Never understood why. There are a few self declared Conservatives here that, while not deserting their beliefs, can engage in a debate without regurgitating badly digested dogma in mile-long posts of great bore.
That said, you could have said your piece in GD, why the Pit?
That’s better than most of the other famous “Quick-name-five-conservative-posters” posters. Most of them regurgitate badly digested truth-twisting and slurs rather than simply incorrect dogma, so he does have that going for him.
Because he was more interested in trying to cut someone down than actually engaging in a debate?
I would have thought a GD thread asking if Sam still thinks his predictions hold water would have been far more appropriate if he wanted a real response.
