Obama’s Car Business:

Two auto-parts suppliers and an auto manufacturer have already filed under Chapter 11. GM is expected to do so tomorrow on the 1st of June.

Very dreadful for GM, because it was established in 1916 and if it had been able to hold together for another 7 years, it would have celebrated 100 years existence without having to declare bankruptcy.

Eventually the undertakers and bankruptcy lawyers are taking care of GM. What finally cleared the way for the GM bankruptcy was a deal with its bondholders in which they take equity in exchange for their debt and agree not to contest the bankruptcy filing. Still, the deal and a few other arrangements relating to it, including the presence of one very big and very odd shareholder, the ‘government of the United States of America’ is so complicated that it's destined to give bankruptcy lawyers plenty of work for many years to come.

"Obama plans 'leaner' car industry," says the BBC.

While most readers will focus on the last three words of that sentence, attention should go to the first two. The subject is the more important part than the predicate of this sentence.

Whether the car industry may or may not get 'leaner' is of little interest. It will do what it needs to do, thanks to the creative destruction of capitalism. But that Obama the President of the United States of America is now writing GM’s business Plan, is surely a sign of great significance. Apparently this world has already changed more than perhaps is realized.

Not that long ago a private company was able on its own to decide how it would compete. When well managed the company should grow and expand and make the changes the market required. If a mistake were made in this process it would go out of business, leaving the operation available for another entrepreneur. Americans always thought that the "free enterprise" system was the best in the world. They believed it was responsible for their wealth, their progress and their leading economic position in this world. Now they apparently have changed their mind: that the President of the United States - an elected politician - should have a direct say in how individual private enterprises are organized and run.

"Power Pendulum Swings Toward Washington," says a paper headline.

People think capitalism has failed. Although they never may have understood what capitalism really was all about. This new-fangled development still is in a posture that something worse could be the ending.

Capitalism is full of what Galbraith called "innocent frauds." The capitalists try to exploit the workers. The workers try to take advantage of the capitalists. And Managers are the guardians over both.

In spite of this the brute force of government soon is replacing the innocent mistakes of capitalism, and let Obama and his team making the decisions.

The silly question is: What does Barack Obama know about the car business, which others don’t know? Sounds funny, isn’t it?

The role of government is commonly misunderstood. It is thought to be an impartial judge, an objective arbiter between competing interests, always asserting the common interest over the narrow interests of the competitors themselves. It is nothing of this sort. It has its own interests, its own delusions of competence, more likely its own desire for power and money.

Remember: When the pendulum swings towards Washington it is always bad news. For no matter how big a mess GM's owners, managers and workers made of the auto business...Washington is sure to make a bigger one. Good luck for everyone involved.