An article in the Friday, May 8, 2009 Washington Post carries this headline: Under Restructuring, GM To Build More Cars Overseas. 

The article begins:

The U.S. government is pouring billions into General Motors in hopes of reviving the domestic economy, but when the automaker completes its restructuring plan, many of the company's new jobs will be filled by workers overseas.

The article continues:

According to an outline the company has been sharing privately with Washington legislators, the number of cars that GM sells in the United States and builds in Mexico, China and South Korea will roughly double.

The proportion of GM cars sold domestically and manufactured in those low-wage countries will rise from 15 percent to 23 percent over the next five years, according to the figures contained in a 12-page presentation offered to lawmakers in response to their questions about overseas production.

As I read the piece, the overwhelming emotional response I had was not one of dismay or loathing for those overseeing the restructuring of GM. Instead, I found myself saying something along the lines of, "Yeah. So?" Frankly, no one should be surprised that GM is moving jobs oversees. Certainly, a student of Austrian economics or free market economics would not find this move surprising in any way. The most basic truth of business is that a firm must, all things equal, seek the lowest costs of production available. Labor costs have been, and will likely continue to be, a large portion of the costs of production in the auto industry. Ergo, finding cheaper labor makes sense. According to an industry source quoted for the WaPo article, "Labor costs in those countries are far lower. While paying a U.S. autoworker with benefits costs about $54 an hour, a South Korean worker earns about $22 an hour, a Mexican worker earns less than $10 an hour and some Chinese workers can earn as little as $3 an hour." One does not need to be a trained mathmetician to understand those numbers!

So what's with the title of my essay? What about this scenario relates to theft? Well, one would have had to have been living under a rock, nourished only by his thumb to not know that the U.S. government has "bailed out" GM, and continues to do so. In fact, the U.S. government has essentially nationalized GM. President Barack Obama has an auto task force that controls the company.  The money that allows GM to continue operating was provided to it from the U.S. budget. Returning to the WaPo article:

The U.S. government has loaned GM $15.4 billion. But billions more are expected to be invested, and under the current plan, it [the U.S. government] will be the majority owner of the company.

Simply put, the U.S. government, who obtains all its money from the taxpayer — in the form of direct taxation, tariffs and duties that raise the prices paid by citizens, or printing of fiat currency (which causes inflation) — has used that money to "invest" in GM. That money keeps GM afloat, despite a history of bad decisions that led, inexorably, to the company's current state of affairs. Actually, I wrote on this phenomenon previously. To wit:

I suspect that Manuel Ayau’s truism about the Stone Ages ["Had we achieved job security in the Stone Ages, we would still live in caves."] applies equally well to this discussion. If the horse-and-buggy manufacturers had been bailed out, we’d probably still be cleaning up behind our transportation. Maybe I’m being unfair, and maybe the Big Three have applied themselves aggressively to the seemingly interminable problems of engine efficiency, gas mileage, etc. but I wonder. The entire environment that supports, not only the types of cars we now drive, but also, where we drive them and how we drive them, is rife with statist intervention. And yet, these iconic car manufacturers need more help from the State?

And now, the most likely outcome is that the people in control of GM will take that big bag 'o loot obtained from taxpayers and spend it building plants in Mexico, China, or South Korea. I'm completely okay with the latter. The former amounts to theft. My bottom line, and the bottom line I suspect Austrian economists would support: Build plants wherever you like. Just don't steal the money to do it. (By the way, just in case anyone thinks it makes sense to reverse the logic and force GM to build plants here with the stolen money, stealing the money from U.S. citizens does not change the enonomic calculus. Finding the lowest costs of production is a business imperative.) And, no matter the scale, theft is theft, and it is just plain wrong.

Wilton Alston is a principal research scientist working in the field of transportation safety, specifically with regard to trains and transit. A libertarian activist and writer, and a speaker for the JBS Speaker's Bureau, Mr. Alston’s columns have appeared in such places as LewRockwell.com, Strike-the-Root.com and around the Internet blogosphere.

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Michael D said:

	Ironic thought... So, now that GM has been nationalized, and my tax dollars help keep the company afloat, does that mean I can receive an employee discount? Excellent article, by the way.
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May 13, 2009
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