The destruction of the smaller fish (Dana Files Chapter 11)

WTOP: Auto Part Maker Dana Files Chapter 11

The continued decline of the great American monopolies of the 20th century (the US auto industry) starts hitting the slightly smaller folks like auto parts manufacturer, Dana. The monopolists continued to argue for free trade throughout the sixties until their free trade mantra started burning them in the seventies. As much as people are employed by the big three automakers, even more are employed their part suppliers. These jobs have typically had worse benefits but they usually paid better than the going wage in most towns.

In a way this is very sad. Once a dynamic industry, the auto industry consolidated into a few giant corporations who used their monopolistic buying power to shut down all competitors. Their only problem was in their arrogance they assumed that they could beat anybody only to find out that Japanese knew how to built better quality cars.

What could have done to prevent this? Well, at the start the automobile makers should not have been allowed to engage in monopolistic buying patterns that eliminated competition. Capital shouldn't have been allowed to concentrate with the few automakers without restrictions. Automakers shouldn't been allowed to buy competitors just to shut them down (as they did with many transit and interurban railway lines).

There are many more faults to the decline of this industry and I'll comment on them later.


S.M. Stirling Sunday, April 16, 2006 at 12:09:00 AM CDT  

Automobiles are an industry with extremely large economies of scale.

Witness the fact that every single significant car manufacturer is very, very large.

Furthermore, the rise and fall of companies -- and areas and industries -- is an inevitable part of a market economy.

It's "creative destruction" and wholly positive. Countries which hinder this process end up like France -- sclerotic and plagued by mass unemployment.

The net job losses among the Big Three car manufacturers in the US this year were equivalent to considerably less than one month's job creation.

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