All Commentary
Sunday, April 1, 1962

GM: Competition and Choice


Dr. Russell is Professor of Economics at Rock­ford College and Chairman of the Department of Economics and Business Administration. This article is from his column of February 4, 1962, in the Rockford[Illinois] Morning Star.

For Several Years Now, a competitor of General Motors has gained national attention by claim­ing we would all be better off if that giant company were broken up by our government. His plan has been endorsed by several im­portant people, including an influ­ential senator who spends much of his time devising ways and means to accomplish the objective. Apparently, many millions of sincere Americans are quite will­ing to accept the “unselfish” ef­forts of those gentlemen to save us from the clutches of the world’s largest industrial corporation. But before you and I join them, per­haps we should think a bit more deeply into this issue of bigness and the resulting power that Gen­eral Motors has over us.

As far as I know, there is not even one person in the entire United States who has to buy any­thing from General Motors. If GM were closed down tomorrow, there would be only a temporary short­age of cars; for even that unself­ish competitor who wants the gov­ernment to break up General Mo­tors would be happy indeed to double his own production. And so would the 12 other domestic pro­ducers of automotive vehicles. And, of course, all foreign pro­ducers would like nothing better than to triple their shipments of cars to the U.S. Similar sources of both domestic and foreign supply also exist for diesel locomotives and the various other products now sold by General Motors.

There is only one reason you now buy any product. You think you are getting the most for your money. Otherwise, obviously, you wouldn’t buy it. Thus the only thing the senator and the GM com­petitor wish to save you from is your freedom to patronize whom­ever you choose.

When we consumers voluntarily choose to buy most of our cars from one company, that company necessarily becomes the largest in the industry. We consumers make that decision when we buy the cars. And the more we buy, the bigger that company will grow. The only way the government can stop that is to tell you and me we can’t buy from whom we choose. That’s what breaking up General Motors means—depriving you and me of freedom to buy what we please from whom we choose and in whatever amounts we can afford.

I do not know nor care why you think a Chevrolet (or whatever) is a good bargain; that’s your business, not mine. Personally, I prefer my little non-GM car. My sole concern here is that both of us shall continue to have absolute freedom of choice in the matter.

Choice in the Market

There can be no freedom of choice, however, except in a free market. For if producers can’t pro­duce what they please—and if you and I can’t patronize whom we choose—obviously we have all been deprived of freedom of choice. I am astounded at the number of in­telligent people who can’t under­stand that simple truism. When you get right down to it, there are only two ways we can ever be de­prived of freedom. And both of them involve government in one way or another—either positively by laws against freedom of choice, or negatively by the government’s refusal to stop gangsters who in­terfere with our freedom to choose.

If we consumers think General Motors is too big, too inefficient, or too anything else, we can easily change the situation. All we need do is stop buying GM products. Then the world’s largest industrial company will go out of business within 90 days—and we will still have all the cars, trucks, finance companies, and locomotives we want.

That giant corporation has no control over you and me in any way. It can’t force us to buy any­thing. The secret of General Motors’ “power” is its remarkable ability to produce what we fickle consumers most want to buy. A de­cision to stop that would be the perfect example of cutting off one’s nose to spite one’s face.

In 1911, and again in 1920, powerful General Motors ceased to be the people’s choice. In both in­stances, it almost went bankrupt. Only by reorganizing, bringing in new management, and borrowing large amounts of capital did it manage to stay in business.

Meanwhile, Ford Motor Com­pany had more than 60 per cent of the entire automobile market. And “Old Henry” was doing everything he could to get it all. Since the American people happily bought his “rough and ready” Model-T’s by the millions, naturally his com­pany became the largest in the in­dustry. Then something happened—we ungrateful consumers began buying Chevrolets and Overlands. And we willingly paid double the price of a Model-T to get those enclosed cars with a new type of gear shift and a self-starter. In due course, Ford Motor Company closed down—and stayed closed until its engineers could produce a car we consumers wanted.

That’s the free market and prog­ress. That’s also freedom. And if you and I permit that senator and that GM competitor to “save” us from it, we will no longer be free to choose. We will lose the most effective and beneficial control ever devised—our right to determine with our purchases which company shall grow large and which shall fail. The government will then de­cide for us. And that, of course, is the opposite of freedom.

 

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Cervantes

Never stand begging for that which you have the power to earn.