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