More venture socialism failure

GM laying off 1,300 on Volt line.

General Motors Co. announced the temporary suspension of Chevrolet Volt production and the layoffs of 1300 employees, as the company is cutting Volt manufacturing to meet lower-than-expected demand for the electric cars.

“Even with sales up in February over January, we are still seeking to align our production with demand,” GM spokesman Chris Lee said. The car company had hoped to sell 45,000 Chevy Volts in America this year, according to the Detrot News, but has only sold about 1,626 over the first two months of 2012.

Of course this isn’t really a failure of green products, per se. This is a failure of the government attempting to drive markets through force of will. Planners in the Central Bureaucracy attempted to force the market for this vehicle by offering production incentives, mandates and purchase credits to buyers. It didn’t work.

Centralized planners cannot detect consumer preferences, shortages, and surpluses with accurately and therefore cannot efficiently co-ordinate production. It just can’t be done.

This is the “economic calculation problem” and it was first proposed by Ludwig von Mises in 1920 and later expanded by Friedrich Hayek.

Mises and Hayak argued that the only rational way to allocate resources in any market is through price. Socialist planners lack the the information provided by market prices and, therefore, lack a method to rationally allocate resources.

Obviously Volts would sell if they cost, say, $5,000. Unfortunately they cost many times that to produce. The disparity between price demand and cost creates a net loss in production. The Administration believed they could overcome this via subsidies to producers and tax incentives to buyers. They were wrong and have, as a result, socialized the lost of billions to tax payers and the loss of hundreds of jobs that have proved to be unsustainable.

Remember, corporatism is not capitalism.

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4 Responses to More venture socialism failure

  1. Rich says:

    So, the plan must be to have all U.S. citizens wake to find that they have secretly and overnight become (think executive order … or imperial dictat – whichever fits best) Government Motor’s union members (much as several states have tried to make day-care workers union members). Then GM can force all U.S. citizens, as good union members, to buy Volts, which is just what GM’s unions are doing now. As a result Volt sales will rise, GM union workers will be rehired: Problem Solved!

    Allah …, er ah Gia, … er ah Lucifer bless Obama!

    I get so confused.

    But then Saul Alinsky did dedicate “Rules For Radicals” to Lucifer … and Obama is an Alinsky acolyte … having taught at the Midwest Academy and all.

    Just saying.

    God Bless,

  2. Lyun says:

    You’ve answered your own questions……if the Volt was marketed at $5,000 it’d sell….doesn’t this tell even a village idiot that the car is over priced for the market at which it’s aimed at.

    I mean who’s gonn slaver at the chops to get his hands on this baby at $50,000 a hit…..not I chums.

    Supposing the execs who designed the thing were given the order…cut the cost in half or lose your head on the block.

    The Chinese are going to ream your arseholes big time if this is the best you can come up with when a Green solution is being suggested, but I forgot, the car makers DON’T WANT AN ELECTRIC CAR CHALLENGING THEIR PETROL GUZZLERS, that makes more sense.

  3. Lyun says:

    I’d like to see a competition to see who can strip and/or substitute a Volt of all the unnessary parts the most, and still make it roadworthy….the biggest cost saver gets a new Volt as 1st prize.

    Target figure….$15,000.

  4. Slaphappypap says:

    Funny thing is GM did have a profitable vehicle. It saved on gas and was cheap. It was called Saturn. Yes, it was kind of a chick mobile, but at $12 bucks pop for fill up it was a teenage dream. They dumped it. I owned the same one from 18 to 26. Rebuilt the engine once, finally sold it to a neighbor cheap who bought it for his daughter. He said she drove it everhwhere. So 180k miles later she sold it to someone else. GM must have a team of baboons running it.