Comment by crote
3 days ago
It's a shame the same logic wasn't applied in maintaining a healthy root-level auto company ecosystem. Having a single megacorp at the top inevitably makes it too big to fail. On the other hand, if there are dozens of smaller car companies, the failure of any one of them is insignificant to the wider ecosystem.
A company that knows it is too big to fail will inevitably lead to mismanagement. After all, why bother saving for a rainy day when you can count on corporate welfare handouts? Why bother reducing your risks when you can always rely on a bailout? You can never lose, so the obvious thing to do is to bet as big as possible in an attempt to create as much short-term "shareholder value" as possible.
I can't think of a way to have dozens of smaller car companies, all competitive and all viable long term without ongoing and adaptive regulation.
With Chevron doctrine dead and Congress struggling to pass a budget, I can't see how it is possible to have any meaningful regulation in the US in the short to mid term.
Even the mainland China model of pitting province and local governments against each other to foster competition might not work in the long term (it is still early days). We already see specialization in provinces which to me indicates that there is a defacto province government who wins auto manufacturers in the long run.