capitalism works every time it's tried. reagan cut taxes and deregulated to pull us out of the carter era. but instead of the plan we know has worked in the past, obama want's to try the exact opposite.

That's the beauty of it. When companies get huge, like GM, they become decidedly less nimble. They are slow to change and innovate. Their size makes them vulnerable. GM is SUPPOSED to fail. Right now there are billions of dollars in venture capital waiting to fund a new American auto industry with a better idea. Hybrid technology? Diesel-electric? We may never know. GM's failure is supposed to herald a new era in auto making. The bail out has undermined a most critical aspect of free market dynamics... failure.

That New York Times article from 1999 was eerily predictive. It's scary to think that even then, people knew exactly what the subprime lenders were getting into.

I've been doing a lot of thinking about this topic, and here's what I think. Feel free to refute this, or argue with me, or provide evidence to the contrary; as I said before, I don't understand economics anywhere near as well as some of you guys do - although I am a fast learner, and always willing to keep an open ear and open mind.

It seems to me that the economic bailouts are akin to adding bricks to the top of a dam that is being over-run; instead of doing so, wouldn't it be smarter to build a LARGER dam a little further up-river?

The next major global market is in alternative energy - solar, wind, and geo-thermal; just as the software/internet boons of the last couple decades changed the world, it is looking increasing evident that alternative energy, whether you agree with its uses or not, will be the next big market. There is a ton of money to be made here, as German and Dutch innovators have been showing within the past couple years. Germany passed, a few years ago, a government mandate which stated that any private home that installs solar panels which feed energy into the grid must be paid BY THE UTILITIES for the energy that is contributed. This has caused a boom in the solar panel-building world - a boom in which the world's largest solar company, which originated in Ohio, relocated to eastern Germany. Since the mandate was passed, the utilities there have gotten involved by researching and funding the development of THEIR OWN solar panel firms and distributors. They have gotten into the game and are making millions. Tens of thousands of new jobs have been created.

Wouldn't the smart thing to do here be for the government to pass such an incentive that doesn't FORCE anyone to do anything different, but rewards those who are innovators, in order to get in on the next big global market? This could create many, many jobs in America, and create a new, profitable market at the same time.

I'm no Eco-nut by any stretch of the imagination, but this just seems to make sense; America made a ton of money off computer technology in the 1990s... do we really want to be left out of the next big market, continuing to add bricks to the top of a crumbling dam instead of building a bigger dam up-river?

CJ:

1) There are plenty of scientists who think the alternative energy market is largely a croc. A drop of water in a very large ocean of need.
2) In California, they already require the utilities to "buy" the excess energy output from soalr panels. AFAIK, it's the only thing that makes them make any sense. You get a credit on your electric bill; however, a buddy of mine who has installed them says that while they offset some of your need, the utility doesn't actually use any of the energy generated.

You are right of course, except for the fact that government has no proper role in business failures. Government can not give a single dollar to any project or initiative without first taking it from someone else.

The German energy plan has been an unprecedented DISASTER. Not because they are building solar homes, but because they began shutting down nuclear reactors. Germany is operating under such an enormous energy deficit that they are forced to purchase huge amounts of nuclear generated power from France. France is now scrambling to get more nuclear plants on line to provide Germany the power it needs.

Germany should have kept their nuclear plants running and built a few more. If they had done this, the added solar energy conversion would have made Germany largely energy independent. Germany's abandonment of nuclear technology has been a colossal failure.

As the technology gets better, though, the solar panels generate more electricity; therefore, your home would contribute more to the grid, and the utility would have to charge you less. The utility gets in the game by funding development of these panels and selling them to us.

I don't think that alternative energy is a crock. I feel more and more like the reliance on fossil fuels is coming to an end (or, at least a slowing-down) as 1) the fuels themselves become more scarce, 2) those who control the fuels become more greedy and more demanding, and 3) the world gets more and more polluted. This will become a global market out of basic necessity. Besides, wouldn't you rather fund the efforts of hard-working Americans building solar panels than the Saudis, Venuzuelans, etc. that own the oil fields?

Alternative energy is great. It's extremely expensive, though. I would never discourage it's use and development.

Nuclear energy is the safest, greenest power source we have ever had. Nuclear powers safety record surpasses all others, including hydroelectric!

But nuclear sounds so scary. Isn't that what they make bombs from?

Solar and wind sound much more cheerful and friendly.

As alternative energy becomes better funded, more widely available, etc., it will get cheaper. Think of how expensive cell phones were when they first came out. Or laptops.

As a side note, I am not at all against nuclear power. It is clean and it produces ample energy; where to put the waste is the biggest problem, though - although from what I hear, there are a lot of people (although probably not enough) working on ways to solve that problem.

Our large corporations like GM would have failed long ago (or perhaps adapted via necessity) had they not teamed with government on protective regulation. Big Corporations just love to create hoops for any potential competition to jump through and Government agencies lap it up like dogs.

Look North, not to the Middle East. That's where it will eventually come from.

I imagine in 40-50 years' time we'll have viable, commercially-available fusion nuclear power. When this happens, electrical energy costs will be virtually zero and there will be no waste issues. We should be putting resources into getting this up and available - immediately. Like "Manhattan Project" style immediately. Of course we need to bridge the gap between now and whenever that becomes available though, and that's the problem. One HUGE thing we could do is prepare our transportation infrastructure for use of ELECTRICAL power to run it, rather than petroleum. It'll make no difference if we have virtually limitless free electricity if all our cars, trucks, buses, trains, aircraft, boats and farm equipment run on oil/diesel/gas (they do).

Another huge technological hurdle is storage. Batteries stink. They're terribly inefficient, even the new ones. And they're toxic. A better solution needs to be developed (and this is another good research area). I read a great article a few years back regarding the use of magnetically-levitated flywheels in sealed, evacuated chambers. Apparently this is a system developed by NASA to store energy. The jist of it is that energy is put into the system by "spinning up" the flywheels, which can get into the hundreds of thousands of RPMs - enough in fact where the structural strength of the flywheel material becomes the limiting factor (you don't want them flying apart and "exploding" the chambers). When energy is needed, the flywheel's rotational mechanical energy is converted to electricity by means of a generator. Very efficient and very little loss. Supposedly these flywheels will spin for YEARS if left alone. Something to consider anyway. Stuff like that. Chemical battery technology as it exists today will be a big hinderance, but we also do have time to work that out and improve on it.

So for the next 40-50 years I'd say put the money and effort into fusion power, energy storage technologies and convert as much of our transportation infrastructure as we reasonably can to electric. Build more nuke plants (fission) to get us to the point where fusion power is available in the interim and QUICKLY start weaning ourselves off of oil.

Just my $0.02.

solar panels,nuclear power ect..
what's killing /killed Europe is unchecked immigration..
60's thru 80's Germany had the Gastarbeiter..he was supposed to work /then go home..
instead he brought the family..
social services cost went thru the roof..
he then started demanding that Germany adopt the rules,language of the place he left..
all the while contributing little or nothing..
the germans gave a little,then more...
now they stand around saying scheisse ..
they are now paying folks too leave..
to late!

Rika

Jeff, that rationale sounds perfectly sound and reasonable. Actually, it sounds a little bit like Thomas L. Friedman, without the ecological focus - and that ain't a bad thing.

Just read Atlas this past fall. It seems true enough in some sense, though, as I said on another thread, Rand poached most of the good Dagny/Reardon love/sex stuff from Scott Fitzgerald's unfinished "Last Tycoon" - which is a better and more realistic business book to my mind.

But what I don't get is the deeper part of the argument - the argument that if everyone would just get out of the way, these 100 geniuses would solve all our problems. If all the losers and crooks and James Taggart's think they are the geniuses (and they do), how are we to distinguish between them? I have run a medium size business for going on 15 years. Like Atlas, I find that many of my competitors are less than they should be, and that regulation is higher than it should be. But that has allowed me to out-compete them year after year after year. Remove the regulation completely, and the "truth" won't just win out. Instead, the liars and cheats will win out by playing dirty.

In Atlas, it is not the government that kills, but the collusion between government and the "James Taggart" types who run things. That is what is falling on our heads now. To remove all checks and balances is a non-workable Utopian vision, and I don't think it would work for Rand any better than the opposite one did for Marx. It was a valuable book - a period piece - to help define the opposing ideas to Communism in the 1950's when we needed to know what options there were. But in the end, it is not practical for living, breathing, ambitious and/or greedy masses of people.

Reagan was right when he said "I'm from the Government and I'm here to help" isn't what we want to hear. But no government? It sounds nice, but let's start small - let all those guys on Wall St. who want no regulation deregulate the cab fares in NYC. Wait for a good snowy or cold rainy day, when the cabbies can charge whatever they can get to shuttle those guys to their apartments or their trains. On that day they'll have to admit that at least some level of regulation makes sense.

It is good that books like Atlas kept us from Socializing like the UK and having to then de-regulate 30 years later. But that is just about as far as the argument goes....

Our economy is one of the most free in the world according to a recent WSJ article - Not that it will stay that way without tension from time to time. But, in the largest sense, though things are tough, the sky is not falling, and America is (and will be) OK. We had 20 years of deregulation. Now we will have some number of years of increased regulation. That will go too far, and we will deregulate again. It's just like a tidal movement. If you run a company, you learn to ride whatever comes.....I believe that is what Dagny and Hank would actually do...

Or maybe it is just too early for me to give up. I just got back from Telluride, Colorado - a lovely town in a high box-canyon surrounded by 14,000 ft. peaks...Not a bad place to live out my days.....Didn't see John Galt there - but by being detached from email and newspapers and tv for a week sure made me see how much of what we deal with everyday is full of hooey. Deep down, I believe that Plato was right - that there is a perfection out there that we strive for. We come at it this way today, see a slightly different way tomorrow, but we keep striving.

When the now-defunct Telluride mine owners wouldn't pay their miners more than $3 a day to dig in dangerous conditions, they made a mistake that cost them decades of strikes and costly intervention. In the same way, when the workers at GM made unreasonable pension and healthcare demands on management, they made a mistake that is now dragging down the whole company.

Management might be right more often than workers, as they have a larger, more global view of things. But to believe that the best idea is just turning over the reins of the world to management....well, that takes a faith in the basic goodness of mankind that neither I, nor Machiavelli, nor most of our philosophers or preachers would think prudent - not to mention our Founding Fathers, who felt that human frailty demanded checks and balances.

If the world was really run by the saints of a Rand book, fine. If perfect people led, then her ideas would work no matter what system was in charge - capitalism, communism, monarchy, democracy. But the world is not run by such people - and it never has been, and it never will be - perfect people don't exist, so perfect systems cannot be built by requiring their presence.

RKC, you make good points.

I came to the painful conclusion in college that some government regulation is necessary. It is my opinion that it should simply ensure a level playing field and prevent cheating. What we have now is a system that picks winners, which is very different. Do you know that big, established companies often lobby FOR restrictive environmental regulations? The reason is simple, it shuts the door on small start-ups by making entering a given industry prohibitively expensive.

Certainly the government should be discouraging this kind of behavior, as well as things like insider trading.

I agree, Rand's view is a little overly rosy, but IMO it is closer to the truth then the other extreme.

If we can get at the fossil fuels under the arctic icepack our fuel needs will be solved for decades and decades.

"Global warming" is making that possible....

No government and we'll be watching the Cayahuga burn again. And GE dumping PCBs in the Hudson....

Legion,

I largely agree. Large companies often become imperial and close out the little guys, which is where just about everything great in America comes from. And government is too big today, and a large percentage is waste or inertia for inertia's sake. Just providing a level playing field would be ideal.

Capitalism (like Democracy, to paraphrase Churchill) is the worst economic system except for all the others. It has brought more people out of poverty and into the middle class, and ended more ancient antagonisms between nations than any form of government (or, for that matter, any religion).

Such an immense good should be allowed to flourish. But I would add to Rand's ideal the fact that government and religion and a few other things still have a necessary place in a flourishing society.

Taxes were 70% under Carter so you're not really compare apples to apples.

And Carter did lower taxes, just not the top tax rate.