The Woman and Man of System

by Russ Roberts on April 29, 2009

in Man of System

In this NPR interview, Lisa Jackson, head of the EPA, gives her perspective (and her boss's) on the auto industry (HT: TJ Goss). In the second quote from her, I have tried to reproduce the sounds she makes in trying to avoid telling a ridiculous lie. She tells it anyway. From the 3:35 mark of the interview:

Jackson: The President has said—and I couldn’t agree more—that what this country needs is one single national road map that tells auto makers who are trying to become solvent again, what kind of car it is they need to be designing and building for the American people.

NPR reporter (interrupting): Is that the role of the government. though? I mean that doesn’t sound like free enterprise.

Jackson: Well, ih it , it is free enterprise in a way. Umm uhh you know, first and foremost the free enterprise system has us where we are right this second (laughs) and so some would argue that the government already has a much larger role than we might have when Henry Ford rolled the first cars off the assembly line.

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Chris April 29, 2009 at 5:34 pm

Capitalism in the way the Mussolini meant it perhaps, but certainly not what I would call free-enterprise.

Mises always talked about the concept of the "sovereign consumer" and his role in the free-market to decide what goods ought to be produced by buying or abstaining. In a free-market, the buying habits of millions of consumer signal where scare resources should be allocated.

Contrary to this is government command/control where the illusion of capitalism is maintained but consumer demand is replaced by government edicts. This used to be called economic fascism.

Martin Brock April 29, 2009 at 6:02 pm

Well, uhh, you know, we did … sort of … tell the domestic auto industry what sort of cars to build, so … mmm … like … we have an obligation to bail them out and impose their pension obligations on taxpayers and create a market for their products by imposing costs on competing products … and … you know … what's good for G.M. is good for America.

Martin Brock April 29, 2009 at 6:10 pm

This used to be called economic fascism.

Still is in my lexicon.

ddbb April 29, 2009 at 6:17 pm

Wow. "that what this country needs is one single national road map that tells auto makers who are trying to become solvent again, what kind of car it is they need to be designing and building for the American people."

From a group of people who have never designed or built anything in their lives.

From a group of people who have barely, if ever, even worked in a business, let alone run an automobile manufacturer. Or any manufacturer. Or any financial services institution. Or fast food restaurant.

And yet they are going to tell these companies how to be solvent and what kind of cars to build (how the government destroyed the auto industry in this country is another story).

The arrogance and ignorance of these people must be unlimited.

Dr. T April 29, 2009 at 6:49 pm

Obama doesn't want anyone in the executive branch to outshine him, so his top level picks are more ignorant about economics than he is.

Lee Kelly April 29, 2009 at 6:51 pm


Everyone's ignorance is unlimited, but some people's ignorance is more unlimited than others.

Kevin April 29, 2009 at 7:19 pm

Awesome. H Jenkins has a great piece in the WSJ today on the state and history of free enterprise in the US auto industry.

Kevin April 29, 2009 at 7:21 pm

Sorry to double post, but was Jackson telling the truth when she said that Obama has actually made this comment himself? I don't doubt that he thinks it, but does anyone know if he really said it?

seanooski April 29, 2009 at 7:22 pm

Umm uhh you know, first and foremost the free enterprise system has us where we are right this second (laughs)

The free enterprise system, despite the political classes efforts to hamper it, has lifted billions of people out of abject poverty, in just a mere 200 years or so. So, where we are right now, while not ideal, is quite all right by me.

Sam Grove April 29, 2009 at 7:54 pm

They are making it up as they go along.

David April 29, 2009 at 8:12 pm

That is simply disgusting.

Speedmaster April 29, 2009 at 8:13 pm

Wow, the fact that an adult thinks that way scares the living heck out of me.

MWG April 29, 2009 at 8:14 pm

Government thinking at its finest… Where's muirdog???

Chris O'Leary April 29, 2009 at 8:47 pm

Evidently, free enterprise is NOT about what people want, it's about what they SHOULD want (as determined by the government).

Are these people even familiar with Japan's fifth generation computing initiative, which was industrial policy at its finest (and an utter failure)?

I assume not.

Don April 29, 2009 at 10:37 pm

One word: Lada

CRC April 29, 2009 at 11:50 pm

Hmmm…what was the last major government that decided to do that?

Ronald Hayden April 30, 2009 at 12:11 am

Honestly, when I would find myself thinking during the campaign that Obama would take us toward 70s British-style socialism, I would feel guilty for overdoing it and playing the partisan game.

It's gone so much further than I feared.

Though I was wrong in that he seems more intent on Japanese-style coopetition wherein the wise hand of government tells businesses who to partner with and what to create.

Juan C. de Cardenas April 30, 2009 at 2:07 am

When I was in Cuba, where I was raised under the Castro regime I met several people who went to Cuba fleeing the Nazis and the Communist and one family who fled China after the Communist takeover only to found themselves under communist rule a mere ten years later. After listening to Madam Commissar of the EPA I have to wonder if that will be also my fate.

Jacob Oost April 30, 2009 at 3:22 am

"No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?"

Ward April 30, 2009 at 8:01 am

How ironic, and disgusting, it is that those who cursed the Bush administration for using 9/11 as a pretext for changing foreign policy, invading Iraq and creating new bureaucracy are now entirely sanguine about the use of the financial crisis and recession for the advancement of their own social engineering agenda. SSDD.

George Peacock April 30, 2009 at 10:02 am

Earlier in the interview when complaining about the critics and lobbyists with their "doomsday scenarios" regarding the costs to business of reducing greenhouse gases, Ms. Jackson says that "they [the cristics]overlook the important, sort of, missing ingredient which is American ingenuity and American innovation." Orwell's Napolean come full circle. Perhaps it's not swine flu but swine rule we should fear.

joshzele April 30, 2009 at 11:54 am

Yes, I was in the car when I heard this discussion. I asked the same questions as the reporter aloud in the car. Ms. Jackson's response could do nothing but stammer and blame the "old ways".

Good stuff. I love when people's true beliefs are exposed from behind the typical boring political rhetoric.

A tip of the hat to the reporter for asking the question.

Ike April 30, 2009 at 2:08 pm

@joshzele –

For the benefit of the rest of the us, can you please share the miraculous story of how you regained control of the vehicle?

Do you know how long you fought off the seizures?

Praise the Lord you are okay, and have lived to share your near-death experience.

rmark April 30, 2009 at 2:23 pm
GRF April 30, 2009 at 6:06 pm

I am amazed that someone from the press, especially NPR, would dare ask that follow-up question. This reporter may never get invited to a Georgetown cocktail party ever again!

Floccina May 1, 2009 at 3:55 pm

she said:
"the free enterprise system has us where we are right this second"

And I wish that she would reflect on that for a while and on the fact that lack of a free enterprise system is what got Cuba and North Korea where they are today. We might be in a ditch at the moment but even in this ditch we are way better off than Cuba and North Korea and enterprise system got us here.

GG May 2, 2009 at 12:52 am

Obama said a few times that auto companies should be making different cars than they were making now. I am sure he did not mean cars that people would want to have.
He would sell these cars at a discunt (Volt) covered by a huge transfer of tax money from the group that would not buy them. At some point the government would tell automakers how many of these cars they should make. They have been trying to do that for quite some time.

I lived in such reality for 30 years. Govenment could not figure out how many rolls and what kind of toilet paper the nation should produce and use. There never was enough. There was an abandunce of white vineger (go figure). One would think that it would be much easier to distribute coupons for toilet paper or shoes or sugar or meat and count how many coupons were issued and then produce as calculated. It did not work either.

Not much diffference here: once the govenment decided to produce ethanol, there wasn't enough than it is too much. Once the government decided to build more homes there were too many. Once the govenment decides how may wind turbines are needed there will be too many, how much food to produce by subsidizing agriculture, there is too much. Funny thing is that nowhere in the world, where the healthcare is nationalized there is enough of it or the right quality.
Government enterprise at its best.

thatguyky May 2, 2009 at 10:05 am

At the 2:10 mark of the interview Jackson makes another astounding comment regarding the reporters question about the possible damaging effects of carbon dioxide regulations on businesses, schools, malls, hospitals, etc. Jackson replies that those institutions would be rightly angry if they suddenly "found themselves operating under some onerous regulation." Her response: "So what that means is we should have a transition." I guess that will give everyone time to get used to the onerous regulations.

Phil May 3, 2009 at 3:19 pm

The thing is, free enterprise did not get us where we are now. The exact sort of centralized decision making that is being criticized is what got us here. If we're going to look to Orwell for lessons let's understand that exchanging big government for big business is no change at all. Free markets work very well, but markets with dominant players aren't free. Markets also can't factor out the uniform biases of the people who participate in them. The best thing for government to do is to rig the markets so that nobody is allowed to become dominant ("too big to fail" is too big by almost an order of magnitude), and so that issues that each of us would rather ignore as individuals (like pollution) are accounted for.

Ultimately the choice between free markets and socialism is a false dichotomy. What's needed is a system that prevents the decoupling of power from responsibility, or knowledge from decision making. No single set of tools is right for every situation, so it's not a matter of picking the right ideology, it's a matter of avoiding ideology in order to make the right choice.

JamesG May 5, 2009 at 7:21 am

Well said Phil. the only person in this thread with any common sense…

"Lifted billions out of the last 200 years"…?
…world population in 1800 was 1 billion, it is now 6 billion, most of whom live below the poverty line.

"the government destroyed the auto industry" ?
…People bought foreign cars so either the wonderful free-choosing consumer destroyed the auto industry or it sold crap cars.

"the use of the financial crisis and recession for the advancement of their own social engineering agenda" ?
…They have been landed with the task of finding work for millions..They didn't ask for it..

"Mises always talked about the concept of the "sovereign consumer" and his role in the free-market to decide what goods ought to be produced by buying or abstaining."
…Does that include hard drugs? Or buying toxic debt, or being stung by Madoffs? Hmm do you suppose there is a need for regulation?

You guys might consider that substituting one stupidity for another is no solution at all.As Phil says it is a false dichotomy we need free enterprise but it needs guidance and regulation.

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