What Do the Germans Know About Making Cars, Anyway?!

by Don Boudreaux on June 8, 2009

in Not from the Onion

Here's a letter of mine appearing in today's Washington Times:

Cal Thomas is correct to note that government-produced automobiles are
no models of performance, style or safety ("Downfall of an icon,"
Opinion, Thursday). They truly are hunks of junk.

I remember being in Germany in 1990, not long after the
collapse of the Iron Curtain. A German friend told me of a then-recent
incident that had happened at night as he was driving on the autobahn.
He was cruising along at about 120 mph in his Mercedes when he saw
ahead two faint, flickering lights. "Good thing I slammed on my
brakes," he said, "because the lights were candles in the rear window
of a Trabant. They were being used as taillights!"

The government-made Trabant, I gather, had a top speed of about 60 mph — and obviously also an unreliable electrical system.

DONALD J. BOUDREAUX
Chairman, Department of Economics
George Mason University
Fairfax

(I thank Geoff Manne for the title of this blog post.)

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{ 26 comments }

muirgeo June 8, 2009 at 10:25 am

Germans have a huge social safety net. Universal health care, strong unions, progressive taxes, free education through college and good unemployment benefits. And in that environment indeed the Germans seem to be putting out excellent automobiles.

I imagine it helps that the German auto industry does't have to front the cost of employers health care like GM and Ford do. The answer doesn't appear to be NO planning but better planning.

Daniel Kuehn June 8, 2009 at 10:38 am

And muirgeo, I think you can press even harder. The Trabant was an East German car made with no responsiveness to the price mechanism or private demand. There was a similar example in the WSJ recently, where the "car czar" from Ceausescu's Romania was warning how bad government cars are.

Your points on the social safety net are debatable – I'd debate some of them – but they are substantially more relevant to America's situation than the products of East European dictatorships that planned and produced cars for the sake of indefinitely planning and producing cars.

vidyohs June 8, 2009 at 11:03 am

What a hoot you two are!

Don's post was about the difference between his friend's Mercedes, designed and made by free enterprise without government central planning and production done by bureaucrats; and the Trabant, designed and produced by government bureaucrats and "don't give a crap" labor.

This was such a simple post to get the kernal of wisdom from; but there you leftwingers go, off on your immediate tangent about socialized medicine, labor, social safety nets, schools, and all the other irrelevant crap.

Concentrate my little ones:

Mercedes – no government input. Works wonderfully well, lasts a long time.

Trabant – complete government planning and production, a piece of crap, begins to fall apart exiting the showroom floor.

Not too hard to understand the message, eh? Unless you're a leftie.

Douglas June 8, 2009 at 11:10 am

Great story, but let's not get too Ayn Randian on all this. Miss Rand couldn't even contemplate the existence of intelligence or proficiency for those on the other side (this made her a poor writer of fiction), but there's plenty of smarts among the liberal fascists.

The Trabant is an easy target, but let's not forget that Japan's economic history is anything but free market. The Soviets did economic planning by putting political ideology first, and it didn't work out so well for their cars. The Japanese did economic planning by putting market share first, and no one is complaining about the Lexus. And no one in their right mind would ever suggest that Japan is some kind of free market loadstone.

Don't get me wrong–I've lived and worked in Japan and it's perhaps my least favorite place on planet earth. And every day in Germany makes me ever more grateful that I live in the United States. But the point is that these places in which I'd never want to live again because of the sheer lack of liberty, can still turn out some decent cars. Keep the cars. I'll take freedom.

Daniel Kuehn June 8, 2009 at 11:19 am

vidyohs -
RE: "Not too hard to understand the message, eh? Unless you're a leftie."

Good lord, can you please reread my post vidyohs. My post agreed that the distinction is government production and that government production is bad. Are you really so blinded by what you think of muirgeo and I that you missed that?

Read Cal Thomas's original article that Don was commenting on. He WAS making the tie between the East European communists and the GM and Chrysler situation.

vidyohs, isn't it possible for me to say:

1. Government should not produce cars – private companies should, and

2. The analogy to East Germany is totally spurious and muirgeo's comments are more pertinent to the issues we are ACTUALLY grappling with in this country.

You are so blinded by what you think of me, vidyohs, that you can't even see that I'm agreeing with Don on government run car companies – and I ALWAYS have on this blog and on every post about GM and Chrsyler.

Oh… and I'm not a leftist either.

Douglas June 8, 2009 at 11:19 am

Don,

I've just read muirgeo's comment, and I imagine you disagree.

I disagree that we need "better planning" because that better planning has landed them an unbearable lack of freedom, albeit with decent cars and jobs they can never lose.

But why do you disagree with muirgeo?

DAVE June 8, 2009 at 11:23 am

As an aside, the mercedes was doing 120 Mph on the highway. Iv'e never done more than 90.

Are there any data re. accidents on the autobahn vs. the interstate?

vidyohs June 8, 2009 at 1:08 pm

Disingenious Kuehn,

Cal Thomas' article is irrelevant, both muirduck and you were responding to Don's post and Don's point.

You may have been introduced to the subject by Cal's article, or maybe by Don's post, but for myself it is a topic from about 4 decades ago.

muirducks comments are wildly wrong because of his basic socialist unwavering viewpoint, and I believe you said this:

"And muirgeo, I think you can press even harder."

"Your points on the social safety net are debatable – I'd debate some of them" //only some of them?//

- but they are substantially more relevant to America's situation than the products of East European dictatorships that planned and produced cars for the sake of indefinitely planning and producing cars.

Posted by: Daniel Kuehn | Jun 8, 2009 10:38:50 AM"

Yep, DK, you don't find it odd that Ford is not going bankrupt, and Ford also has much the same obligations that GM had/has? Yet your response to muirduck seems to show that you tarnish the entire of American auto industry with the GM brush.

Could GM's problem have more in common with the Trabant than you can see? Have you never seen a GM Aztec on the road, not many of them for sure as they were the product of an drug addled brain and GM lost its ass on the thing. GM lost its ass because it began to think it could build cars that had no real marketability, and then sell them by dazzling the public with BS. (Now I'll grant you the Aztec was functionally much better than the Trabant, but ugly beyond belief.)

Even with a market like that provided by the American people that can only last so long.

And, of course you're not a lefty……….:-)..of course. You haven't yet learned that when it comes to economics, trade, market(s), and wealth creation, muirduck has never had a relevant thought, all he has ever done to date is spew socialist scripture and orthodoxy. But as a not lefty, you think his comments have some sort of value? How does that work?

John June 8, 2009 at 1:14 pm

Germans have a huge social safety net. Universal health care, strong unions, progressive taxes, free education through college and good unemployment benefits.

I had the opportunity to learn under a chef from Germany.
That free education is doled out according to ability and need. If you do not test well enough you don't go, and if you do test well enough your course of study is determined for you – or you get to pick from a filtered list.

On health care, he used to joke that in Germany you don't go to the doctor unless you are dying.
He talked of one incident when he was in school when a fellow student accidentally stabbed themselves in the gut with a six inch boning knife.
He put a bandaid on it and kept working.

Is that your idea of utopia?
You go to college if the government says you can, you study what the government says you can study, and you don't waste government health care resources unless you are on death's door?

Daniel Kuehn June 8, 2009 at 1:42 pm

vidyohs -

RE: "Cal Thomas' article is irrelevant, both muirduck and you were responding to Don's post and Don's point."

Yes… and Don's post linked to Cal's article, and Don's post was ABOUT Cal's article, so I fail to see what you're getting bent out of shape about.

RE: ""Your points on the social safety net are debatable – I'd debate some of them" //only some of them?//"

Yes vidyohs. Despite your efforts, I'm pretty much sold on progressive taxes and good unemployment benefits, and while I'm not sold on free college I'm fairly well convinced on free pre-college education as well.

RE: "And, of course you're not a lefty"

Actually, I do happen to write with my left hand, but I take your point. I'm glad you finally recognized I'm not a leftist :)

RE: "But as a not lefty, you think his comments have some sort of value? How does that work?"

His thoughts are more relevant to the actual problems and issues in the U.S. right now than an East German car designed by a central planner. Didn't I explain that already?

John -
Re: "He talked of one incident when he was in school when a fellow student accidentally stabbed themselves in the gut with a six inch boning knife."

:) sounds like natural selection to me

Mcwop June 8, 2009 at 2:29 pm

DK writes:
I'm fairly well convinced on free pre-college education as well.
———

I am not, at least not the government run schools. Baltimore has a huge public school dropout rate (40%) despite the education being free. Is it because of poor quality government run education?

If the government in Baltimore cannot get schools right after decades of failure, why should I believe that the government can build cars – huge safety nets or not.

John June 8, 2009 at 2:42 pm

Makes me think of the Simpsons episode "Oh Brother, Where Art Thou?" where Homer designs a car…

Slocum June 8, 2009 at 3:17 pm

I imagine it helps that the German auto industry does't have to front the cost of employers health care like GM and Ford do. The answer doesn't appear to be NO planning but better planning.

You might imagine that government provided health care is the critical factor, but that doesn't fit the facts. Not only do GM, Ford, and Chrysler provide employee health coverage, but so do all the transplant factories in the U.S. Are the Toyota and Honda, and Nissan's health plans as generous and comprehensive as the UAW plans? No — but my plan isn't either and chances are very high the same is true of your plan, too, if you work in the private sector. Similarly, if you're a retiree on Medicare, you coverage is not nearly as good as a UAW's retiree coverage.

Universal health care wouldn't save any money for the Detroit automakers unless the UAW was forbidden from demanding a richer plan above and beyond what the government provided (as is the case now with UAW retirees having better and more expensive plans than Medicare).

Is muirgeo recommending that the Detroit automakers could be made competitive by forbidding the UAW to bargain over health care and instead forcing it to accept whatever least-common-denominator universal plan is available?

But even then, nothing would stop the UAW from demanding more in wages to make up for what it gave up in accepting a lower-cost health care plan. In the end, it was irrelevant whether Detroit's higher labor costs were in the form of wages, health benefits, or retirement benefits (or all of the above)–dollars are dollars, and it doesn't matter to the employer what form the compensation is in.

andy June 8, 2009 at 5:01 pm

I have heard a funny story about some Trabants which occured in the 90's – some guy was approached by a (somewhat richer) friend if he could sell him his trabant, he was offered some reasonable money. He did. Afterwards he asked his friend what is he going to do with the trabant – and he was told that he and some other guys bought some trabants, took a really big ball and took the cars to some meadow and played a variant of 'soccer'….

SaulOhio June 8, 2009 at 5:33 pm

Someone said something like the answer isn't no planning, but better planning. To that, I agree. But better planning is private planning, which public planning makes impossible.

And all that gibberish about a social safety net is a diversion. You have nothing important to say about the topic, so you change the subject.

brotio June 8, 2009 at 6:14 pm

Great point, Saul.

Yasafi,

Don was comparing Trabant (a government-owned company) to Mercedes-Benz (a privately-owned company) as a way to illustrate GM's future.

Gil June 9, 2009 at 1:43 am

Fancy that – being able to cruise at 200 km/h. Two things come to mind – you'd be breaking the speed limits anywhere to do that speed and most down-to-earth cars probably top out at around 200 km/h anyway, if at all.

muirgeo June 9, 2009 at 2:18 am

The article suggest that Germans make better cars then governments. No argument from me there.

But aren't Don and Cal Thomas overlooking the fact that the Germans make better cars then Americans? Isn't it the American companies that are failing?

But if governments and or government regulations make it harder to make good cars then how is it that GM failed and German automakers have succeeded? Are you trying to tell me that Germans have LESS regulation then us?

I think the post is self contradicting.

muirgeo June 9, 2009 at 2:24 am

"But the point is that these places in which I'd never want to live again because of the sheer lack of liberty, can still turn out some decent cars. Keep the cars. I'll take freedom."

Posted by: Douglas

Lack of liberty? The guy in Germany was legally doing 120 mph. Can you do that ANYWHERE in the US of A?

The guy likely has 6 weeks of paid vacation. Most Americans are lucky to get 1 or 2 weeks.

The guy doing 120 mph had access to free health care. Fully 1 in 5 Americans have no access to care.

So what lack of liberty did you see in Germany when you were there?

Liberty for a privileged few does not make a land of liberty IMO.

brotio June 9, 2009 at 3:04 am

"The guy doing 120 mph had access to free health care." – Yasafi

Another quote worthy of inclusion in the list of muirpidity. There is no such thing as free health care, unless you're healing yourself.

"But aren't Don and Cal Thomas overlooking the fact that the Germans make better cars then Americans? Isn't it the American companies that are failing?"

Toyota, Nissan, and Honda build cars in the United States. The quality is as good as the cars rolling off of Japanese assembly lines, which is as good or better than anything Benz is making.

GM, Ford, and Chrysler aren't building crap, but they are paying $75-per-hour and up for labor, while the cost is more like $45-per-hour in the non-union shops. But, I'm sure that has nothing to do with GM's problems, does it?

muirgeo June 9, 2009 at 10:00 am

Bro,

German auto makers are unionized as well. So unions don't explain the failure of US auto industry compared with the German auto industry does it? In fact, I believe Japans auto industry is all unionized as well.

On free health care… yeah there is no such but also there is no such thing as FREE freedom. But I think you knew what I meant.

lukas June 9, 2009 at 10:26 am

The problem is not unions but uncompetitive wages… Besides unions in Germany work differently in that membership is not compulsory and multiple unions are allowed to compete for members.

Narbonne June 10, 2009 at 11:23 am

Why do people tell this trite little stories about Eastern bloc widgets compared to Western widgets and think it is of any value and says something about socialism. First, I don't understand why people think that all socialism involves totalitarian centralized government control of production in a non-democratic state. Second, perhaps the cheap Eastern bloc car was the first and only that the blue collar owner could afford, and was very happy to own, and the person driving there Merc. was a wealthy capitalist fat on the wealth generated from exploiting the person driving the small car. What is perhaps most distrubing about this post is that how nice your car is is supposed to say that one system is better then another. I guess this writer believes that one day capitalism will allow us all to buy those big Hummers that we obviously all want. Lets also not forget that the national socialist Germans built some very nice widgets up to and during WWII, but that even then they were not as good as the Soviet tanks. The capitalist Americans built weaker tanks, but we built alot of them.

geckonomist June 10, 2009 at 11:44 am

Renault, Volkswagen (and Audi and soon Porsche ) are de facto government owned. The french car is not very good, but the audi's are climbing in all rankings.

But soon all of you will have to sell your porsches out of government hating principle???

And watch out when you take the plane, don't step in a state of the art Airbus , but choose those stone age MD's and Boeings.

Guess taking a train is not an option, that would have been too much freedom to handle.

rmark June 11, 2009 at 5:42 pm

"The guy doing 120 mph had access to free health care. Fully 1 in 5 Americans have no access to care."

1 in 5 may not have health insurance (a statistic I seem to recall includes those who can afford it but prefer not to buy it), but they do in fact have access to health care.

sethstorm June 12, 2009 at 1:47 am


The Japanese did economic planning by putting market share first, and no one is complaining about the Lexus.

…except that Detroit makes cars with performance in mind without restricting such performance to the select few.

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