Anti-Tesla bill rejected by Ohio Senate.

On December 3rd, an amendment to Ohio Senate Bill 137 failed to pass. The amendment would have required Tesla Motors to sell its electric cars through a third party rather than directly to consumers. Ohio is number two in auto manufacturing in the midwest and Tesla’s new line of ultra-efficient electric vehicles are a threat to the entire automotive industry. Contrary to what those in Detroit and Ohio would have you think, this is a good thing.

For far too long the automotive unions and automotive industry lobbyists have suckered the individuals in this country into believing they were the backbone of American manufacturing when in fact they were a leech sucking money from more productive uses. For example through the years 2008 to 2011 Ohio granted $80.8 million in subsidies to General Motors, $54.4 million to Ford, and $28.7 million to Chrysler. This is ignoring the billions of dollars spent on the auto bailout last decade which, much like Chrysler bailout in 1980, simply saved failing corporations from their own shoddy business practices. While Tesla gets its own fair share of subsidies any threat to the auto industry is a positive thing for consumers.

Around the Web: The Failure of Detroit and the Demagogue of Vienna

  1. Ilya Somin argues that Detroit’s aggressive use of eminent domain needs to be incorporated into any discussion of Detroit’s failure (be sure to read through the ‘comments’ section, too).
  2. Richard Wolff blames “capitalism” for Detroit’s failure. No seriously.
  3. Historian Andrei Znamenski has a great piece in the Independent Review on the political life of Karl Lueger, a socialist who became mayor of Vienna in the late 19th century.

Ultimately, I think that Detroit’s failure can be chalked up to bad fiscal policy, cronyism (at the local, regional and federal levels) and freer trade (which lets me drive a high-quality Toyota rather than some clunker from Detroit).

Lueger was an advocate of social justice and consequently of national socialism. Znamenski found that he had a profound influence on the thinking of an impressionable young artist living in Vienna at the time.

Unemployment: What Is It?

Unemployment has regained center stage now that the debt crisis has receded from that position, at least for a time. Unless things change dramatically over the next year unemployment will be the number one issue in the forthcoming presidential election. Hardly any proposal will escape being labeled “job-killing” or “job-creating” or both.

To begin with some basics, what is work and what is a job? For economists, work is any activity that we would not perform without tangible compensation, usually money. In our work lives almost all of us are also motivated by nonmonetary considerations, and to the extent we diverge from the most remunerative activity available to us, we are blending work and leisure. A retired person who takes up college lecturing may do the work primarily for the satisfaction it brings. If his salary were withdrawn and he continued to teach, he would be enjoying leisure.

The goal of all economic activity is consumption, which to economists means not just mundane goods like faster cars but also “noble” ends like cathedrals. Jobs are therefore not ends in themselves, as much as public discussion would suggest otherwise. They are means to acquire income to be used for consumption and saving, in addition to personal satisfaction, learning opportunities, or socializing.

A person who lacks a job is unemployed if he or she wants work, has suitable skills, and has realistic expectations about compensation. These are vague terms; they make unemployment a murky concept. That goes double for underemployment, though both remain very real phenomena. Continue reading