Monday, February 10, 2020

Studebakers and Capitalists

When I last visited South Bend, Indiana, I assumed it was for the first and final time. But karma doesn’t work that way. It puts one in situations one never expect for reasons one rarely understand. Karma brought me here once more. Last time I was here there wasn’t time to visit the Studebaker Museum across the street from our accommodations at the Avanti House. But this time we ventured inside.


Within the museum’s walls are some very shiny and cool old cars, mostly Studebakers. But there are also old horse carriages. Studebaker began as a blacksmith shop. Later it built carriages. Ultimately, the company decided to hedge its bets by manufacturing automobiles in addition to carriages in case “horseless carriages” were more than a passing fad. Studebaker’s first car was electric, a quiet vehicle that didn’t foul the air. But the public demanded gasoline powered cars. In time Studebaker made those exclusively.

Among the museum’s carriage collection are several that transported American president’s. Of these carriages, two provided the last rides taken before their riders were assassinated. A somber coincidence perhaps. Karma can do that.

If the museum can be said to tell a story, the story is this. Companies have natural life cycles. Studebaker began as a simple blacksmith shop. It took risks, but also gave the public the products it desired. It grew from a one-person business to become a major automobile manufacturer. However, when its fortunes changed in the 1960s, it went out of business. This is capitalism in its pure and natural form. It takes risks, pleases consumers, competes and innovates.

There is a myth that circulates among us. It’s that markets should be self-regulating and free. Economist Robert Reich points out that markets have always had their rules, such as those governing bankruptcy and loan terms. Karl popper notes that without regulations, seemingly free markets would develop consumer strangling monopolies. Markets should serve consumers, not profiteers. I believe the free market myth is a disguise for class-entitlement thinking. Too much winning convinces some of the wealthy that they are deserving of what falls to them. Because they deserve what they ultimately get, class-entitled people are willing to bend rules by seeking favorable treatment from the government and others. When they talk about a free marketplace, they mean one free from environmental rules that force their industrialists to pick-up after themselves. It’s like they say, “We make chemical products. The remaining hazardous waste is an unintended byproduct that’s not our problem.” Staying focused on the product and not on the damage it causes, leads oil company executives to bury reports on climate change while misinforming the public.

There are some who say capitalism works best when it’s unregulated. I don’t believe it. We live in a complex world. Regulations are sometimes needed. Studebaker began small, gave the public what it wanted, took risks, changed with the times, grew large, then died a natural death. This is how it should be.

Unfortunately the same wealthy men who advocate unregulated marketplaces also advocate tax breaks and handouts for themselves. These wealthy men feel entitled to special advantages. They’ve forgotten that capitalism is entwined with risk. In order to convert more oil into money, some of these men misinformed the public about climate change. The lies have worked to some degree, but the tide of opinion has changed — most people are now convinced that climate change is real and imminent. Sustainable, green technologies are being birthed and implemented. Ultimately businesses based on obsolete petroleum technology will decline and die. That’s how capitalism is supposed to work. Competition drives innovation and innovation drives economic growth. Dinosaurs that prefer lying to competing and innovating deserve to disappear.

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