While the politicians run around the country telling us of their plans to make our lives better–what wizardry they command, merely to make speeches, pass laws, and print paper and thereby make us prosperous and secure!–free enterprise is busy actually accomplishing this, and with little or no fanfare.
This is the thought that struck me when I saw today’s headline that 43,000 have applied for jobs at the new KIA Motors auto plant that is opening in Georgia soon. When the plant opens, there will be 2,500 jobs, so many of those people who have applied will be disappointed. What does that say except that we need more and more and more such plants.
But if that is to happen, we need to curb the activities of politicians so that free enterprise can do its job, which, after all, has nothing do to with elections, campaign finance, lobbying, or yard signs. Enterprise takes place on a completely human scale, person to person, and with every exchange, every winning investment, society is made just a bit better off.
I’ve been driving by the facility now for about six months, and it is nothing short of a marvel of ingenuity and daring. Actually, it is an amazing inspiration. A beautiful thing. Look across the highway and see what seems to be miles and miles of cleared land, with tractors buzzing about, with dirt, steel, and wood being moved from here to there. It is in its early stages of construction. But in what you see there are wild dreams at work. Ah, civilization! It was months before a sign appeared that it would be the new site of a KIA automotive plant.
You get chills when you think of the checks they’ve had to write already. Every driver of every tractor has to be paid. The 3,300 acre plot of land itself must have been incredibly expensive. And actually the entire plant represents a $1.2 billion investment. There are also five supply plants going up. The company will pay and pay and pay and pay – leaking fantastic sums of money for years.
And why? For what gain?
The gains are purely speculative. The plant doesn’t open until November 2009. But even then, not until the first car is purchased off the showroom floor does expense turn to revenue. Think of it. In the end, it all comes down to one salesman talking to one customer. And, in the end, it is up to the customer whether to trade money in for a car. He can walk away. If everyone walked away, this company would be bankrupt. All the expense, the planning, the purchases, the vast apparatus, will have proven to be a waste.
Talk about living on the edge! And why? There are two possible answers. The first is to make a buck. People say, that’s so greedy and disgusting. So much effort and resources and time put into the grubby task of making money. True? Let’s just say that raw greed is indeed the underlying motive. How does it work itself out in practice? Through an incredible and overwhelming act of human service, one that is rooted in offerings to the whole of society that everyone who accepts does so on his or her own volition.
While it impossible to know with certainty what motivates others–sometimes it is hard enough to untangle our own motivations–greed alone cannot account for the level of entrepreneurial fanaticism that is behind this kind of undertaking. More likely, it is a drive to do something spectacular. The motives could even be purely altruistic: the desire to give people great jobs and great cars. What the motivation is really doesn’t matter here; the key is the reality itself. KIA is doing wonderful things and taking enormous risks solely so that you and I, in the end, might have a fun car to drive.
It is also notable that this company is based on South Korea. So here we also see free enterprise smashing borders, uniting people across the world in a common cause, bridging barriers of culture and language to accomplish wonders for the whole of the human family. And they do it with no central planner. What drives them is not an election schedule, federal legislation, the ambitions of the powerful and the mighty but merely the deft coordinating hand of the free market.
Where politicians parade around and talk about themselves, no one apart from those who watch the automotive industry closely even know the names of the principles players here.
To compare politicians with entrepreneurs is like comparing two runners in a race, one who stands at the starting line and makes a speech, and another who runs the full distance around the track without saying a word.
Voters were not asked if this plant could go up, and, because of that, the CEO didn’t have to pander to anyone, tells fables of the fabulous things he will do with other people’s money, or re-invent himself as some sort of human savior. He doesn’t have to attend rallies or ask for everyone to cough up money. All decisions concerning this investment involve private property used for public benefit.
Now, you might be curious about how a plant this size opens without government help. Sometimes there are sweetheart deals behind these things. So I look it up. It turns out that the state of Georgia did indeed provide sizeable tax breaks. They concern income, sales, and land taxes – and the action of the state consisted in removing obstacles that shouldn’t have been there in the first place. Such tax breaks should be available to all, and that they are made only for KIA is a problem of justice. However, a tax cut does not actually extract a single dime from the citizens, so it is far more easily justified that an actual subsidy.
The people behind this will probably not go down in anyone’s history book. They hardly make the news now. They don’t even get the credit, not even from the people who buy their cars or work in their factories. On the contrary, they are held accountable for even the smallest amount of dissatisfaction. And their accountability is not just about reputation. It is about the bottom line. The truth is finally in the profit and loss numbers – a withering and bracing method of testing that politicians never face.
Reflecting on all this makes me want to put a KIA yard sign in my yard. Oh wait, I think that violates zoning laws. Special provisions are made for political signs.
{ 14 comments }
And then, when the entrepreneur finishes the race, the politician beats the crap out of the entrepreneur and steals his money. Then the politician steals money from the customer.
Very well written!
I agree with Chris, this is well written. However, it never ceases to amaze me how libertarians that tout the free market in the allocation of resources in capital and consumer goods possess an odd tendency to flirt with socialism when it comes to actually pushing through with their strategies.
I am of course referring to political libertarianism in light of a much better alternative in Agorism.
yet could the current mass of private automobiles, so inefficient in terms of space, cost, and time, still exist without government subsidy? without free parking? without free road usage? without free pollution? what if car drivers had to pay for their road usage, would there be so much car production?
car manufacturing could be viewed as the best response to the mass government subsidy of cars. the correct response to “free” road usage is overproduction of cars.
and car subsidy even extends to the point of “free” killing. kill with a car, get off with a slap on the wrist.
we’d see many more bicycles and much fewer cars and trucks if vehicle pilots had to pay for their road usage. this greater transportation efficiency would free up resources to engage in more productive activities, make the air cleaner, and save lives, both animal and human. maybe we’d see taller buildings instead, so people spend less time on transport.
Tucker is right: tax breaks cannot fairly be called subsidies. Since business entities simply collect taxes, such breaks represent a return of money to the company’s shareholders, directors and customers. The only injustice, as Jeff also points out, is that every business and individual doesn’t get them. Like when Buffett the Younger wept great crocodile tears over paying taxes at the lower capital gains rate than his secretary. In addition to not whipping out his checkbook to make up the difference, he likewise failed to call for the obvious remedy: lower everybody’s taxes to the capital gains rate.
In contrast to the Kia plant, I’m finding more and more about the appalling level of public financing involved in a lot of supposedly “private” real estate developments in Atlanta. It’s like a bubble w/i the bubble.
Quote from Joseph Huang: “yet could the current mass of private automobiles, so inefficient in terms of space, cost, and time, still exist without government subsidy?”
Who do you think is actually paying for that “subsidy”. Do subsidies fall from the sky? Grow out of the ground?
The tax payers are already paying for all of these “free” things you’re talking about. It might be nice if the costs weren’t hidden, then people could make real choices, but don’t act like they aren’t being paid for.
yes, and tax payers are a different group from car drivers.
the point is, that car driving is “free”, as in little marginal cost, from the point of view of the car driver, not that the roads fall out of the sky.
what if there was an ice cream shop that “charged” everybody and gave ice cream for “free” to those who came inside? this would cause over consumption of ice cream and related goods, such as ice cream cones. this is the same situation with cars and roads.
It’s fine to talk cars, but that wasn’t the point of my essay. I was trying to draw attention to the productivity of markets over politicians. But anyway…carry on.
and why would i complain about inefficiency if i really thought they were free as in no cost?
can you really ignore the fact that car driving is subsidized by everybody, due to the theft of taxes, while praising car over-production in response to these subsidies? perhaps in a fantasy world, but i don’t see how that makes sense in this one. to do so is to ignore the elephant in the room.
or to put it another way, i agree in principle, but i think the example was poor.
also, going with the car theme here, cars have long been under attack by the political class, with mileage mandates and exhaust controls and import tariffs and a zillion other things. That has to be considered as well.
Wow. That was sweet. Just make the sign “Vote KIA!” Believe me – most people won’t know the difference.
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