General Motors sells the electric Volt for $40,000 and loses about $50,000 every time it makes a sale, because that $40,000 car costs $89,000 to build. The solution GM has hit upon (you have to be a government-run enterprise to think this way) is to sell it for $30,000 instead. GM is offering additional $10,000 discounts on a car nobody wants, but the problem is: Nobody wants it. GM should just close the production line–in fact, that is what GM is doing abroad, shutting down factories in Europe because nobody there wants GM’s non-electric cars either.
The Democrats made the GM bailout the centerpiece of their economic case at their convention in Charlotte, boasting that intervention saved more than a million jobs. This ridiculous claim assumes that without GM every single automotive job in the United States would have been lost: not only those at GM and other U.S. firms pinned down under the morbidly obese autoworkers’ unions, but at Honda, Toyota, BMW, etc. An automaker that cannot sell cars at a profit is not a business, and it is altogether mysterious that it has become a talking point.