Dealergate: Center-Right Bloggers Doing the Establishment Media’s Work, with Larger Lessons (Topside Updates: More Evidence; Reverse Discrimination?)
TOPSIDE UPDATE, May 30: Apparently, the Leftosphere is engaging in one of its typical tactics — “You don’t have courtroom-level proof, therefore it’s all made up.” Well, patterns are patterns, and acknowledging their existence isn’t a sin — yet.
Meanwhile the evidence, and concerns expressed by adults, mounts:
- Doug Ross — “Dealergate: 40 Democrat-friendly Dealerships Become 42 After The Dust Settles; Their Competition Gutted As Well”
- IBDeditorials.com — “Has our political class grown so petty that it would use the power of government to punish the political opposition? We hope this isn’t true. If it is, the country’s in more trouble than we thought.”
- Doug Ross — “Awesome: Olbermann and 538.com echo-chambers inadvertently confirm Dealergate findings!”
The Volokh post showing that the percentage of terminated dealers who were minority-owned is the same as their percentage of the dealer universe proves nothing, and actually may support the favoritism claim. If minority dealers in general have outperformed all others or have more attractive prospects, fewer of them should have been terminated. If minority dealers in general have underperformed all others or have less attractive prospects, more of them should have been axed.
Based on business considerations, it’s obvious from this May 15 Wall Street Journal report that the a minority dealership group thought that the latter would be the case:
The National Association of Minority Automobile Dealers (NAMAD) estimates that 140 of Chrysler’s 170 to 175 minority-owned franchises could be closed, and at least 174 of GM’s 300 minority-owned dealers could shut their doors.
The NAMAD estimate was presumably based on the group’s assessment of the business factors Chrysler would consider in dealership termination decisions.
Even conceding that the group’s statement has some attention-seeking hyperbole, it’s difficult to get from NADAM’s 82% “could be closed” estimate (140 divided by 175; NADAM’s total dealership count appears to be as of early 2008) to the final result of about 25% (38 divided by 154) without raising the possibility that minority Chrysler dealerships were unfairly spared in the name of something other than business-related factors.
I cover the reverse discrimination issue more fully here.
TOPSIDE UPDATE 2, May 30: Why won’t anyone own up to being responsible for the dealer termination decisions? Joey Smith’s Chrysler Dealer Shutdown blog points out that White House spokesman Robert Gibbs claims that “We don’t make those decisions. Ok?” But a lawyer for Chrysler dealers who deposed Chrysler President Jim Press believes, based on that deposition and despite management’s official denials, that “Chrysler (management) does not see the wisdom of terminating 25 percent of its dealers …. They are under enormous pressure from the President’s automotive task force.” Separately, Smith notes an LA Times story reporing that General Motors CEO Fritz Henderson has “acknowledged (Obama administration) pressure to make ‘faster and deeper’ cuts to the company’s distribution network.” So there was pressure at GM, while Gibbs implies there was none at Chrysler. Uh-huh.
(begins original post)
Doug Ross has done yeoman investigative work (here and here) looking into something the establishment media apparently won’t touch — and, as Michelle Malkin noted, is even mocking. Now that Drudge has flagged Mark Tapscott’s piece, further attempts to sweep the matter under the rug will be painfully obvious.
What Doug and others have found reveals a pattern of Chrysler dealer terminations that, despite assurances that they were based on “sales volume, customer service scores, local market share and average household income in the immediate area,” seems divorced from valid business considerations. Many star dealers who have moved a lot of merchandise have been nixed, while a number of underperformers have been allowed to stay on board.
Doug, with lots of help, notes that “Dealers on the closing list donated millions to Republicans, $200 for Obama.” Meanwhile, certain dealers who are either Democratic donors or have Democratic connections have been spared.
The possibility also exists Gateway Pundit also has compelling evidence that certain terminated right-leaning dealers have seen their territories gobbled up by Democratic business cronies.
All of this is an object lesson as to why the government shouldn’t have tried to “save” Chrysler, or General Motors, in the first place.
In a private business, owners’ decisions are often arbitrary, and sometimes even stupid. Heck, there may even be a few that are based on partisanship, or disagreements over religion. But in general, the decisions are made based on business considerations with an eye towards current or future profitability. If the decisions are wrong, the primary and unpleasant damage is limited to the company itself, the owners, company employees, and other stakeholders.
But when government makes business decisions, even angelically-intentioned (which seems very dubious in the case of Chrysler), factors other than current or future profitability become more important than they should be. Sometimes the other factors become paramount. History has shown that the government-made decisions are on average be much worse for the business and for society as a whole than decisions made by business owners themselves.
When the government is an actual owner, the entire country pays the price for bad business decisions. That’s why government should stay away from running businesses.
That we have to re-learn this obvious lesson because of an administration that either believes it can transcend history, or doesn’t care about the damage it is doing as long as its power is enhanced, is extremely frustrating.
Milton Friedman had something to say about all of this many years ago (“The Social Responsibility of Business is to Increase its Profits”). He was right then, and he is still right today.