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Why GM’s Chevy Volt won’t sell: Government Motors vs. US consumer

Updated on December 23, 2010

by Joshua Cook @

“Function” in economics is very important in the consumer market. Products must have function and value in order for it to be successful. What some firms do when they do not have a product that functions well is get the Government involved to eliminate its competition or have the government be its top customer. These firms force its products on the public via law or statues. The Chevy Volt is a good example because it is a product of GM which is owned by the federal government and there is an ongoing attempt to change the public taste to go “green” whether they like it or not. The problem with the Volt is that fact that no one wants this product because it doesn’t work very well; it is expensive, uncomfortable, doesn’t travel very long without having to charge it again and costs a lot of money to re-charge. Consumers want value and products that function well. Until GM develops car that the consumers want, not what the Government wants, their products will never be successful.

Another example of firms and the misuse of government is in the Kilo case. Pfizer built a large research facility in New London, CT. A not-for-profit organization, New London Development Corporation (NLDC), planned to build a “sprawling waterfront complex of private housing, stores, restaurants, and businesses” nearby in the Fort Trumbull area. Some land-owners in the area refused to sell to the NLDC, and so the city claimed their land by eminent domain. The land-owners sued the city, and the action wound up in the US Supreme Court, which decided in favor of the city, by a 5-4 vote. Justice John Paul Stevens wrote for the majority that the city’s “determination that the area was sufficiently distressed to justify a program of economic rejuvenation is entitled to our deference. The city has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including – but by no means limited to – jobs and increased revenues.” This majority opinion is important, because the Fifth Amendment to the US Constitution provides “nor shall private property be taken for public use without just compensation.” Many had interpreted this provision to mean that eminent domain could only be used to take property for public use, e.g., to build a road or a public school, but not for private purposes, like building up-scale waterfront developments.
The winners are big firms that have legal backing and political influence. In a vigorous dissenting opinion, Justice Sandra Day O’Connor wrote, “any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms…. The government now has the license to transfer property from those with fewer resources to those with more.” Finally, “the specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, any farm with a factory.” Justice Clarence Thomas added, “allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that these losses will fall disproportionately on poor communities.” Ironically, One of the new board members of the city of New London was George Milne Jr, who also was a Pfizer vice-president. The new board president was Claire Gaudiani, President of Connecticut College, the wife of David Burnett, also a Pfizer vice-president.

The misuses of big companies that use government to force others, individuals or other less powerful companies, to give in by force must not be tolerated in this country. In this case, Pfizer and NLDC used government to eliminate any competition by their political influence and legal maneuvers. GE used the government to pass a law to ban the incandescent light bulb and replace it with an “eco-friendly light bulb.” The two issues is that GE eliminated its competition by political influence, banning its completion through the legal system and congress. Number two, the product is not efficient and actually harmful to the consumer and the environment because of its high mercury content. The action of eliminating competition via fiat and political means is that it stifles and damages efficiency because it eliminates companies that may develop a better product. What is more is the principles that this country was founded on and the fact that we should all be equal under the law. I would say that what we need are politicians who will stand up to these big firms and to politicians who align themselves with these corporations, but that will never happen.


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