Wednesday, June 19, 2013

Detroit City or the Silicon Valley

La Crosse WI – Just a couple of years ago The Wall Street Journal’s headline banner read “GM Collapses into Government’s Arms.” The motor company, along with others, had gotten itself into too much trouble financially, and needed to be bailed out.
The now infamous “stimulus package” was supposed to save the failing companies, which were “too big to fail” from collapse. The bailout was supposed to save jobs. The General Motor Company once employed about 395,000 blue collar workers. As of 2012, they employ about 40,000.
Detroit just defaulted on a 2.5 billion dollar loan to avoid bankruptcy. The city is no longer the sprawling metropolis with massive factories turning out the new cars every few minutes as the entire world clamored for the new technology. Over 40 percent their revenue this year, according to Fox News, went to paying bond, pension, health care and other payments. If their current system were to continue, by 2017 they would be paying 65 percent of their revenues to creditors.
By July first the city’s deficit in the budget will be about 380 million. Their long term debt could be as much 17 billion dollars.
In the southern region of the San Francisco Bay area in Northern California, is a place called the Silicon Valley. Originally named after the silicon chips, it now has taken on a different meaning; many large technological corporations in the area, most of whom are rich beyond the dreams of avarice.
One of the companies is Apple Inc. In the years between 1986-97, the company began to decline. Instead of getting a stimulus or being bailed out, the company tried new products to keep their heads above water. Some of these were the iproducts.
If Apple had gotten a bailout, they would have had no reason to struggle to survive, and we may never have had the iPhone.
The first company Bill Gates and his friends started failed. But that first company, (Traft-O-Draft) got them into writing software for computers. If the first company had been stopped from failing, it is very likely Microsoft would never have gotten started.
These companies were not started by powerful trusts, they were started by kids. Kids who did not know that bad companies should be saved by the government, kids who forgot to sign up for their benefits. If their failures had been turned into successes, then we would all have lost out. When the government leaves the market alone the bad businesses die and the good ones make themselves better to survive. Who knows what would have happened if Detroit had been left alone? Perhaps we would have flying cars.

Andrew C. Abbott

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