Roger and Me and Free Enterprise; J. Doti

RogerandMe documentsthe impactofGeneral Motors' decisionto relocate automobileproduc tion facilitiesfrom Flint, Michigan,to lower-cost operations in Mexico.The film's messageis that relocatingassemblyplantsoutsidethe U.S. had a devastatingsocio-economicimpacton the people ofFlint.Thefilm'svillainis the freemarketsystem that allowsG.M.'s supposedlycallousCEO,Roger Smith,to undertakereprehensibleactswhilehold ing himself and his company above accepted normsof decentbehavior. It shouldnot be surprisingthat MichaelMoore takesa gooddealofartisticlicenseindocumenting the facts. It isn't mentioned, for example, that whilesomejobswere lostin Flint,the majorityof workerslivingthere are stillG.M. employees.Nor does Moore document the fact that G.M. has poured billionsof dollarsinto buildingnew and modernizing existing U.S. assembly plants. A more serious problem that calls into question Moore'sethicalstandardsand reliabilityas a jour nalist is his scrambling the sequence of events depicted in the film to support a point of view rather than a senseof reality.

For the sake of argument,let us overlookthese Dr. Doti is a professor of economics at Chapman Col lege, Orange, California. problemsand acceptfor the momentMoore'scin ematicview-that the unbridleduse of free mar ket capitalismled to the demiseof a once healthy and vibrant local economy.When such a view is taken,thelogicalfollow-upquestioniswhatsortof policyMoorewouldproposeas an alternative. I supposemostmorallyconsciouspeoplewould advocatethe passageoflawsthat preventG.M. or any other domestic automobile manufacturer fromclosingU.S.assemblyplants,especiallywhen the closurestake placebecauseauto-makingfacil itiesarebeingmovedoutsidethe country.Butlaws preventingplant closureswould place G.M. and other domesticauto makersat a competitivedis advantage againstforeign competitorswho pre sumably can locate their automaking facilities wherever production costs are lowest. Enlight ened policy-makersare therefore likelyto argue that protective trade barriers are necessaryas a concomitantpolicy.Suchbarriers,so the argument goes,wouldpreventforeignautomakerswho pro duce at a lower cost from having an "unfair"

advantageoverU.S. firms. Theimplicitassumptionhereis that lawscanbe enacted to prevent the cruelties documented in RogerandMe. Manypubliccrusadersundoubted ly believethatjobsaswellas citiescanbeprotected by legislationdesignedto servenationalinterests. Beforeacceptingthisassumption,let'sconsider the cost of such well-intentioned public policy. Firstof all, the compassionatefeelingsof Michael Moore and other public crusaders evidently extend only to U.S. workers.The fact that G.M. created jobs for Mexicanworkers and improved theirearningspotentialis consideredonlyin a neg ative light. G.M.'s recent decision to build an Michael Moore assemblyplantin Hungarywouldprobablyalsobe attacked by these same humanitarians.It is ironic that compassionis often constrainedby national istic fervor while the forces of free markets work againstsuchdiscrimination. But even if justiceand moralityextend only to the U.S.border,keepingFlint,Michigan,aliveand well by means of laws and regulations will also work against our fellow citizens. Consider, for example, the higher prices that consumers will have to pay for automobilesas a result of steeper tariffsand quotas that are now necessaryto keep domesticauto makersin business.

The higher prices represent a subsidy on the part of consumersto maintaininefficientproduc197 tion facilities.While the jobs savedin Flint might bear witnessto whata benevolentgovernmentcan do, the true costs are spread thinly among many and are difficultto observe.In the aggregatethe costsare significantbut, at an individuallevel,the marginallyhigherpricea personpaysfor automo bilesis not the stuffupon whichentertainingdoc umentariesare born. A dieharddo-goodermightstillarguethat jobs were savedin Flint.Perhaps,but onlyfor a while. Eventually,consumersget fed up with payingthe bill for inefficiency.Case in point: the consumer revolutiontakingplacein Eastern Europe and the Soviet Union. The lure of goods available in a globalenvironmentis seductive.Whenthe dispar ity widens between what consumersget at home versuswhatis availablein worldmarkets,pressure is broughton governmentsto end theirprotection istpolicies.And whengovernmentsend their pro tection, firms that barely survivedin a regulated environmentwill suffer a slow and painfuldeath whensubjectto the rigorsof competition.

Thevisibleimpactoffreemarketforcesmightnot alwaysbe kind and gentle.In servingthe needsand desiresof consumers,the "invisiblehand" of free enterpriseforcesproducersto respond.When they do, theyprofit;when theydon't,theyfail. The pro cess isn't necessarilypretty,but it works amazingly wellas longas governmentsdon'tgetin the wa~ There is a scenein RogerandMe reminiscentof The GrapesofWrath,whereRonald Reaganvisits Flint and suggeststo unemployed auto workers tha~ jobsmightbe foundin Texas.Reagan'sinabil ity to come up with a more palatable and action oriented alternative strikes audiences as humor ous. We shouldbe thankfulthat he didn't go back to the WhiteHouse and draft a jobsbill. D F·E·E 11990 Summer Seminars July 9-14 August 6-11 Join us in Irvington to explore the philosophy of freedom. Our 5-acre facilities in suburban Westchester County provide the ideal setting for intellectual pursuit. For full details and applications, write or tele phone Mrs. Dorothy Reale, Foundation for Economic Education, (914) 591-7230.