General Motors Is Now Toyota’s Regulator

It was ugly when the US Congress spent nearly $50 billion to transform General Motors from a proud automobile company into a jobs program, but the consequences of public ownership of private companies has now taken a turn for the worse.  Now GM and the United Auto Workers Union have been given the ability to harass and regulate competitors, potentially forcing them out of business!

Toyota has recently experienced quality issues due to rapid acceleration with many of its cars and brake problems with the Prius hybrid.  This has resulted in massive product recalls and a freeze of new car sales until accelerator pedals can be fixed, costing Toyota hundreds of millions of dollars.  I’m convinced that Toyota’s quality problems are legitimate; my problem is the fact that the US Government, which owns General Motors, is now investigating Toyota.  This represents a gigantic conflict of interest.

Last week during Capitol Hill testimony, US Transportation Secretary Roy LaHood stated that Toyota owners driving vehicles affected by the recall should stop driving the cars immediately and take them to a dealer.   Toyota stock immediately tanked, reducing company value by $3 billion.  LaHood later apologized, saying he had made a “misstatement.”

The US Transportation Department has now commenced investigations into both the acceleration and brake problems of Toyota vehicles.  The Federal government has also announced that their investigation is spreading to include the possibility of electronic interference as the cause of Toyota’s vehicle acceleration problems.  This type of Federal investigation could go on for years costing Toyota billions of dollars, not to mention further damage to Toyota’s already marred reputation.

One can imagine a clever editorial cartoon where a government regulator is harassing a Toyota executive.  Behind the slightly cracked office door sit the ecstatic CEO of GM and the president of the United Auto Workers.  What a deal!  The owner of Government Motors is also in charge of regulating GM’s competitors!  Not only is this conflict of interest not good news for Toyota, but it’s not good news for Ford or any other legitimate automobile company.  Once your competitor “owns” the regulation process for your industry, nothing good can happen.  If the US Department of Transportation investigates a problem with any non-GM make or model, many will wonder if the problem is legitimate, or driven by political considerations.

The US government should immediately put GM and Chrysler up for sale.  If a buyer can’t be found in one year, both companies should be broken up and their component divisions sold to outside investors.  Those divisions not sold should be shut down.  It is time to get the Federal Government out of the automobile business and to re-establish legitimacy in Federal regulative agencies.

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