Economics by Dan

I want to blog, but then I think about how long it will take to write a bunch of stuff out and then I think, "No, I'm too lazy to spend that much time finding and referencing sources to make myself sound smart". So here is a quick thought with no proof of real founding:

Sometime last week Warren Buffet, who apparently knows a lot about money, said something like that we are not yet out of the recession and it will take a little while longer, but things will be better than ever when we come out of it.

I started thinking about that and I agree. I think that we can look at the car manufacturing industry as an example of what he means. The following explains my hope of how this will happen.

To this point in my life I have been a Toyota and Honda guy. I've owned 3 different Toyotas and 2 different Honda's and I loved every single one of them. But you know what car we had that we hated? It was a Saturn. That thing was too cheaply made. Sure it got decent gas mileage but that was only due to 90% of it being made plastic (that's an exaggeration), having a tiny engine and being a 5 speed manual.

When we were done with the Saturn we could only get $500 out of it. My Toyota truck died in the same fashion and we got more than 6 times that much out of it. Then our Honda Accord died and we got $1,000 out of that one. The resale/scrap value is one example of why it doesn't make sense to pay big bucks for an American car when you can pay the same amount for a nice foreign car.

Additionally, in my experience, ALL the Fords/Mercury's that I have driven or had family members that drove had electrical system problems. The seats in most Dodge's seem to be molded for short, fat Americans and they have issues with transmissions, steering mechanics or overheating. General Motors vehicles are cheaply made with bad plastic trims and are ugly. Any General Motors car that is decent looking gets horrible gas mileage. If anyone's interested, ask me, and I can explain my personal experience with these problems.

So back to how things are going to be better than ever… For Dodge and General Motors to come back and thrive, they need a restructuring much like pushing a master RESET button to wipe everything out and start all over. It seems in the past people bought their cars because their deceased grandfather was a steel mill worker and if they bought foreign he would haunt them from the grave. The car companies can't rely on stuff like that anymore. Consumers have to be smarter when the economy is tough and being ”American-Made” now envelopes many more manufacturers including Honda and Toyota.

Once Dodge and General Motors have a completely clean slate, they need to create cars in comparable quality to Honda and Toyota and then they need to develop the technology to have the absolute best gas mileage. If they can do that, people will want their cars for the same reasons they buy foreign. The foreign auto makers will then have to develop the same technology for even better cars and the race will go on. Pretty simple, but I think this is the exact kick in the pants that this industry needs. And that is why I believe that things will be better than ever when we get out of the recession.