Thinking about Hudson led to a random thought about governments.
Studebaker and Packard made plenty of identifiable constant mistakes, obvious to outsiders at the time, not just in hindsight. Above all Studie overpaid shareholders and underpaid factories and research. Packard kept trying to compete in luxury cars after Cadillac unquestionably owned the niche, and outsourced its bodies to Briggs in 1941, losing the visible sense of quality.
Studie had a way out, and finally turned onto the off-ramp after the car business failed. In 1958 Sonnabend started accumulating non-auto companies that could use the same factories and skills.
After 1967 the corporation continued in a smaller way with the family of non-auto divisions. They should have switched niches in ’58 when Sonnabend wanted. The post-automotive corporation was successful, vindicating Sonnabend. Its total revenue in 1979 was 1 billion dollars just before it was bought out by McGraw Edison which kept the divisions but deleted the Studebaker name.
Packard had a way out but didn’t take it. Packard started making aircraft engines in 1918, and after WW2 aircraft engines were Packard’s unique specialty. They should have switched to the alternate niche then. After Curtiss Wright LBOd the whole mess and stole the aircraft plants in ’56, the off-ramp was closed.
Hudson didn’t make any serious mistakes for most of its lifetime. Engineering, styling, quality, performance, variety, comfort, safety, all somewhat ahead of the crowd. Their first real mistake was the Jet in 1952, but by then it didn’t matter. Why? Because Hudson had never developed an alternate skill. Even if they had chosen to switch, the path wasn’t there. After Nash bought the company, Nash simply discarded the factories and workers and kept the dealers.
= = = = =
New thought:
Failed governments can also take the Sonnabend exit when tyranny and war cause bankruptcy. The ‘family’ of non-tyrant companies is already present in a small way thanks to the New Deal. TVA and BPA and REA are ideal examples of government as a holding company.
TVA provides electricity in return for payment, and makes a profit on the transaction. The central government receives a share of the profit.
THE NEW DEAL WAS MODELED ON THE SOVIET SYSTEM.
The old textbook definition of socialism as ‘ownership of means of production’ is useless. You can have government OWNERSHIP without government CONTROL. GM after 2008 was mainly OWNED by the feds, but the feds didn’t exert their power to CONTROL how GM used its capital.
In the real Soviet system, businesses weren’t government agencies and didn’t act like government agencies. They were NORMAL BUSINESSES, making things and selling things for a PROFIT. The government’s function was CONTROL OF CAPITAL ALLOCATION. Gosbank invested more in companies that offered a realistic chance of improving production, or adding jobs for people with needed skill sets. Just as in PRE-WALL-STREET capitalism, profit was the MEASURE of a company’s success. Government was motivated to increase the profit of businesses, because government ran on VAT. The whole system was thus biased toward INCREASING REAL VALUE.
Wall Street is biased toward sucking the entire universe into the black hole of Larry Fink’s bank account.
Polistra's Mill 