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Roger and Me and Free Enterprise

MAY 01, 1990 by JAMES L. DOTI

Dr. Doti is a professor of economics at Chapman Col. lege, Orange, California.

Film-maker Michael Moore’s very funny satire, Roger and Me, has opened to almost universal critical praise and audience approval. Unfortunately, the fact that audiences across the country are largely accepting Michael Moore’s message hook, line, and sinker is sobering, especially when one considers the distorted view of free enterprise depicted in this cleverly constructed documentary.

Roger and Me documents the impact of General Motors’ decision to relocate automobile production facilities from Flint, Michigan, to lower-cost operations in Mexico. The film’s message is that relocating assembly plants outside the U.S. had a devastating socio-economic impact on the people of Flint. The film’s villain is the free market system that allows G.M.’s supposedly callous CEO, Roger Smith, to undertake reprehensible acts while holding himself and his company above accepted norms of decent behavior.

It should not be surprising that Michael Moore takes a good deal of artistic license in documenting the facts. It isn’t mentioned, for example, that while some jobs were lost in Flint, the majority of workers living there are still G.M. employees. Nor does Moore document the fact that G.M. has poured billions of dollars into building new and modernizing existing U.S. assembly plants. A more serious problem that calls into question Moore’s ethical standards and reliability as a journalist is his scrambling the sequence of events depicted in the film to support a point of view rather than a sense of reality.

For the sake of argument, let us overlook these problems and accept for the moment Moore’s cinematic view—that the unbridled use of free market capitalism led to the demise of a once healthy and vibrant local economy. When such a view is taken, the logical follow-up question is what sort of policy Moore would propose as an alternative.

I suppose most morally conscious people would advocate the passage of laws that prevent G.M. or any other domestic automobile manufacturer from dosing U.S. assembly plants, especially when the closures take place because auto-making facilities are being moved outside the country. But laws preventing plant closures would place G.M. and other domestic auto makers at a competitive disadvantage against foreign competitors who presumably can locate their auto-making facilities wherever production costs are lowest. Enlightened policy- makers are therefore likely to argue that protective trade barriers are necessary as a concomitant policy. Such barriers, so the argument goes, would prevent foreign auto makers who produce at a lower cost from having an “unfair” advantage over U.S. firms.

The implicit assumption here is that laws can be enacted to prevent the cruelties documented in Roger and Me. Many public crusaders undoubtedly believe that jobs as well as cities can be protected by legislation designed to serve national interests.

Before accepting this assumption, let’s consider the cost of such well-intentioned public policy. First of all, the compassionate feelings of Michael Moore and other public crusaders evidently extend only to U.S. workers. The fact that G.M. created jobs for Mexican workers and improved their earnings potential is considered only in a negative light. G.M.’s recent decision to build an assembly plant in Hungary would probably also be attacked by these same humanitarians. It is ironic that compassion is often constrained by nationalistic fervor while the forces of free markets work against such discrimination.

But even if justice and morality extend only to the U.S. border, keeping Flint, Michigan, alive and 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 automobiles as a result of steeper tariffs and quotas that are now necessary to keep domestic auto makers in business.

The higher prices represent a subsidy on the part of consumers to maintain inefficient production facilities. While the jobs saved in Flint might bear witness to what a benevolent government can do, the true costs are spread thinly among many and are difficult to observe. In the aggregate the costs are significant but, at an individual level, the marginally higher price a person pays for automobiles is not the stuff upon which entertaining documentaries are horn.

A diehard do-gooder might still argue that jobs were saved in Flint. Perhaps, but only for a while. Eventually, consumers get fed up with paying the bill for inefficiency. Case in point: the consumer revolution taking place in Eastern Europe and the Soviet Union. The lure of goods available in a global environment is seductive. When the disparity widens between what consumers get at home versus what is available in world markets, pressure is brought on governments to end their protectionist policies. And when governments end their protection, firms that barely survived in a regulated environment will suffer a slow and painful death when subject to the rigors of competition.

The visible impact of free market forces might not always be kind and gentle. In serving the needs and desires of consumers, the “invisible hand” of free enterprise forces producers to respond When they do, they profit; when they don’t, they fail The process isn’t necessarily pretty, but it works amazingly well as long as governments don’t get in the way.

There is a scene in Roger and Me reminiscent of The Grapes of Wrath, where Ronald Reagan visits Flint and suggests to unemployed auto workers that. jobs might be found in Texas. Reagan’s inability to come up with a more palatable and action-oriented alternative strikes audiences as humorous. We should be thankful that he didn’t go back to the White House and draft a jobs bill.

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May 1990

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