Reason's Ford Blind spot

In the course of promoting free markets, Reason points out that Ford is a free market success story while the recipients of government bailout money are still struggling to become profitable. The headline of the story is Unsubsidized Ford Profitable for Six Straight Quarters.

Ford was the only domestic auto manufacturer to avoid bankruptcy or take a bailout from the federal government. 

This simple analysis misses the a lot, because the government's programs did a lot to help Ford.  There was a cash for clunkers program and various government stimuli that helped keep the consumer in a better position to spend money, but the largest subsidy was the bail out of Ford's suppliers. Without the GM and Chrysler bailout Ford's supply chain would have been in dire straights, and the final impact on Ford would have been anywhere from bad to catastrophic. 

This blind spot appearing in the blog of a libertarian oriented magazine bothers me.  Libertarians often become libertarians because they habitually look at second order effects of government action. If an unpopular company whose suppliers were subsidized by the government was distorting the market by out competing a company with unsubsidized borrowers I'm sure Reason would be quick to point this out.  Just because Ford did a lot of things right and is popular doesn't mean that it is an example of a free market success.

About

I studied Bioengineering at the University of California at San Diego. While there I served as a trustee on the investment committee of the UCSD Student Foundation, a group that manages an endowment to fund scholarships. While in college I applied my interest in finance and economics by working as a summer associate at Clarium Capital Management, working part time my senior year, and joining full time when I graduated in 2006, staying there through August 2010. I am currently working as a portfolio manager at another global macro hedge-fund in the Presidio (And blogging about more directly market related ideas at their restricted blog). I’ve been focusing on quantitative finance, currencies, commodities, the interplay between finance and politics, demography and other long term trends.

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