June 27, 2005

Dems, like General Motors, have hit the skids...

For a good economic analogy of the state of the two major U.S. political parties, read the new John Micklethwait and Adrian Woolridge column in the LA Times. (registration req'd).

The authors liken the Democrats to GM and the Republicans to Toyota. The Dems, like GM, were dominant from 1940 to 1968 until they got pummelled by competition from manufacturers like Toyota.

GM and the Democrats were rooted in the world of big capital and big labor, of long-term planning and predictable product cycles. The automaker could afford to guarantee its workers decent pay and benefits so long as there was limited competition. And the Democrats could take their political dominance for granted.

The same forces that are tearing apart GM are also discombobulating the Democrats. The increase in foreign competition from the '80s onward has made it impossible for companies to guarantee good jobs for life: GM is crippled by the huge cost of its healthcare benefits. Foreign competition has also put a premium on flexibility and innovation — skills that neither GM nor the Democratic Party have cultivated.

The rise of the "new model" Republican Party almost perfectly parallels the rise of Toyota. The GOP roared to prominence in the 1980s, suffered a slight setback as the Democrats retooled in the '90s, and now dominates the presidency and Congress. The Republicans have thrived for the same reason as Toyota - they have been better at producing new products and going after new customers.

GM's strategy is still devoted to hanging on to the base: churning out Cadillacs for the posh and Buicks for the upwardly mobile. Toyota, once known for small, cheap cars, now makes pickup trucks and Lexuses. And it is focusing on the Prius while GM is still betting on monster trucks.

And while Ken Mehlman is out growing the market and making inroads for the GOP in groups formally dominated by Democrats, the very "GM-like" Howard Dean is out preaching to the already converted.

Posted by: Gary at 10:03 AM | No Comments | Add Comment
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