Former Car Czar Speaks Out Against Government Intervention

In today's WSJ, Ion Mhai Pacepa, a former top government official in Romania under Ceausescu, knows first hand that government-run car companies do not work. He was the former "car czar" in Romania to help build cars for both internal use and for export to other countries. (The companies were not successful.) The experiment works neither in communist or capitalist countries, he rightly argues.

Automobile manufacturing and government do not mix in capitalist countries either. In the spring of 1978 Ceausescu appointed me chief of his Presidential House, a new position supposed to be similar to that of the White House chief of staff. To go with it he gave me a big Jaguar car. That Jaguar, which at the time had been produced in a government-run British factory, was so bad that it spent more time in the garage being repaired than it did on the road.

"Apart from some Russian factories in Gorky, Jaguars were the worst," Ford executive Bill Hayden stated when Ford bought the nationalized British car maker in 1988. How did the famous Jaguar, one of the most prestigious cars in the world, become a joke?

In 1945, the British voters, tired of four years of war, kicked out Winston Churchill and elected a leftist parliament led by Labour's Clement Attlee. Attlee nationalized the automobile, trucking and coal industries, as well as communication facilities, civil aviation, electricity and steel. Britain was already saddled by crushing war debts. Now it was sapped of economic vigor. The old empire quickly passed into history. It would take decades until Margaret Thatcher's privatization reforms restored Britain's place among the world's top-tier economies.

The question is whether only GM and Chrysler will fail or whether the government will use its heavy subsidy hand to help make it difficult for Ford to succeed as well.