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Home >> Opinion
UPDATED: 14:53, November 22, 2005
"American auto industry is going bankruptcy": Interview (III)
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Photo:File photo shows Lyndon H. LaRouche, Jr. is making a speech in October, 2005, in Washington, US.
File photo shows Lyndon H. LaRouche, Jr. is making a speech in October, 2005, in Washington, US.
Lyndon H. LaRouche, Jr. is an American political activist and founder of various political organizations in the United States and elsewhere. He is perhaps best known for being a "perennial candidate" for U.S. Presidency, having set a minor record for most consecutive attempts at the office by running eight times; Harold Stassen ran for President nine times, but not consecutively. LaRouche has run for the Democratic nomination for President in every election year since 1980, including in 1992 while he was in prison. Yet he and his "LaRouche movement" have gained only limited electoral support, although he has received some support in Democratic presidential primaries.

Although he has no formal qualifications, LaRouche has written extensively on economic, scientific, political, and cultural topics. Critics consider him to be a conspiracy theorist and political attention-seeker. He is frequently described as an extremist, cult leader, a communist, a fascist, and an anti-Semite, all of which he denies. LaRouche is regarded by his followers as a brilliant individual who for political reasons has been unfairly persecuted.

In 1988 LaRouche was sentenced to fifteen years imprisonment for conspiracy, mail fraud, and tax code violations. He continued his political activities from behind bars. He was released in 1994 on parole after having served five years.

LaRouche lists his formal position as a director and contributing editor of the Executive Intelligence Review News Service, a core part of the LaRouche movement.

Recently Yong Tang, People's Daily Online Washington-based staff writer, has conducted an exclusive interview with LaRouche at his home in Virginia.

Yong Tang: According to your system, you pay much more attention to the real economy than the virtual economy. And you also said that the American auto industry will die soon. Why do you think the American auto industry is going to collapse?

LaRouche: Because the management of it is insane. We are producing too many automobiles.

Yong Tang: Producing too many?

LaRouche: Even worse than that. In order to produce too many for this industry, we have set up a credit system which is insane in the auto industry. The people who are running the auto industry are insane, absolutely incompetent and insane. They're only interested in money. The key thing is here. What you have in Europe and in the United States in particular.

You have a section of the economy which is called the machine-tool sector. These are the people who make the machines that make the machines. You have, for example in Japan, a sector which has that kind of capability too, a machine-tool sector. Japan's economic power, apart from whatever else it did, was from the machine tool sector, the science machine tool sector, which they adopted under the Meiji reforms which were designed by the United States in the late 1870s. So you had Henry Carey's friend, Peshine Smith, who was sent to Japan from the United States to advise Japan and that's how Japan's industrial revolution occurred in 1877-79. So this was realized later when Japan developed a machine-tool industry, and they got into the auto industry and so forth. And Japan's machine-tool technology is very good. They're very advanced in this. The outside Japan is very sick, but inside Japan, the old Japan, the industrial Japan has a very good section in the machine-tool sector. Now the machine-tool sector is the key to developing any modern economy. The machine-tool sector is a small percentile of the total labor-force. But it is the part of the labor-force which actually develops the economy.

So in the United States we too have a small group of people who can make a completely new product within a year. Make all the tools and make the new product, design it and everything. So therefore, the small number of machine-tool people are the basis of the employment of the whole labor-force in that industry. US machine-tool industry has two sectors, one is in the military sector, which is largely the Air Force, like Boeing. These have machine-tool capabilities for the aircraft industry. They are largely now concentrated in the military sector. The civilian sector is dead in that area. The military sector is the whole sector.

If we shut down the auto industry, which is threatened now, we don't have a machine-tool sector. If we don't have a machine-tool sector, we don't have an economy. And the same thing is true with Europe.

The same is even true for a developing country, as in China. The key thing for China's long-term economic development is the machine-tool sector. The machine-tool sector is science-driven. It's a science-driver. The machine-tool sector turns science into machine-tools and designs. Machine-tool designs make the industry, make the productivity. So without this strategic factor of the machine-tool sector, you cannot really have a self-sufficient modern economy. The auto industry is junk. It's over-built. There are too many automobiles. But the auto industry can make locomotives. They can make rail systems. They can make all kinds of things, different kinds of things which are needed very much by society.

So if you diversify the production from just automobiles or concentration on automobiles to different kinds of things, things that are needed now, you've got a healthy industry again. So my concern is to diversify it, have the government put it into reorganization. Keep the people employed, but change the assignment. Because we have to build a railroad system again for the United States. We have to build dams. We have to build power stations. We have a lot of things to do. And the machine-tool sector is the means to do it.

Yong Tang: My concern is still, why these three auto giants, GM, Ford and Chrysler, are going to collapse?

LaRouche: They are now in collapse.

Yong Tang: Why in collapse?

LaRouche: Because they are bankrupt.

Yong Tang: Why are they bankrupt?

LaRouche: Because they were foolish. They are producing cars below the cost of production in order to sell them.

Yong Tang: Are they producing many more cars than are consumed?

LaRouche: No, they're selling the cars but they're selling them below the cost to produce them. And the way they're doing that is going into debt. Now the debt that they build up in this method is so great that now they are bankrupt. There's no possibility of paying it. General Motors has about $350 billion debt.

Yong Tang: So they couldn't repay the debt?

LaRouche: No. They couldn't repay the debt.

Yong Tang: Never?

LaRouche: No, not under the present system. So I say, take the industry, put it through bankruptcy, change the product...

Yong Tang: What's wrong with all this?

LaRouche: It's a sickness of the whole U.S. economy.

Yong Tang: Aren't the cars good enough?

LaRouche: No. The point is, in order to sell them, with people who are becoming poor who can't afford to buy them, in order to sell them to people who can't afford to buy them, they drop the price. They sell them below the cost of production in order to sell them. The difference is, they finance that and create a debt on themselves for which there is no possibility of being repayed. This is really gambling. You want to see the worst case of gambling in China. This is what these people are. They're gamblers. They're at the table throwing their money on the table gambling.

Yong Tang: They're selling the cars at a price which is below the real cost?

LaRouche: Yeah. The cartwheel cost of production.

Yong Tang: By financing, do you mean if I buy a car, I could get the financing from the bank. I don't need to pay immediately.

LaRouche: Yes, you go into debt. You go into long-term bonded debt. And the debt is now come due and they can't pay the debts. Because the debts are now due, and they can't meet their current payments on the debt.

Yong Tang: How about the auto industry elsewhere? For example, Japan and Germany?

LaRouche: Well, look what Japan does. Japan goes into debt. How does it go into debt? Japan is a big seller of cars because Japan went into this integrated manufacturing process where they stamp out cars like pancakes. And they became very good at it. So now Japan is a big supplier of automobiles in the world market. Other people also do it. But Japan is the expert at making cars cheaply.

Yong Tang: So Japan's auto industry is healthy?

LaRouche: No it isn't. Because their industry depends upon the world market, and the world market is collapsing. Japan's automobile industry is not as sick as America's automobile industry. So the question is, they're all dying, but some people are dying sooner.

And you have the same thing with Germany. Germany had an excellent auto industry with Daimler Benz, Mercedes Benz..

Yong Tang: How do you think of Chinese auto industry?

LaRouche: In China you cannot afford to build ten-lane superhighways all over the place because the land won't allow it. So, therefore what it means is that China has to be saner than the United States. We have a lot of land so therefore we have big highway systems. We waste land on highway systems. China cannot. So China is forced to be more sane. Everyone having a car and driving it all day long is not a good idea in China. It cannot work. What is needed is public transportation systems and organizations of cities which can eliminate the need for all this automobile transport.

So therefore, China, as it was understood by Sun Yatsen when he designed the railroad system of China. The China government today is implementing for its time the Sun Yat-sen outlook for the development of China. It's necessary to develop mass transit systems, which are largely rail systems and to design cities and areas such that people can move very easily from one place to the other to perform their normal daily functions, so they're not required to get out and drive many miles for many hours on the highway to get from one function to another. So therefore, China by its nature must have a more rational idea about land use which includes the development of lands, that is, new usable lands. And therefore, mass transit will be the emphasis in China. So that mass transit stations, as in the Shanghai-Shanghai Airport maglev is an example of that. The experiment by China in getting large-scale rail systems is obviously the right thing. It is necessary to find ways of transporting people for a modern industrial economy efficiently and cheaply.

Yong Tang: That means we don't need to develop our auto industry?

LaRouche: No. You could take a modest auto industry, build a standard vehicle. Don't try to compete with fancy stuff. Just something that works. So that anyone who needs an automobile, or needs to use one, can have one accessible, easily to use. The point is instead of starting from the market, why not look at a use. What is the use? What kind of automobile policy is useful to China for its needs? And therefore, it needs what it needs for China. It does not need to have a Mercedes Benz which is a hundred feet long for each family.

Yong Tang: Is the rising oil price making the auto industry feel more and more bitter?

LaRouche: Obviously, if the oil price goes up, it does aggravates the problem. But that is not the cause of it. The cause of the problem is the speculation. And the cause of the auto industry problem is the mismanagement of the industry. Because they use it as an instrument of financial speculation.

For example, General Motors used to be a big manufacturer. It is no longer. It is actually a financial operation.

Yong Tang: It's becoming a financial company?

LaRouche: It is! General Motors Acceptance Corporation is not a producing agency. It's a financial agency. They invest in real estate loans and things like that. So what you have is the transformation of what used to be industrial corporations into post-industrial corporations. And they're moving more and more into financial operations.

Yong Tang: Why? Because it's more profitable?

LaRouche: Because it's quicker. For example, you make money more quickly in a gambling joint than you do in a factory.

Yong Tang: But it's more dangerous!

LaRouche: Of course it is! It's insane. But that's what we're doing. We're practicing insanity.

Yong Tang: All these auto company CEOs are becoming gamblers?

LaRouche: Because they're idiots.

Yong Tang: Why do they choose to become gamblers? They know it's dangerous.

LaRouche: Because it's an ideological thing. When you get certain cultural diseases of the mind which take over a section of people that run the country, that's how empires collapse. No empire collapses because of technical reasons. They collapse because they are unnatural. They adopt unnatural policies which serves to bring the collapse upon themselves. And instead of recognizing their mistake and changing their behavior, they refuse to change their behavior and therefore they die. This is the way empires collapse. And we're dealing with an imperial kind of mentality, not a productive kind of mentality. Remember, we went through this.

Yong Tang: How much more money do they make in financial speculation?

LaRouche: You have to look at the gambling mentality. The Wall Street mentality is the gambling mentality. The Wall Street-related corporate management has a gambling mentality. It's buying something and selling it and making a profit.

By Yong Tang, People's Daily Online Washington-based Staff Writer

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