The Labor Theory of EV Value

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In communist economic theory – which is fast becoming general economic practice in America – there is something called the labor theory of value. It mean (Borat voice) that how much work you put into something determines how much it’s worth. Thus, the digging of holes – and the filling of them back in – is very valuable, indeed. 

The same kind of “value” manifests in electric cars. 

Stellantis CEO Carlos Tavaras tried to explain this the other day when he told journalists that component suppliers for the electric cars that Chrysler, Dodge, Ram, Jeep and all the other other brands of cars under the Stellantis umbrella are being forced to build must help “absorb” the costs of doing so. He points to the heavy “investment” in electric cars – which is costing Stellantis and every other car company being forced to build electric cars huge losses not being offset by profits made selling the electric cars they’re all being forced to build.

“It’s not because we’re the bad cop,” Tavares said. It’s because we see the magnitude of the challenge.” Indeed. Like making money by giving it away.

That’s a challenge, too. 

The industry trade publication Automotive News quotes Tavaras as saying that “Stellantis and it suppliers are in this EV journey together  . . . and the sooner they find opportunities to reduce and absorb costs the better . . . Stellantis is already aggressively pursuing ways to save money with new language in its North America (contract terms) that directs suppliers to pass on any savings they achieve” to Stellantis.

In order to help offset the losses incurred by building electric cars.

Marx would understand.

“They may not like the fact that we are too frank or transparent,” Tavares goes on . . . about the costs of losing money, building vehicles without a profit margin (arghh! that word!) “ . . . but in a way, they should be expressing some gratitude for the fact that we are giving the wake-up call early enough for them to prepare for it.” 

Sergio Marchionne – the former head of what is now Stellantis (and was FCA, or Fiat Chrysler) is spinning at redline in his grave. Marchionne – as opposed to Marx – understood that you have to make money in order to make money.

As opposed to make-work. 

He encouraged people to not buy the overpriced, under-performing electric cars the company he oversaw were forced to build in consequence of “complying” with the “zero emissions” regulations used by governments around the world as a very effective de facto ban directed at every car that’s not an electric car. He knew that people want to buy – could afford to buy – cars like the Charger and Challenger, Jeeps and Ram trucks. Not electric cars that cost more than most people can afford and which for that reason it makes no sense to build.

It is like insisting that home builders put triple-pane Pella casement windows, radiant floor heating and solar roofing in (and on) every new home – irrespective of people’s ability to afford such a home.

Of course, it’ll be very green (the outside of red) when half or more of the people currently driving aren’t – because they no longer can afford to.

Which by now ought to be obviously the point of all of this – just as the forced wearing of “masks” was meant to lead to the forcing of Jabs. As this contrived fiasco in Ukraine is meant to distract people’s attention from all of that – and those responsible for all of it.

You want “zero emissions” for real – as opposed to the play-pretending that two-ton EVs with half a ton of batteries aren’t “emitting” anything because they emit it elsewhere? Force people out of the driver’s seat and onto their feet. Pedal power is affordable.

And very “clean,” too.

This is what comes of buying into the green (red) agenda, which Tavares appears to have done. Do you want “to fix the global warming issue or not,” he says. “Are you sincere about bringing your fair share to fix the global warming issue”?

Italicized to emphasize another talking point familiar to those familiar with Marx and his doctrines. What you’re allowed to keep – and what you’re obliged to give away. From each according to his ability, to each according to his need.

“If you don’t want to face this reality, then I cannot help you because I will have to find a solution for my company.”

That would be earning money – by offering people cars they want and can afford to buy. But you’d have to read Adam Smith or Von Mises – rather than Marx – to know about that.

. . .

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30 COMMENTS

  1. I will give him credit he said a month or so ago that Its not the car makers who want to build electric cars,its being forced on us by the politicians to build them..

    *not exact quote,have to look for it..he obviously doesnt want to go full electric..He knows for sure Dodge is dead,after all its a V8 brand now!

  2. Update on the ‘labor theory of gasoline,’ courtesy of the neo-marxist ‘Biden’ regime:

    BOSTON (March 7, 2022) — The national average price of gasoline in the U.S. today broke the existing record, rewriting the all-time high to today’s $4.104 per gallon, according to GasBuddy. The previous all-time high was set back in 2008 at $4.103 per gallon.

    Please may I have another gallon, kind sir?

  3. “From each according to his ability, to each according to his need”…… Always loved the total bullsh*t of that quote. What if your ability is zero and your needs are endless? I know a few people who fill that bill, and I’m sure others here do as well. Only works if everyone is a saint, not gonna happen in real life.

    • Everyone’s needs really are endless. As soon as your hunger is satiated you want something more. It’s how we’re built. No matter how happy we are at this moment there’s always an opportunity for more happiness.

      • We Negative Utilitarians call that the Treadmill of Desire or the Structural Preference Frustration of existence.
        We focus less on the ever-elusive “happiness,” and more on the all-pervasive anxiety of want that is only punctuated by fleeting relief, and the diminishing returns on the ever-more-grueling effort it takes to eke out those momentary reprieves.

  4. “It is like insisting that home builders put triple-pane Pella casement windows, radiant floor heating and solar roofing in (and on) every new home – irrespective of people’s ability to afford such a home.”

    This is pretty much what government has done with building regulations. Then elected office holders have to do something create ‘affordable housing’. Um they legislated it out of existence. All these requirements drove up the prices of small homes to where there was no profit left in them for what people were willing to pay.

    Same thing has been going on with cars but unlike homes used cars (used to) sell at enough of a discount to mask the effect.

    • Let’s not forget the prohibition on the building of “small houses” (micro-houses) and the near impossibility of living “off-grid”.
      Just having to obtain “permits” for building on your own land (yes, I am aware of “property taxes–rent to the township for being allowed to keep title to your property) is unconscionable.

  5. Looking back through history, the outlier idea was the monetization of productive physical labor. The monetization of labor–assigning labor real value that Third Reich Germany adopted was a threat to the international banksters; hence, a “war” was needed to “bring Germany back in line”.
    Germany did not have any appreciable amount of precious metals or reserve currency, and few natural resources other than water and abundant coal reserves.
    Physical labor is the primary source of all economic value, not what some Talmudic gnome sitting on his pile of gold and silver claims it to be. A true national economy must exist to serve the people, not the other way around. No truly sovereign nation would let its citizens starve or suffer degradation and debt slavery simply to appease the lurking market worshiping demons.
    The German people was under no imperative whatsoever to starve or turn back to those supposedly idyllic days of the Weimar Republic when Berlin was the cheap sex capital of Europe and women were often forced to prostitute themselves for a cup of sugar or a piece of bread.
    Hitler’s great crime (other than having lost the war) was that the National Socialist economic policies worked so well. This no doubt horrified the usurious overlords of Wall St. and the City of London, and enraged FDR , whose so called “New Deal” had been totally ineffective at dealing with the depression in the US.

  6. Marx wasn’t wrong about labor value, but he missed the point that the buyer of your labor determines its worth. But it doesn’t matter, because the C suite is motivated by the stock price, not actually producing products. As long as they can borrow at prime rates below 0%, stock buybacks and financial shenanigans will be more profitable than actually doing anything. And as long as Uncle has their back, who cares if they lose money. Just keep the income tax rolls filled and everything will work out.

    And besides, the long term strategy is to offer “transportation services” not sell cars, so who cares if the vehicles actually make money? The real profits are in monthly service fees, not hardware.

    Remember Western Electric? At one time every piece of equipment connected to the Bell System was manufactured by Western Electric. They were a giant company that did everything. You needed a 400 pair cable to replace storm damaged trunk? They have it in a warehouse, ready to go. It will be on the next truck. You want to add a new Princess phone (pink, with the lighted dial) in your bedroom? They have it in three colors. Someone will be by between Tuesday and the end of the month to install it. Touch tones? Well, sure, and that extra $1/month won’t hardly be noticed. They built really high quality products too. I’m sure there were Western Electric handsets used for murder weapons. When the 1970s wave of vandalism started Western Electric built a payphone that could survive a nuclear blast (but was incredibly simple to hack). After the Carterphone decision handset quality went to hell, but at least they were cheap and had some variety.

    Auto manufacturers want to simplify their assembly lines. Robots aren’t advancing quickly enough and labor is too expensive. So they want more complicated sub-assemblies and fewer SKUs. Easier to just throw on all the options and disable them in software, the opposite of what Japanese manufactures did with dealer-added options in the 1980s. And if the dream of selling you movement instead of physical stuff comes to pass, you’ll be cruising around in a city bus anyway.

      • Own Nothing and be Happy…thats what they want!

        You want to eat,you’re forced working for a piece of moldy bread,thats coming!

        • This was the situation in the German Weimar Republic when a (((certain select group))) possessed almost all of the wealth in the country while the ordinary German citizens were forced to compromise their values (prostitution, etc.) in order to avoid starvation.
          As much as Hitler is (unjustly) vilified, he actually had the right idea…assigning labor value and reigning in the banksters were but two of his successes…

    • I have pictures of the tearing down of the massive Western Electric Complex in Cicero, Illinois from 1986-87… Very sad. Now there is a strip mall there. But they left the waterTower at least.

      • My grandpa ran Hawthorne Works back in the 60’s. He had passed away before the plant was destroyed in the 80’s, Grandma was thankful he hadn’t lived to see that.

    • Hi RK,
      I worked in a Western Electric warehouse as a summer job my senior year in HS, (my dad worked for NJ Bell) we would sort old equipment brought back from wherever. Every so often a phone would come through that had bloodstains on it (was NJ after all 😆). Those bakelite handsets could be used as a hammer without getting a dent, we used to smash them on the concrete floor and they just bounced off. That’s one case where it’s true that “they don’t make them like they used to”.

  7. Riddle me this, why would a business have an incentive to achieve lower production costs if it was required to turn over increased profits? Perhaps they would be rewarded by being allowed to lose even more money on future contracts? I predict in our glorious green future the workers and peasants (and we know who they will be) will ride bicycles and take public transportation. The apparatchiks will drive around in the equivalent of a Pobeda. Our masters in Zils. As a side note looking at increased fuel costs, food costs etc., I hope everyone has been stocking up.

    • Your question leaves out a very important point. Most business schools (erroneously) state that the “stockholder is king” and that all others should be squeezed (especially employees) in order to “lower production costs”.
      They are missing the “big picture”–employees are also consumers and in many cases should be able to afford the product that they produce.
      Henry Ford KNEW that basic staple of REAL economics along with the “economies of scale” making it possible to lower the price of his automobiles, making them everyday things, not just for the rich. His pay scales created the middle class that is slowly being decimated to this day.
      If you pay your employees a decent wage, profits will come back to you in spades…

    • In an uncorrupted environment, if someone had to put more value into a product than they could command on the market, that project would be abandoned as a path to bankruptcy.

      Many businesses fail every year for this simple reason.

      Government mandating a product be produced (and ultimately only this type of product) will result in the same outcome, barring something like government subsidies.

      If I can afford a $20000 new car but not a $40000 one, I will not have a new car if one is not available for $20k.

      I will have to buy used. Thus for the same money, I do not get something new that is the result of something that added new value to the economy. The economy is now poorer by one vehicle.

      May not seem like much, but millions will be robbed of the ability to have something new – with all the advantages of a new product (longer life, less maintenance, enrichment to life)

      And all of life is opportunity cost. If I have to swing the $40k, I have $20k less to spend on other things.

  8. All because of a thing that has existed for billions of years. Climate has constantly changed ever since there was one. The notion it can be held static is Salvador Dali stuff. I love surrealism in art, not so much in energy policies. It becomes ever more blatantly obvious that the goal is to dispose of private transportation. All the major car companies missed the boat that Musk got a first class cabin/suite on. Eventually, if you want an automobile, you’ll have to make one. A thing FoMoCo disposed of with the model T, when Henry dared to engage the notion that the people who made the product should be able to afford the product. A very rare thing up to that point in time. Carpenters and masons did not own their domiciles.
    Every government on the planet is founded on the assumption of authority to kill you if you don’t obey. They cannot function without this authority. Sane people do not seek such power. Which means that nearly all who do are sociopaths, if not psychopaths. A thing far too many fail to realize. Your government is clinically insane.

    • The united States of America was largely successful due to the (lack of) ethics of most builders of industry, raking in millions in profits for themselves while ignoring the basic needs of those who made their success possible by their hard work.
      It was common to see these “captains of industry” do their damnedest to pay their employees as little as possible while raking in massive profits benefiting only themselves.
      These “captains of industry” attempted to redeem themselves by establishing “foundations” (which guarded their wealth, making it tax exempt) and indirectly countering their own beliefs that it was not necessary to pay their employees a “decent wage”.
      They always pleaded poverty to their employees while living grand lives themselves.
      One must not forget the “company town” with the “company store” which was a more advanced form of “slavery”, putting people in bondage by charging artificially inflated prices for goods while their employees wages were “not quite enough” to escape the cycle. Those who attempted to escape the “company town” were threatened with lawsuits and more for “moneys owed” to the company…
      These injustices contributed to the rise of labor unions, which at first, were brutally suppressed.
      There were exceptions, such as Henry Ford, who almost single-handedly created the middle class by paying his employees well above “market wages” of the day. Ford’s $5.00 per day wage was not entirely altruistic as it was also instituted to stem “turnover” as assembly line work was monotonous, but his writings have stated that one of his objectives along with the institution of the 8-hour workday was to make it possible for workers to “enjoy the fruits of their labor”.
      The “robber baron” label, being criticized by today’s proponents of “capitalism” and “free markets” have it wrong. We have never had truly “free markets”…

      • I remember reading that when automation first started coming to assembly lines Henry Ford Jr. said to Walter Ruether, who was president of the UAW at the time, that he envisioned the day when the entire process could be done by robots. Mr. Ruether replied “well I hope those robots will be buying the cars, otherwise nobody else will.”

  9. The auto manufacturers got themselves into this mess. Every time they dreamed up some over-engineered “safety” feature, they were the ones that lobbied for it to become mandatory. The people that run those corporations couldn’t give less of a shit about the environment.

    I hope they all go broke. Especially the luxury car manufacturers. They think they’re so cool that no matter what they make, people will flock to buying it. Baloney. People wanted the feel of a powerful engine and were willing to pay more for it.

    No engine? Sure, they’ll get some hold out but people are gonna migrate away from these fancy brands if all they’re gonna do is offer generic shit.

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