The closing of the Janesville GM plant is certainly a blow for that community. GM and the other American auto manufacturers are certainly subject to criticism for failure to anticipate market changes that would reduce demand for SUVs and trucks. The rush on the left to find out who else is to blame for not preventing this reflects - once again - a misunderstanding of basic economics.
Jay Bullock, for example, can't resist blaming George Bush (although he lacks even a plausible reason) and (literally) everyone else for not saving GM from itself. His argument is, essentially, that GM shouldn't have built SUVs, it shouldn't have been allowed to build SUVs and consumers should not have wanted them. The underlying assumption is that someone should have done something to make sure that whatever was built in Janesville should never become unwanted.
That type of "industrial policy" is, of course, a recipe for economic stagnation. It would result in far fewer plants to risk one day being closed because it would necessarily require policies that restrict market changes and would require the government to interfere in the market, artificially manipulating supply and demand in a way that would stifle innovation and responsiveness to consumer needs and desires.
In Jay's world, the government would have acted to prevent GM from building SUVs so that now it would not have to stop making them and, as a consequence, throw people out of work. Putting aside the obvious, i.e., that in such a world, GM may have produced nothing in Janesville, the government has no particular expertise in determining what people should or not should not build and want. Rather, the market - through prices - best matches demand with supply.
Sometimes this results in companies going out of business and people losing jobs. Plants that manufacture film, paper checks, and audio or videocassettes are probably not doing well. But the government should not have decreed that they stop producing these things or prevented others from producing digital cameras, developing on-line payment systems or DVDs. As market conditions change or new products are developed, some companies and individuals will lose.
If there is a role for public policy here, it is in internalizing market externalities and helping persons in transition. While some may argue that SUVs or gas should have been more heavily taxed to reflect their contribution to air pollution, certainly no one in Janesville would have supported that. That would have reduced demand - which is precisely what higher gas prices have done.
But what happened here - as tough as it is for Janesville - is what ought to have happened. GM was slow to see changes in the marketplace and is now responding to those changes. It's not the fault of George Bush, the GOP, NAFTA, taxes in Wisconsin or the failure to manage the economy from Capitol Hill.
Of course, the closing (and the circumstances that compel it) are tragic for Janesville and GM. But the claim that we can live in a world where these things never happen is a false - and ultimately cruel - promise.