Government Motors

GMlogo I heard from a friend of long standing today, who said a friend of hers of long standing (at our age, we eschew “old friends”), had this to say about the government’s takeover of General Motors.

… his grandfather, who worked for GM is rolling over in his grave because those who have destroyed the company have now nationalized it.

Now some would say that statement is redundant, but they did at least happen in that order.

I’m not sure that the Obama mandates to the new GM are necessarily a good thing. Improved mileage standards are probably a worthwhile goal, and Americans have shown they will buy fuel efficient cars, as is evidenced by the Toyotas and Nissans and Kias of the world. But for what ever reason, when it comes to “American” cars, massive SUV’s and pickups seem to be what Americans want to buy. It just seems like every time GM made an “economy” car, buyers flocked to the imports. And now massive Toyota and Nissan trucks are every bit as obnoxious to us sedan drivers as their American cousins.

I grew up in a GM town.  Central Foundry was the 2nd largest employer in Lawrence County.  Interestingly, the Navy was #1, but that’s another post. People who got jobs at Central Foundry often had them for life, they were good jobs at decent wages and promised a comfortable, middle class retirement. In a town where not everyone went to college, it was a good employer, and usually a good corporate neighbor.

But some of those benefits are a part of what’s caused GM’s demise. While many will blame the management, and there is certainly plenty of culpability on their part for not building the cars people seemed to want to buy, labor also has to bear some of the blame. Eventually, as fewer cars rolled off the assembly line, money became worth less, and more employees retired, the weight of the pensions became a burden that added hundreds of dollars of cost to every car. While not the sole culprit, I just don’t think there is any one segment of the company that should bear the full weight of the eventual collapse, and “nationalization” of the company.

I’ve often heard from my more liberal friends how “obscene” it is that the CEO should earn sometimes hundreds of times more than the people who build the products, but folks, as John Mellencamp would say “Ain’t that America”.  People are worth what a company or board is willing to pay for their services. Should they get huge golden parachutes when they drive a company into the ground?  I tend to think not, but until boards start writing contracts that stipulate that a CEO who resigns in “disgrace” for ruing a company shouldn’t live in the lap of luxury, that’s the way it’s going to be. It’s still, IMHO, a better system than anybody else has going.

white house How much should taxpayers spend to prop up the automobile industry? I honestly don’t know. Nor do I know if the entire economy would collapse if they were allowed to fail, as companies do every day. I do know there are hundreds and hundreds of subcontractors, small businesses that make the things that go into cars. The failure of GM or Chrysler could have a very broad ripple effect across the economy. In such instances, there’s often a loud chorus of “the government ought to do something”, but people of good conscious can disagree on what that “something” ought to be.

zil For GM, the course is charted. President Obama has said he does not want to run car companies, and that he hopes the federal government will be out of the car business sooner rather than later. We probably all hope so, but it’s also pretty well documented that once the government gets into something, it’s very difficult for it to get out. Meanwhile, we all know what kind of car a command economy can build.

It was called a Zil.




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Filed under Cars, Government, Thoughts

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