Government Motors: General Motors, Once a Proud Success Story of American Free-Enterprise Capitalism, Is Now in the Vanguard of Our Nation's Precipitous Plunge into Full-Blown Socialism

By Scaliger, Charles | The New American, June 22, 2009 | Go to article overview

Government Motors: General Motors, Once a Proud Success Story of American Free-Enterprise Capitalism, Is Now in the Vanguard of Our Nation's Precipitous Plunge into Full-Blown Socialism


Scaliger, Charles, The New American


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Monday, June 1, was the end of an era for the American automotive industry. As nearly everyone not living in the jungles of Borneo knows by now, once-mighty General Motors, the flagship corporation of American automobile manufacturing and one of the most potent symbols worldwide of American industrial might, slid into Chapter 11 bankruptcy after the Great Recession dealt the long-foundering giant the coup de grace. In what is being billed as the fourth-largest bankruptcy in American history and the largest ever for an industrial manufacturer, GM claims $82.29 billion in assets against almost $173 billion in debt--this, be it duly noted, after billions in federal government bailout monies have been shoveled GM's way.

Since the beginning of the decade, the company whose fortunes were once proclaimed to foreshadow those of the nation as a whole saw share values plummet from around $70 to 70 cents. As part of the June 1 bankruptcy, GM announced plans to shutter or idle 12 of its plants, laying off tens of thousands of workers in the process. Many of its marquee brands, including Pontiac and Saturn, would be sold off or discontinued, and shareholders wiped out.

The U.S. government, with a new cash infusion of $30 billion on top of $20 billion already showered on GM, will now have an ownership stake of 60 percent. Our fine neighbors to the north got into the act, too. Under the terms of GM's bankruptcy, the Canadian government is contributing $9.5 billion in exchange for a 12.5 percent stake in the company.

Despite the foolishly optimistic vaporings of President Obama and other politicos thrilled at the prospect of Washington running an automobile company ("A new beginning ... a rebirth ... a new General Motors," Senator Carl Levin of Michigan called it), the corporation that has now been nationalized will never be more than a pale shadow of the former icon of American industry. Nationalization, the president is now assuring us, will be only a temporary measure; but in politics, alas, "temporary" is usually reckoned in transgenerational terms. Most of the "temporary" emergency measures of the Great Depression are still with us in one form or another. "Temporary" military deployments overseas--in South Korea and in the former Yugoslavia, for example--are now part of the status quo.

Unfortunately for General Motors, liberal Washington insiders who have tried for decades to destroy the automobile industry by foisting cumbrous environmental and safety regulations on GM and its two major competitors are unlikely to see the seizure of the world's second-largest auto manufacturer as anything other than a golden opportunity to remake the auto industry in their own image. New fuel efficiency and emissions standards already announced by the Obama administration to be phased in by 2016 will be foisted--along with sundry other environment and safety-related conceits--on GM's federal government-managed product line. Because taxpayer dollars, not consumer choice, will henceforth drive decision making at GM, cost, efficiency, and other hallmarks of industry competitiveness will no longer be an issue.

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GM's Economic Travels

How has General Motors come to such a pass? While questionable executive judgment certainly played a role, the federal government--with its regulatory burdens and other economic distortions, as well as its support for coercive union demands--has also been a major contributor (as GM spokesmen have correctly pointed out from time to time). There was, for example, the 1990 capitulation to UAW in which GM agreed to pay workers even when plants were idle. This was just one of a myriad indignities GM has been forced to endure at the hands of a UAW empowered and emboldened by the National Labor Relations Act of 1935 that made it illegal for companies to get rid of unions. That GM has managed to survive for so long, all the while having to pay thousands of employees for not working, fund expensive employee healthcare packages mandated by the union that cost an estimated $1,600 dollars per car manufactured, and finance lavish pensions that drove the corporation billions of dollars into the red before the recession even got started, is little short of a miracle. …

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