On Monday it’s expected that General Motors will file for bankruptcy. In as little as 60 to 90 days, Government Motors will emerge, 72.5 percent owned by taxpayers and 17.5 percent owned by our Big Labor partners whose intransigence and greed helped to destroy the industry.
There is so much to fear about this evolving relationship between politicians, the constituencies that regard them as essential to their well-being and the private sector. The takeover of General Motors, and the temptation to use that ownership stake to pursue political agendas — the elimination of big “gas-guzzling” SUVs, for example — is temptation social planners of the left will find irresistible. And, as with government agricultural planning and programming, every action has consequences that trigger the need for more planning and regulation. Eight decades later we still can’t get that right.
Politicians will, of necessity, wall-in America, regulating automobile, truck and parts imports so that no foreign competitor will have cost-advantage.
Walling-off America is contrary to consumer interests. Democratic constituencies like Big Labor believe, however, that we need a protectionist industrial policy that uses tariffs, quotas and other tax and regulatory barriers to keep out competition.
It’s the same argument that surrounds Wal-Mart. The left stokes the fears of mom-and-pop retailers because Wal-Mart resists unions. Without question, though, Wal-Mart competition is healthy. It allows consumers to acquire more lifestyle-enhancing goods and services.
Just as with the war on Wal-Mart, Big Labor uses an 8.9 percent unemployment rate and fear of industrial job loss to gain support for protectionist policies that are anti-consumer. Intervention in the agricultural economy in the 1930s did not stop the exodus of farm jobs and it won’t stop the effects of global competition. It just runs up the tab.
I’m a bit ashamed to say this because so many innocents among dealers and service companies stand to be harmed, but I won’t buy a car from the government.
It’s the beginning of a protectionist and social-engineering industrial policy. It cultivates a deep symbiotic relationship between government and the private sector that emasculates business as an effective counter to government excess.
At government’s best, it creates a tax and regulatory climate where a free market flourishes. Then it stands back and lets the market determine survivors.
In the emerging government-business relationship, the creativity expended to survive in a free market morphs into the quest to prosper by appeasing politicians. It can be done.
Business is not liberal or conservative. Give it a cost-plus contract or corral its competition and it’ll do whatever politicians want. Want a dozen patronage jobs at $25 an hour each? No problem, so long as business can increase its contract by $350 an hour, cost plus profit.
Give business a monopoly that effectively fixes prices and limits consumer choice, and it will build any kind of vehicle politicians want.
Business, once bought and silenced, becomes a government partner that we should fear.
U.S. Sen. Richard Shelby (R-Ala.) said GM ownership puts us on “the road toward socialism” and asks “what’s the end game here and can the American people afford it?”
The end game is evident. And, no, the American people most assuredly cannot afford it.