Owning GM is troubling

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.

109 comments Add your comment

Linville

May 31st, 2009
10:53 pm

Livinginparadise,

Are you ready to join Caper’s and my third party? Otherwise who would you replace them with? More of the same?

Yulanda

May 31st, 2009
11:28 pm

Ok so Why’s hdukes.com Insurance is CHEAPER than my employer?? Is my employer reaping benefits and not SHARING.

Decider

May 31st, 2009
11:45 pm

Pension aren’t secured, they are priority unsecured on Schedule E.

Bigliberal

May 31st, 2009
11:56 pm

http://www.fdic.gov/bank/individual/failed/banklist.html These are all the banks that have failed recently. Who do you think takes them over when they fail? The US Government. They take them over and sell them back into the private sector all the while insuring the money that is deposited is guaranteed. They essentially close the bank take ownership and make sure the employees and management don’t make off with any assets. So while it is a short time, they own a private business. Does that answer your question?

I also have to disagree that the government does not do anything well. For some things we need them. Police, fire, disaster management etc. Jobs that have little profit incentive but that society needs. For 8 years we have been under a republican president who believed that government should be small enough to drown in a bathtub all the while giving out money hand over fist with very little return. It was Cheney that said “Regan proved that deficits don’t matter, this is our due” and now you are going to complain about spending? Where were you 8 years ago?

drago

June 1st, 2009
2:37 am

Jim you rock, I love your columns and you are correct about our march towards socialism. This is the consequences for voting for Democrats, and a poor Republican party that failed its voters. Shame, Shame, Shame!!!

Shifting to Toyota

June 1st, 2009
6:36 am

All you morons that voted for Obama wanted “change”….and now you are getting it. Congratulations. You asked for it.

Copyleft

June 1st, 2009
8:59 am

Please… American automakers have needed to have their life-support shut off for YEARS now. These dinosaurs need to fail, if they can’t provide the economical, fuel-efficient, reliable cars that their competitors do.

[...] Jim Wooten is troubled at the prospect of owning GM. [...]

LL Cool J

June 1st, 2009
1:56 pm

*”Of course, in ANY corporate bankruptcy proceeding, the (government) court appoints a (government) trustee to (governmentally) administer the debtor’s assets and reach (government) agreements with the creditors.”*

Wow. It is unfortunate but clear that Copyleft has not spent much time in bankruptcy court or dealing with bankrupt/troubled companies. This isn’t even remotely close to how bankruptcy works – at least not Chapter 11, which is where Chrysler and GM find themselves. Yes, a trustee is usually appointed (although not always) but the role of the United States Trustee (as opposed to any of the other types of trustees that are sometimes involved in bankruptcy cases) is not to “administer” the debtor’s assets. Absent special situations like fraud or blatant malfeasance, running the debtor’s business operations will generally remain under the purview of the debtor and its existing management and board of directors structure until the company is sold or a Plan of Reorganization becomes effective, hence the term “debtor in possession”. It means, quite simply, the debtor remains in possession and in control of its assets.

The US Trustee’s role in the bankruptcy process is not to cut deals on behalf of the debtor, but rather to effect the just, speedy and efficient resolution of bankruptcy cases and police the behavior of the parties in interest to the bankrupcty case. In most chapter 11 cases, the debtor is responsible for arriving at the best resolution of the case, whether this is a sale (or sales) of the company or a Plan of Reorganization. The bankruptcy code provides a debtor a period of exclusivity specifically to accomplish this goal.