General Motors will not see 2009 without a government bailout. What used to be the centerpiece of the American economy has a decent chance of not seeing Obama’s inauguration.
If this should happen, it would be an atom bomb dropping on the American middle class. It might be hard to see from here (or maybe not), but GM and the auto industry are among the few things that have worked in the US private sector, from a social and economic point of view. You know the deal. Work hard, turn in your hours, and you’ll be rewarded with the American dream: home, retirement, some vacations, and so on. Be part of the great, producing company, and all of this is yours.
On the other hand, the service sector that has come to dominate the US economy is most notable for producing shitty, disposable jobs that are considered a stepping stone to something better. So what future will we favor in these tough times–becoming underappreciated, union-less armies selling outsourced, imported goods? Or becoming a well paid worker that actually makes things?
And here’s what might be most shocking–despite being saddled with the costs and responsibilities of being the largest private pension and health insurance provider in the world, has made clever and key investments that deserve fulfillment. Yes, I’m talking about an American car-maker; hear me out.
Nevermind the now-defunct EV-1–the first modern mass-produced electric car. GM’s heavy-duty hybrid technology would be far more revolutionary than Toyota’s. Likewise, the technology in a Chevy Volt does a far better job of playing to the strengths of electric and gas motors than any competing hybrid. For more technical details, you should hop over to DearScience.org for an explanation.
GM has great ideas, their manufacturing quality is on par with the Japanese manufacturers, they have beloved small cars they’ve started pumping.
Early on in this crisis, we decided that AIG–an insurance company that made horrifyingly bad decisions–was worthy of rescue. We’re now up to $150 billion in a growing pit of despair attempting to save a company that did little to create or maintain a middle class. On the other hand, the same sum invested in American industry as loans would have a clear, immediate and profound effect on the economy–putting money into the pockets of line workers, new products on the global market that are competitive and even potentially make our society more energy efficient.
The alternative frightens me. If we allow GM and the auto industry to fail, it’s unclear what, if anything, would replace the key role it played in our economy. I cannot fathom how to renew an industrial middle class without the auto companies–and the vast manufacturing networks supported by them.
There may be no good economic justification, but for political reasons its looking increasingly likely. Since Obama is going to back this, all you partisans better get in line behind Jonathan and start finding some reasons that it’s really a great idea.
GM has many great products down the road and with the workers wages cut in half, they have an excellent chance of doing well….if only they can survive the next two years.
If we lose the auto industry to foreign countries, we as an industrial base are through in this country. We can not allow this to happen. No other government in the world would allow that to happen. But, with such a dumb government like we have, this could easily happen.
@49: GM has been fucking Michigan for the past 25 years, and you want to blame US for its failure? You need to get your priorities straight.
This is, seriously, the most incoherent item I’ve ever read in the Slog.
We are supposed to bail out GM on the grounds that “GM and the auto industry are among the few things that have worked in the US private sector, from a social and economic point of view.” For a minute there, I couldn’t figure out in what sense the author believed GM “worked”. Then it hit me. The author thinks GM works because it offered its retirees pensions and health care that the company cannot possibly afford, while remaining a going concern. So the government, outside the context of providing universal health care, should step in and finance GM’s improvidently assumed obligations (“improvident” here defined as an obligation you couldn’t possibly make in a billion years).
I am a liberal, my friend. Not a Marxist. Fuck this.
GM is worth saving for one reason: Cadillacs rule. The CTS is the raddest car I’ve ever owned and I want a new one in a few years and I’d totally cry if they were no more.
And the prize goes to #28 who has bought six foreign cars since 1982 “because they’re higher quality”.
Better than my mom’s 1992 Buick? If they were that great, you would only have bought one of them.
My car was made in 1980. I figure it’s good for another 15-20 years. It ain’t no damn Toyota.
#14 and #47 are spot on. Lets think about this everyone: you’re going to pump billions of dollars into a company that produces a product no one wants (or can afford now that the credit bubble has burst). The harsh reality is that no amount of government cash or loans can turn this around at this point. Someone, somewhere, has to start buying their products. With people losing their jobs, the credit crunch stopping the ‘drive new every two’ gravy train, and the fact that GM products are lower quality than Honda or Toyota, its over. Let’s assume the government comes to the rescue and dumps billions of dollars on them — are they going to keep running the factories when sales have totally fallen off a cliff? GM just reported its worse sales month since 1945! Anyone want to bet that it was just the weather keeping people off the dealership lots?
I feel bad for all the workers not only at GM, but in all the supporting businesses and suppliers who will lose their jobs. Unfortunately, like housing, financial stocks, and playing the lotto: they bet on a company and lost. GM has squandered opportunity after opportunity most notably building giant, gas-guzzling SUVs after the 1970s oil crisis and dismantling the electric car program.
Giving the same management team piles of cash will only prolong the inevitable. Overall demand for vehicles has tanked. Most consumers can’t afford a new car without extraordinary financing. Honda and Toyota have better products. Someone has to go down and according to good, old-fashioned capitalism, its the weak businesses that should fail. Pay off their pension obligations (We will anyways since the Pension Guarantee Corporation is almost insolvent — thanks to other failed corporations — and will likely need a bailout of its own), sell their factories and tangible assets and intellectual property to someone who knows how to use them, and walk away. In the current economic storm, someone is going down and this time, the drain is big enough to accommodate GM.