My OperaGM and DC: a two-way street
Tuesday, June 2, 2009 6:57:33 PM
G.M.'s executives and unions now have an incentive to see Washington as a prime revenue center. Already, the union has successfully lobbied to move production centers back from overseas. Already, the company has successfully sought to restrict the import of cars that might compete with G.M. brands. In the years ahead, G.M.'s management will have a strong incentive to spend time in Washington, urging the company’s owner, the federal government, to issue laws to help it against Ford and Honda. (Emphasis added)
Brooks also echoes my fear that GM will be a ward of the state pretty much forever:
The U.S. government will own most of G.M. It would be politically suicidal for the Democrats, or whoever is in power, to pull the plug on the company — now or ever. Therefore, the current managers can rest assured that they never need to fear liquidation again. There will always be federal subsidies for their own mediocrity.
I disagree that "whoever is in power" won't be brave enough to take GM off of taxpayer-funded life support. This deal is pretty unpopular with everyone except his base, and will smell worse as the company passes $50 billion in bailouts and heads toward $60 billion, if not more. (Go ahead, bookmark this. I'm prepared to put offer 3-to-1 odds -- my GM stock against yours.) We'll need a Republican Congress (but one with considerably more spine than we have now) to try to undo this deal.
Brooks makes a series of points about this unholy mess. Again we agree:
Instead of thinking obsessively about profitability and quality, G.M. will also have to meet the administration’s environmental goals. There is no evidence G.M. is good at building the sort of small cars the administration demands. There is no evidence that there is a large American market for these cars. But G.M. now has to serve two masters, the market and the administration’s policy goals.
Read the whole thing.
