Celebrating the Artificial: General Motors and the Skeletons of American Industry


GM is Alive, Government Motors, bailout, subsidy, taxpayerThe Treasury Department is reportedly feeling pressure from General Motors to “sell the government’s entire stake in the auto maker,” a move that, at the moment, would result in an estimated $15 billion loss for U.S. taxpayers. But such are the realities of dysfunctional private-public-private back-rubbery:

GM executives have grown increasingly frustrated with that ownership, and the stigma of being known as “Government Motors.” Executives have said the U.S.’s shadow is a drag on its reputation and hurts the company’s ability to recruit talent because of pay restrictions.

Last week, I explored these tensions over at Values & Capitalism, critiquing the government’s malinvestment in GM as well as the Democratic National Convention’s overt attempt to romanticize such failures:

“GM is alive, and Osama bin Laden is dead,” said President Obama in his recent speech at the DNC. The crowd responded with resounding cheers, energetically waving signs bearing the same slogan. Now, just a week later, bumper stickers are already primed for your Prius.

The problem is: Osama bin Laden is actually dead, and GM has resurrected into a zombie of sorts, fumbling and stumbling about under the control of autocrats—licking its lips for another round of taxpayer flesh.

Yet of all of the tall tales of glorious GM resurrection, the Obama’s administration’s underlying attitudes about human potential are made most clear by none other than Vice President Joe Biden, whose DNC speech rails against the “Bain way” (i.e. the profitable way), arguing that “the Bain way may bring your firm the highest profits, but it is not the way to lead our country from the highest office.”

And there she blows:

Profitability, we are told, should no longer be a priority of the American people. Further, we are told, it shouldn’t be a priority of the United States government. And this is what garners cheers from the ruling party of our nation.

We now live in a country where government-appointed know-it-alls waste tens of billions of taxpayer dollars on failing companies, only to then be hailed as “defenders of industry.” We now live in an era in which viewing government in terms of “balance sheets and write offs” is demonized; in which waste and inefficiency are downplayed; and in which those who pursue economic growth in a traditional sense are viewed as obstacles to human flourishing.

The truth, of course, is that “the Bain way” secures higher profits by discouraging wasteful behavior and drawing on everything that’s good in humanity. It is this—value creation and the reward of earned success—that makes the market much more than a market, empowering us to attain the American Dream.

The market can only be a source for good if it remains a free market: an arena where contributions come before rewards, not after. And the moment Americans forget this—the moment we join this overt celebration of government-subsidized failure—is the moment we start down the road that invariably makes America like every other entitled, vacuous Western democracy, rather than the exceptional nation we’ve always been.

If this is the contrast the Democratic party wishes to draw—a battle between Artificializer Obama vs. Realistic Romney—so be it. Americans will know what they’re buying, and if the pollsters’ current predictions hold true, we’ll get all the skeletons of “industry” and “economic progress” that we ask for.

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  • http://twitter.com/remnantculture/status/248084750324084736 Remnant Culture

    The DNC ridicules the "Bain way" and celebrates government-subsidized failures like GM. But will it sell? http://t.co/NT7IC6Qq

  • http://twitter.com/remnantculture/status/248089861184188416 Remnant Culture

    Celebrating the Artificial: General Motors and the Skeletons of American Industry http://t.co/spkQSoVV

  • http://twitter.com/cfmpl/status/248090305142870016 CFMPL

    Free the Market! Free the Market! (or else….um….) http://t.co/J34kr8F6

  • http://twitter.com/josephsunde/status/248091154397143040 Joseph Sunde

    Celebrating the Artificial: General Motors and the Skeletons of American Industry http://t.co/spkQSoVV

  • http://www.facebook.com/people/Theo-Gagner/74600918 Theo Gagner

    Hmmm.  What do you propose as the alternative to the government bailout of GM?

  • http://www.remnantculture.com/ Remnant Culture

    Chapter 11

  • http://twitter.com/remnantculture/status/248534180827365376 Remnant Culture

    The "Bain way" secures higher profits by drawing on everything that's good in humanity. http://t.co/spkQSoVV

  • http://twitter.com/remnantculture/status/248534180827365376 Remnant Culture

    The "Bain way" secures higher profits by drawing on everything that's good in humanity. http://t.co/spkQSoVV

  • http://twitter.com/lukemoon1/status/248541971940003842 Luke Moon

    The "Bain way" secures higher profits by drawing on everything that's good in humanity. http://t.co/spkQSoVV

  • http://www.facebook.com/people/Theo-Gagner/74600918 Theo Gagner

    Chapter 11 would have allowed them to:
    1) Restructure management.
    2) Void existing deals with Unions and reconstruct them.

    This has happened anyway during the government financed restructuring.

    However, bankruptcy would have required a third party to determine what liquidity the company had, and after that to start making those assets liquid.  I don’t really know what GM has to sell that would help their investors recoup any losses.  I believe GM would have failed completely.

    GM has restructured and is posting record-breaking profits.  They have retaken the market as the number one auto dealer in the world.  They are the prime retailer in the worlds largest, fastest-growing, and largest market, China.

    I think a $50B loan is one of the soundest investments the government could have made in the recession.  A $700B stimulus generated 1-2M short-term employments.  We are currently on a new $40B/month quantitative easing to generate/retain a trickling of jobs.  This $50B investment, which at most will be at a $50% loss, retained 3M jobs for the foresable future.  Now GM is back making money, hiring employees and paying taxes.  I don’t understand the downside of this deal.