ushanka.us: GM, Obligatory Post

Monday, June 01, 2009

GM, Obligatory Post

Ahh, peace and quiet. Albeit for a short time. The loud mouths screaming "Obama is not a socialist" are sleeping in today. Why strain the ol vocal cords on the day Obama takes a 70% stake in a major American corporation?

Ion Mihai Pacepa, former Communist and Romanian Chief of Intelligence, and only author with two books in our library to your left, writes in today's WSJ, What I learned as a Car Czar:

They say history repeats itself. If you are like me and have lived two lives, you have a good chance of seeing the re-enactment with your own eyes. The current takeover of General Motors by the U.S. government and United Auto Workers makes me think back to Romania's catastrophic mismanagement of the car factories it built jointly with the French companies Renault and Citroen. I was Romania's car czar.

When the Romanian dictator Nicolae Ceausescu decided in the mid-1960s that he wanted to have a car industry, he chose me to start the project rolling. In the land of the blind, the one-eyed man is king. I knew nothing about manufacturing cars, but neither did anyone else among Ceausescu's top men.
---
In 1945, the British voters, tired of four years of war, kicked out Winston Churchill and elected a leftist parliament led by Labour's Clement Attlee. Attlee nationalized the automobile, trucking and coal industries, as well as communication facilities, civil aviation, electricity and steel. Britain was already saddled by crushing war debts. Now it was sapped of economic vigor. The old empire quickly passed into history. It would take decades until Margaret Thatcher's privatization reforms restored Britain's place among the world's top-tier economies.

The United States is far more powerful than Great Britain was then, and no American Attlee should be capable of destroying its solid economic and political base. I hope that the U.S. administration, Congress and the American voters will take a closer look at history and prevent our automotive industry from following down the Dacia [picture below], Oltcit or Jaguar path.

From today's WSJ Editorial, The Obama Motor Co.:

GM, we are told, will now be able to make a profit and some day even return money to taxpayers. If you close your eyes and imagine that GM's private managers would be able to make decisions based solely on business judgment, you can even start to believe.

But then you snap out of it.
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[From the print edition, but missing from the online version. Why?] Now that the government owns GM, it's only a matter of time before Congress starts to micromanage its business judgements. Every decision to close a plant will be second-guessed, much like a military base-closing. And what about buying parts from foreign suppliers? Will those also be banned when Mr. Gettelfinger [UAW head] demands it, even if the costs are lower? GM's managers and directors will have one eye on enhancing shareholder value, but the other on maintaining their political viability in Washington.
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The larger corruption will be when government tries to vindicate its ownership by favoring GM over Ford and the other auto makers that aren't wards of the state. The TARP legislation contained one blatant example in the form of a $7,500 tax credit for consumers who buy GM's new electric car, the Chevy Volt. Expect more such favoritism, including huge new subsidies for green cars if consumers prove resistant to their charms.

Mr. Obama likes to say he's a pragmatist who only prefers a government solution when it will work. But in resurrecting an industrial auto policy that even the French long ago abandoned, the President has made himself GM's de facto CEO. Our guess is that he'll come to regret it as much as taxpayers will.

A picture of the East German Trabi:

None of this would have happened if we had had National Health Care this past decade.

Our question: Who will buy a 2010 Corvette?

Labels: Not a Socialist

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