Yet More on GM and The Reagan Illusion

There’s some good stuff in this article in today’s New York Times:On Washington – The Great Bailout Debate

We need clarity, and given the ridiculous nature of American transitional politics we won’t get any. Right now we need leadership … oh well.

The fact remains that saving GM is a hopeless cause. It’s a dead company. It reminds me of the great line from Monty Python: ‘if it hadn’t been nailed to the perch it’d have fallen over’. It’s dead I tell you!

The American auto industry has had calamitous leadership for decades. It has lived, like America as a whole, in denial about the onrushing realities of the 21st century. Global wage competition; oil price increases; and environmental disaster have all been avoided by managers, union leaders, and politicians here in America for decades. Instead we lived in the warm haze of the Reagan illusion. Morning in America was not a new dawn it was a desperate attempt to slip back beneath the covers, go back to sleep and deny change.

Reagan lied.

We listened.

And here we are.

Guess what? The world caught up. Those naughty people invested. They innovated. They saved money [there’s a thought!]. They did not think the world revolved around them – they engaged one another. Old Europe is a muddled mess of partially deregulated and overly controlled economies. It’s people may have massive misgivings about the Brussels bureaucracy. But at least it doesn’t fritter away its energy on a politics built around religious issues; abortion; gun rights; gay marriage; and tokens like a flag. Those much maligned Brussels folk think about economic things. Gasp!

So here we are. With a car industry that is several decades behind that of India and South Korea in terms of technique and labor productivity. With a health care system foisted on us as an anti-labor policy by GM back when it was the machismo figure head of American industry. With a dependence upon an energy source that we have no control over. With a social contract that we can no longer sustain. And with a lifestyle way beyond our means.

And we are concerned with shoring up one of the primary causes of our troubles?

As the professor in the article says: given the amount of capital that the American Big Three have raised from gullible, I should say pathetically supine, shareholders over the past few years they could now own, lock, stock, and barrel all the assets of the competitors now crushing them in the open market. They didn’t buy those assets. They didn’t even see the need to emulate the strategies or labor policies of their competitors. They didn’t adjust their product lines [‘Americans like muscular ugly cars!’]. They didn’t see the need for fuel efficiency. In fact they fought against higher fuel standards. They poured money down the SUV drain. They built unproductive factories. They missed every market turn. They became sheep in the market protected by wolf-like union pressure on the Democrats and managerial pressure on the Republicans. They became the poster child for industrial failure.

Why?

Because of Morning in America. Because of the belief in the ability of America to stop the clock and even to turn it back to the 1950’s. When all was right with the world and there was no competition, no gas shortages, and the stars and stripes ruled the waves.

They bought the Reagan illusion and institutionalized it. They allowed themselves to pretend all was like it always was.

They were stupid.

Let them collapse. And let Reagan go with them. It’s time to move on and catch up with the world.