FRED WOLFERMAN: Just What General Motors Needs: the Government Running It

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General Motors is a mess.

It is a giant, inefficient bureaucracy with featherbedded work rules, out-of-control health-care and retirement costs and executives who have ignored all these problems for too long. It has a history of poor products and bad service. Obviously it needs a serious overhaul to have any chance of survival.

So naturally, the logical solution is to turn control over to -- the government? Makes sense. Who has more experience with all these things?

There are so many folks in government with manufacturing expertise. Let's see: The president manufactured a biography and a campaign out of neighborhood organizership. Joe Biden manufactured the vice-presidency out of his only career of senator. Tim Geithner manufactured the treasury secretaryship out of all that fine work at the New York Fed. Co-President Pelosi manufactured most of her appearance out of nips and tucks. Charlie Rangel manufactured a story about not paying taxes because they speak Spanish in Puerto Rico.

Yes sir, this is clearly the group of people to take over the day-to-day operations of General Motors. They're doing so well with the federal budget. There's no question that they will succeed; after all, it doesn't matter how negative your cash flow is if you can just print more money.

Maybe Rick Wagoner, CEO of General Motors until the president asked (asked?) him to resign, needed to go. He was a 30-year veteran of the management system that got GM to where it is, though he seemed to be trying very hard to change things.

This sort of decision was once left to corporate boards of directors, but it's much simpler just to let the president make it. This is a whole new definition of executive authority.

Remarkably inconspicuous through all this has been Ford.

Ford, you will recall, did not take any government money. Thus far, it has been spared the micromanagement being lavished on GM and Chrysler. Desirable as this would appear to be, what do you suppose will happen to Ford's competitiveness when GM's creditors and unions are finally broken, and its balance sheet becomes manageable? Exactly -- Ford, too, will need some of our tax dollars as it restructures further to meet new market conditions created by federal subsidization of its largest competitor.

Whether it is the result of some secret socialist plot, as the talk-radio folks would have it, or simply a bad idea, the biggest bureaucracy in the world fiddling around trying to fix a lesser one is not going to work. Whatever it ends up being called, GM is headed for a de facto bankruptcy; exactly what would have happened if Washington had just stayed out of the way.

Chrysler may succeed in combining with Fiat, a concept that risks merging American design with Italian manufacturing. Ford will be back in the news.

The argument is made that, because GM, Chrysler, and whoever is next receive taxpayers' money, they should be subject to governmental restrictions. This raises two questions. The first is whether they should get any money at all. This is not new territory; it has happened before. That is one of the reasons it is happening again. In the deepest recesses of their capitalist minds, executives of giant companies believe the government will not allow them to fail. It turns out they are right. Maybe it is a necessary policy. We have never had so many huge corporations before. Maybe they wouldn't be so huge if they thought more carefully about risk.

The second question is of a different order: Even if it is desirable, or at least expedient, for the government to loan money to these companies; even if it is important to require stringent conditions to attempt to ensure repayment, is it appropriate, or constitutional, or rational, for management decisions to be made by the same folks who brought you Medicare and the Postal Service?

Fred Wolferman lives in Southern Pines. Contact him by e-mail at fwolferman@sbcglobal.net.

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