The Federal Government taking over GM really doesn't sit well with me. I understand that GM is a major employer (not just directly but indirectly as well) and that it would be a devastating blow for them close. But the fed taking it over and making operating decisions IMO is not going to make a better company.

Then you have things like this (link)


I expect that a majority of car dealerships would be owned by Republicans, but the initial "this doesn't seem right" feeling is there (as with many of the Obama administration actions). The White House needs to make known the criteria for selecting dealerships to close.

Okay, seriously, how many car dealership owners do you think are Democrats?

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Hope is the new black.

From fivethirtyeight.com: http://www.fivethirtyeight.com/2009/05/ ... icans.html

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Hope is the new black.

I don't know, but I do know that the one mentioned in the article (Landers in Arkansas) is partially owned by Mac McClarty and despite being a mega-supermarket auto dealer they have been struggling for years yet they were not subject to close.

Why? To assuage your fucking whine reflex?

The vast majority of car dealers are Republican. Nearly 9 out of 10, according to the site bearne linked to. So yeah, the vast majority of dealerships that close will belong to Republicans. If you actually see something in that to complain about, then you are a fucking idiot.

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Back to the original point of the thread...

The US government running GM is bad on so many levels.

1) It is a bad investment for US taxpayers. Do YOU want to own a GM car? What will need to happen to make GM viable again?
2) The US government does a shitty job at being the US government - what makes us think it will do better running a massive private enterprise already saddled with huge problems?

I wouldn't use Joxur's reasons, but I think the govt buying out businesses is a BAD FUCKING IDEA. It's incredibly unfair for other businesses to have to compete against 'state owned businesses'.

I'll argue long term it's not unhealthy for businesses to fail. The consumer demand still exists and will be met. If you want to drive that business to US owned companies, then the govt. should focus on that by allowing big tax breaks for those who buy US, and higher import/taxes for those who do not buy US brands.

That shouldn't drive the market, it should simply allow for US automakers to make a better car, competing with those who have lower costs overseas. Make those costs more 'equal', then whether they succeed or fail is on them.

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As I understand it, there are some treaty/trade agreement issues with that.

Further complicating matters are blurry lines around the definition of "American cars." You have foreign cars assembled here, foreign cars assembled domestically with American parts, domestic cars built domestically, domestic cars built in other countries, etc. The entire supply chain deserves consideration. This isn't about saving one company, so much as an entire domestic industry.

Yes, there are sometimes market advantages when businesses fail, but that's not the only way the market works. Competition is also good and that'd be diminished if GM (any big automaker) ceases to exist. And certainly, a market doesn't work without buying and selling goods with money. If a giant employer tanks and its suppliers go along with it, that's a lot of money taken out of the economy slowing down our rebound.

You're right about Jox's argument though. He's personalizing something that isn't personal and using stereotype in place of truth.

Back when Congress wanted to put strong protectionism into the stimulus bill, there were threats of a trade war from European countries.

Protectionism bad!

Besides, even if protectionist provisions are put into bills and even MORE incentives are given to buy American/GM cars... no one wants them. Do you realize how many incentives are on GM cars right now?

If GM is to survive in a form that's beyond life support, with constant money injections, they need to radically re-invent themselves, something along the lines of what Apple did when they started to come out with the iMac, iPod, etc.

No one wants GM cars. I asked my wife, who's not a car buff, to name one current model GM car besides the Corvette. She couldn't. Same with Chrysler. She could name a handful of Toyota, Honda and Nissan cars, though.

I cry bullshit, *I* can't name a single Honda

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Again, making an argument personal by basing it entirely on one person's knowledge or lack thereof, is a waste of everyone's time. Besides, if someone can't name a model, it's more of a branding problem than anything else (which GM definitely has, with so many makes with similar models -- something that's already changing).

Last year, the two best selling vehicles in America were a Ford and a Chevy. The top 10 included 1 Ford, 2 Chevys, 2 Toyotas, 3 Hondas, 1 Nissan, and 1 Dodge. There's obviously a market for their products.

Reason #3 why owning GM is a bad investment - people are way too defensive and emotionally involved. You can't say anything negative about GM without someone jumping out of the woordwork and throwing around sales numbers of pickup trucks as evidence that GM is "doing ok!".

Chevrolet and Ford have always been at the top with their pickup lines - but it's hardly a growth business.

If it's not the product line, Leo, why is GM doing so poorly?

Pickups will always sell. They are work vehicles. Chevy and Ford make the best pickups.

The problem GM has is they are hemorrhaging money before a single vehicle is created. Call it labor costs, call it healthcare costs, call it union costs or whatever you want but they have so many contracts that were created when GM was basically printing money that are coming back to kill them now.

Look at Saturn (a GM line that is not a Union shop) they are profitable and GM is being forced to sell it.

GM must re-work the union contracts if they are truly to rebuild as a company.

One of the reasons GM is doing so poorly is the faltering economy because they had too much invested in higher end shit, and SUVs. SUV sales dropped with the higher gas prices (which the auto industry didn't follow, assuming correctly that it would not be a lasting issue), then when the economy took a shit, a lot of people have downsized their cars. And SUV sales have gone waaaay down.

I'm sure that's not the ONLY reason, but that's one reason I've seen both personally through experience seeing people turn in cars/downsize to more fuel efficient and less expensive cars AND have seen in economic analysis on GM's 'bad decisions' in not cutting loose some SUV brands and pulling back from promoting others, and focusing on other shit.

All that being said, Saturn was a good brand and it's gone down the shitterl. I can't tell you why, because I've never *ever* heard a bad thing about a Saturn from any Saturn owner. I know my MIL chose not to buy one based on hearing rumors it might go under, but she favored it. She purchased a new car (paid cash) when the economy went to shit, turning in a car she'd had since the 80s I think, because it was the best time to buy a new car. If only many of our older Americans had done the same heh.

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We owned a Saturn. It was a great but totally unspectacular car. Nothing exciting or interesting about it at all. Sadly, that's not good enough anymore.

I really do think GMs problems are in the brand and perceptions of the brand, and that they are insurmountable without a massive re-branding campaign.

heh, Saturn *tried* rebranding campaign, but failed miserably -- basically, Saturn was GM's "middle of the road" line, and they tried to turn it into the "lower high end" line, making the cars (and suvs) more expensive looking. I think that bit them on the ass.

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World of Warcraft: Kallaystra, Gweila, Steakumn, Tarathia [ Feathermoon/Horde ]

Herein lies the key. The unions are too powerful. Unions at one time were a great thing, but now they are dated and need to either be done away with or give some serious concessions to the automakers. If it wasn't for the unions I think a lot of the automakers wouldn't be in the situation they are in now.

There's a reason why only American auto makers are failing, and that is because the union has far too much control.

Asian and European car manufacturers with plants in the US built them in states where the UAW had no presence, so they could actually give competitive salary to their employees without having to give outrageous benefits or hire twice as many workers as were necessary to do the work.

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World of Warcraft: Kallaystra, Gweila, Steakumn, Tarathia [ Feathermoon/Horde ]

With the Union getting a large chunk of ownership it will not change. (link)

As long as GM sells the Hummer brand off so they're back to making them custom again, I'll be happy camper. After that? Fuck 'em. I look forward to watching the unions lobby at the unemployment lines.

Reading a news story about how it is more and more likely that the Fed will take over a large portion of CitiGroup, this comment by Phillip Orlando summed up my feelings in the government controlling any private businesses (link)

That's a large collection of generalizations.

“They’re not businessmen; they’re bureaucrats. They don’t understand capitalism, they don’t understand the profit motive and they don’t understand the financial industry.”

I take issue with painting government officials with such a broad brush like that. No, their job is not to make the firm as profitable as possible, but their job is to prevent a company from going under that could significantly damage the national economic system. I would assume that for the most part many people in the Fed are at least kind of smart, have at least a little business sense, and understand "profit motive." That line to me is more indicative of the speaker's lack of understanding. Who, especially in the Fed, is not aware that business are motivated by a desire to earn profit?

That's a pretty bad quote for you to use as your pull, if you ask me. Sure, profitability would come behind sustainability, but preventing substantial economic damage due to "the profit motive" is the objective. Once the damage is managed to the point that Citigroup might make it another quarter, then they can get back on their profit motive horse all they want.

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leo in with the single sentence. either way, that's a ridiculous quote.

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And yet, every other company in the world has that goal. Puts Government Motors at a serious disadvantage. Toyota won't be playing defensively, nor will Ford, Nissan or Honda. Every analogy i can think of, if you're playing not to lose.. you won't win.

At some point, the damn thing needs to just fucking fail. Prolonging it is only going to prolong the recovery.

That quote's all propaganda. It's an "either you're with us or you're against us" line. There's plenty of gray area, plenty of politicians who are/were business leaders, some from the financial industry.

And just about every American understands profit motive -- just maybe not from the "I get a billion bucks and you get screwed" perspective. Oops, that was propaganda too.

Ok, so to spin this a little bit differently, Leo. You seem to think the government takeover of GM is a good thing. What makes you think so?

This goes back to what Mark Cuban said about the Obama economic recovery team: "where are the entrepreneurs?" This administration seems perfectly happy in putting in policy wonks and or professors in to attempt to solve issues when they should be putting in people with some experience.

(say what you want about how he runs the Mav's he still made billions from creating something, broadcast.com, and regardless of his overtly liberal standings you have to give him at least some credit for being a successful businessman)

Umm... If you're not familiar with at least the Accord or the Civic, I don't know what to say. They've only sold zillions over the last 30+ years.

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Kuwen Furyblades
Hunter of Memento Reejeryn
Champion of Faydark

You guys should just paint your flag red, smack a hammer and sickle on the front and be done with it.

What the heck?

The 31-Year-Old in Charge of Dismantling G.M.
http://www.nytimes.com/2009/06/01/busin ... .html?_r=1

Maybe this guy is the most brilliant not-quite-graduate of the Yale Law School there has ever been. But... wow. Too big to fail, but not too big to put an intern in charge. lol.

He has no responsibility at all. He's an analyst doing what analyst do. It makes for a good story though.

I don't know if it will be or not.

But I do know that the domino effect created by GM failing will thrust America into more dire financial difficulties.

And I know from experience that a leader having direct industry knowledge doesn't correlate with success for his/her business. There have been plenty of losers who know their business but can't run their company and plenty of people brought in from the outside with shallow understanding of a company's industry who've turned the business around.

Nobody can guarantee whether or not a government takeover of GM is going to save the company. There are a lot of factors that'll go into that question, most of which we probably couldn't even begin to guess yet.

Instead of good thing vs. bad thing on a political level, we deserve to think about good/bad when it comes to actual results.

To me, the most viable argument against a GM takeover is that we'd be stronger long-term if GM would be allowed to fail. Problem is, that argument fails to consider the ramifications of GM's failure on the short- and mid-term, especially if GM's folds quickly. Even in the long term, in my unscientific opinion, we'll be better off rescuing GM (or preventing a quick collapse) than we would be if we let them fall and suffer the consequences.

The devil is in the details. Whether GM lives or dies, it needs to happen the right way.

I don't disagree at the micro level, with individual companies. But when the whole world is the stage, don't you want someone who has both the experience AND new ideas? Not all automakers are failing after all, so presumably there are people out there with both.

In the middle of a crisis, I tend to lean towards wanting the grizzled combat veteran to lead me out of the shit, not the hotshot lieutenant. Not saying we even have the hotshot lieutenant.

This is a perfect example of what I was talking about before. The Wiki on Brian Deese:


Where is the ACTUAL BUSINESS EXPERIENCE? I don't care if it were manufacturing, or whatever this man is just a policy wonk with zero real world business experience and he is charged with reconstructing one of the foundations to the American Economy?

This looks like just another Obama Yes-Man being appointed to answer directly to Obama. Have yes-men been appointed before in every administration? Yes, but never to do something as critical as this.

Read what Lee Iacocca said about this in the April 30 Newsweek


Honestly, they need to put someone like Iacocca in charge of this, or at least let them have a major role in this whole process.

And I tend to lean toward wanting results, not stereotyping the people who might get them for us.

When the whole world is the stage, it's not as simple as Viper vs. Maverick (or whatever military pun you prefer).

Results are easy when you want something like "how can we get more people to vote for me?" But results that have impact to millions of people's lives (either directly through jobs or indirectly through the money those jobs put into the economy) you can't be experimenting.

It took the Obama administration days and hundreds of hours worth of meetings to determine the course of action for the Somalia Pirate situation. How can a person with little to no real world business experience lead a group of people with little to no real world business experience resolve a real world business situation?

You want results. But the first step in getting results is not to cripple your business by making it uncompetitive. Do you think a government controlled GM makes it more competitive against Toyota, Honda or another carmaker?

I'm really just trying to pin down why you think the government owning GM is a good thing, Ignore, for a moment, the question of short-term death vs. long-term death. Just address the issue of having the government running a huge business. What are the upsides?

Here are some downsides:

1) Other carmakers can conduct their business as efficiently as they want, and political correctness can eat it. While GM execs are taking Delta to get to their destination, others are in their huge corporate jets, conducting business as if there were no interruption at all.

2) Don't like the bonus incentives at GM? Fine, go work for anyone else, where there are no caps on pay like the new politically-correct GM.

3) Don't want the union running your company? Well, unions now own more than 17% of GM. Now that's a recipe for success - the government and the UAW running your company.

How does any of this help GM field a viable product that people will buy, and limit their expenses in such a way as to make them profitable again?

Again, what are the upsides?

31 year old rewrites the rules for american capitalism

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I have given up on fighting on IF the government should control GM. I am trying to battle the HOW because if has become moot. That was doomed to happen. Even the administration started pressuring the bankruptcy judge to make a ruling. link)



From the way things are happening, there is already a plan and come hell or high water the administration will put their plan in place - regardless of the outcome.

Just look at the shape that Social Security and Medicare are in to see just how effective government is at running them. Does anyone really think that the government will be able to run an automotive company with any amount of efficiency?

Here are some more practical issues that aren't emphasized enough.

The US government will simultaneously serve as the company's regulator, tax collector, customer, pension backstop and lender.

How do you fairly regulate GM and every other company. One you have a vested interest in, the others you do not. It's like having NFL refs with stock in the Dallas Cowboys trying to referee a game. As soon as a bad call goes against the other team, accusations of conflicts of interest are inevitable.

How do you award government contracts for automobiles? I mean, really. There's no way this can be done fairly any more.

The government has already intervened by forcing GM to stop increasing production at overseas plants - to bring that production back here. That's a political stunt that may make great headlines, but is probably bad business if GM's competitors don't have to face the same standard.

From an environmental perspective, some of the best-selling products are their pickup line. Environmentally friendly cars make up a small percentage of sales. So, what will Obama do when he starts getting pressured to make more hybrids and less pickups. Again, another bad business move - but good politics. The government will be advancing tougher environmental laws that will in turn hurt the government by making GM less profitable.

Actually, I think that the union partial ownership of GM is a good thing. Taking ownership of a problem leads to results. Now, UAW has a bigger incentive than ever to boost company profits.

I haven't heard anything directly related to salary caps at GM (though it wouldn't be terribly surprising). But even if there are, its effect is questionable. On one hand, you have people who are going to chase the bucks (if another firm is even likely to hire a GM exec who's bailing on his company right now) and on the other, you have people who want to pad their resume by helping GM back to profitability.

And call it a hunch, but I doubt some executive conducting business onboard a private aircraft is going to be the linchpin to that profitability.

The upside? GM stays in business, assumedly becomes profitable again. If you're asking if the government should buy it, you're asking the wrong question.

Is it in America's best interest for GM to go under?

If the answer is no, someone has to buy it. If no private entity is willing or able and you've already stipulated that it's not in America's best interest to let GM cease to exist, you've already answered your own question.

GM can stay in business whether or not the US govt has an ownership stake in the company. We can just continue to dump money into it. My question is what advantage do we have with the government actually owning GM (running the company, in other words). I still haven't heard anything that sways my opinion.

One advantage Jox, it is no longer subject to the rules of business that every other company must follow. Profitability is no longer the goal.

I say this all tongue-in-cheek. I don't want the government to run/own/be in charge of GM or any other company.

1) We keep it afloat, since if it went under it would apparently destroy the economy. (Or so people want us to believe.)

2) We don't have to keep funneling billion after billion into a failing business.

Those are the two positives I can come up with. Not saying that I support the government taking it over, just answering your request.

Isn't that negated by taking over a business losing money hand over fist?

Probably, but I'm sure the ideal situation is that the government steps in and tries to stop the bleeding.

Though, if it were me, I'd seriously consider just letting it fail. I would consider it akin to painfully cauterizing a would rather than letting it freely bleed for years.

You make fun but the Canadian government will hold 12% of GM.

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Kuwen Furyblades
Hunter of Memento Reejeryn
Champion of Faydark

Look at Amtrak for some wonderful governmental and corporate partnership successes

In light of this I think a full accounting for the bailout money needs to be made open for public record. Especially considering we're dumping even more money into them as part of their bankruptcy proceedings.

What a GREAT segue you gave me, Sarissa!

Speaking of both public accountability AND government running things... I was listening to NPR the other day and they were profiling the people that run recovery.org, a privately-run company, and how much better and more complete it is than recovery.gov, the official US govt site. Fascinating, and totally relevant to this discussion.

yeah you're right it's just a liberal media conspiracy that if GM shuts its doors then an enormous number of employees will have no place to go tuesday morning. is there another corporation that employs more workers, or that has more people whose lives will be changed dramatically if GM doesn't exist tomorrow? do you have jobs to give them?

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Are people entitled to have jobs?

i don't think they're entitled to have jobs, but i also don't think that a couple million people at the unemployment office tomorrow morning will have a severely negative effect on the economy, which is what i was responding to.

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Which wouldn't have been the case if they'd been force to slowly scale down and modernize to become profitable. Mismanagement played a huge part in this, but we can't ignore the contribution of the unions and government intervention in all of this nonsense.

yeah, i wish it had been fixed before it was a problem. again, not at all what i was responding to.

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I didn't say it wouldn't be bad.

I know you meant that facetiously, but I think there's substance to it. The average tenure of a CEO is three to five years, which means that's about as far ahead as they're willing to plan for their company. (Visionary CEOs are certainly out there [Steve Jobs, Shai Agassi, et al], but they're the exceptions to the rule.) Government ownership frees GM from the myopic "rule of business" that has short term profitability governing company policy.

Taking the long view enables a company not only to take public goods like economic stability and environmental performance into account, but also to fund the kind of innovative projects that can lead to long-term profitability. It was long-view innovation that enabled Apple to create the MP3 player market, and to continue to crush the competition.

In GM's case, I hope this means a shift away from gas guzzlers, and toward the future: hybrid electric vehicles.