Tuesday, February 12, 2008

If only they could read between the lines, Happy 100th G.M. !

“home folks think I’m big in Detroit City,

 From the letters that I write they think I’m fine.

But by day I make the cars, and by night I make the bars,

If only they could read between the lines.”    Detroit City

 

 

This year marks the 100th anniversary of General Motors. The good news is that they still sell as many cars as any company in the world. The bad news is that they no longer sell more cars than anyone in the world and during their 100th anniversary year will slip into a permanent second place, at least until the Koreans and the Chinese can gear up to pass them, as Toyota is doing.

 

G.M. lost almost 40 billion dollars last year. That’s over 100 million dollars a day. Think about that, every day, the president of G.M. goes to work and knows that his company is going to lose 100 million dollars that day. At least things can’t get much worse if he takes the day off. Today G.M. is offering tens of thousands of its employees about $150,000 a piece to go away. In other words, they can now “make the bars” both day and night, because they don’t need them to make the cars anymore. At least not at $28 an hour plus pension and benefits. G. M. wants to pay about $16 an hour for their replacements. That sounds like about $32,000 a year, which is not going to buy many drinks in Detroit city, or anywhere else. You don’t really have to read between the lines to know how truly awful all of this is.

 

When I was young, the Chairman of General Motors could look a Congressional Committee collectively in the eye and say “What’s good for General Motors is good for the USA”.  Actually, he never really said it quite like that, but that did not keep it from being an oft quoted line for the next 20 years. It even got incorporated into a song in the musical “Lil Abner” starring the immortal, but height challenged ,Stubby Kay. But no one was bigger or more powerful than G.M. back in the salad days of America’s post war boom. Buicks, Cadillacs, Oldsmobiles, Pontiacs, and, of course, Chevrolets were turned out and bought by  the millions. In return for their good fortune, G.M., although sometimes at the gunpoint of the UAW, kept raising pay and distributing benefits for workers, under the assumption that the good times would last forever. It was a particularly American arrogance. Especially since the country had lived through ten years of devastating depression within the memory of everyone who was making or buying the cars. I sometimes think that the euphoria caused by the victory over fascism  made the country believe that the normal rules no longer applied to it. There is a strain of optimism in the American that very often crosses the line into delusion. Never was that strain more pronounced than in the post war days.

 

There are a lot of things about economics that I don’t understand. I don’t understand how a company can lose 100 million dollars a day and still give away thousand dollar scholarships in the name of two football players who played well on each college football game that is televised. I don’t understand how a country that owes a trillion dollars to creditors can vote to give each of its families making less than $150,000 a year a check for $1,500. I don’t understand how a country can have the second highest tax rate in the world without supply universal health care for its citizens. I don’t understand how a country can keep two wars going and cut taxes at the same time. I guess it can only happen in a country where none of the rules apply.

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