Annals of Corporatism: Another $45 Billion Gift to General Motors?

Annals of Corporatism: Another $45 Billion Gift to General Motors? http://tinyurl.com/27vcoqf
Annals of Corporatism: Another $45 Billion Gift to General Motors? Any
time you have a firm that's "too big to fail" you have a form of corpratism, by definition, no? The government will step in to save the failing firm, and inevitably—to avoid disruptions—be forced to keep on some of the highly paid managers who drove it into the ground. The state becomes the guarantor of inequalities that the market alone would not generate, cementing in place a division of labor in which different people are semi-permanently assigned different and unequal roles in society, the way organs have different roles in a body (or corpus). That's certainly what happened with the Wall Street and Detroit bailouts.
Next come two additional temptations: a) The tempatation for the government to protect its new ward, giving it special treatment and in effect penalizing competitors who aren't affiliated with the government. And b) the temptation for the government to use its new leverage to pursue other social objectives—which only makes the firm seem more vital to the nation and increases temptation (a).
The Obama administration appears to have given in to both of these temptations. We now learn, for example, that GM has been given not only $50 billion or outright (in exchange for stock) but also extraordinary tax treatment that will shield it from up to $45 billion in taxes on its earnings over the next 20 years. (I wonder how Ford feels about that.) It's also becoming fairly clear that GM's government ownership is one reason it fell into line behind Obama-supported policies on fuel economy and carbon emissions. Reports Politico:
Treasury officials have always argued that managers appointed by the government have acted independently, and they point out that a majority of GM’s campaign contributions have continued to go to Republicans.
GM spokesman Greg Martin said that government ownership had no impact on the company’s about-face on fuel economy, attributing it to California’s move. He said that GM, with 20 percent of the U.S. market in 2009, couldn’t have dragged nine other carmakers along in supporting the deal.
But the auto lobbyist scoffed at this. “Foreign car companies always deferred to the Big Three” U.S. automakers. “There were a lot of good reasons to make a deal then, and there will be fewer in the future, and [government] ownership is one of them.
Indeed, an environmental lobbyist notes (in Politico's words) that "the government will retain a sizable piece of GM for years," and openly "hopes this influence will deter the company from fighting to weaken the next round of fuel economy rules."
We're not near Putinism, in which companies that don't support the administration are effectively blackballed and put out of business (though Ford might reasonably disagree). But the Teep Partiers aren't crazy to worry about a slippery slope—even the upper reaches of which are offensive, at least to social egalitarians. It's one thing to have risk-taking bankers and brokers making a million a year. It's another to have their exalted place in the economic hierarchy guaranteed by government as if they were entitled members of a House of Lords.
The bigger question is whether, given that some firms really are too big to fail, this isn't a slope we'll be on for the forseeable future ...
--
The credit belongs to the man who is actually in the arena; whose face
is marred by dust and sweat and blood; who strives valiantly; who errs
  Click to see the full signature.
Add pictures here
âś–
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
"Jim_Higgins" wrote in message
Annals of Corporatism: Another $45 Billion Gift to General Motors? http://tinyurl.com/27vcoqf
Annals of Corporatism: Another $45 Billion Gift to General Motors? Any time you have a firm that's "too big to fail" you have a form of corpratism, by definition, no? The government will step in to save the failing firm, and inevitably—to avoid disruptions—be forced to keep on some of the highly paid managers who drove it into the ground. The state becomes the guarantor of inequalities that the market alone would not generate, cementing in place a division of labor in which different people are semi-permanently assigned different and unequal roles in society, the way organs have different roles in a body (or corpus). That's certainly what happened with the Wall Street and Detroit bailouts.
Next come two additional temptations: a) The tempatation for the government to protect its new ward, giving it special treatment and in effect penalizing competitors who aren't affiliated with the government. And b) the temptation for the government to use its new leverage to pursue other social objectives—which only makes the firm seem more vital to the nation and increases temptation (a).
The Obama administration appears to have given in to both of these temptations. We now learn, for example, that GM has been given not only $50 billion or outright (in exchange for stock) but also extraordinary tax treatment that will shield it from up to $45 billion in taxes on its earnings over the next 20 years. (I wonder how Ford feels about that.) It's also becoming fairly clear that GM's government ownership is one reason it fell into line behind Obama-supported policies on fuel economy and carbon emissions. Reports Politico:
Treasury officials have always argued that managers appointed by the government have acted independently, and they point out that a majority of GM’s campaign contributions have continued to go to Republicans.
GM spokesman Greg Martin said that government ownership had no impact on the company’s about-face on fuel economy, attributing it to California’s move. He said that GM, with 20 percent of the U.S. market in 2009, couldn’t have dragged nine other carmakers along in supporting the deal.
But the auto lobbyist scoffed at this. “Foreign car companies always deferred to the Big Three” U.S. automakers. “There were a lot of good reasons to make a deal then, and there will be fewer in the future, and [government] ownership is one of them.
Indeed, an environmental lobbyist notes (in Politico's words) that "the government will retain a sizable piece of GM for years," and openly "hopes this influence will deter the company from fighting to weaken the next round of fuel economy rules."
We're not near Putinism, in which companies that don't support the administration are effectively blackballed and put out of business (though Ford might reasonably disagree). But the Teep Partiers aren't crazy to worry about a slippery slope—even the upper reaches of which are offensive, at least to social egalitarians. It's one thing to have risk-taking bankers and brokers making a million a year. It's another to have their exalted place in the economic hierarchy guaranteed by government as if they were entitled members of a House of Lords.
The bigger question is whether, given that some firms really are too big to fail, this isn't a slope we'll be on for the forseeable future ...
--
The credit belongs to the man who is actually in the arena; whose face
is marred by dust and sweat and blood; who strives valiantly; who errs
  Click to see the full signature.
Add pictures here
âś–
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On 04/11/2010 3:03 PM, Jim_Higgins wrote:

Government Motors operates lobby grups. In essence taxpayers money funding the representatives political war chests. Bribery and corruption. Certainly not very democratic.
--
Socialism is a great ideal as long as someone else pays for it. And when
no one is left to pay for it, they all can share nothing.
  Click to see the full signature.
Add pictures here
âś–
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Motorsforum.com is a website by car enthusiasts for car enthusiasts. It is not affiliated with any of the car or spare part manufacturers or car dealers discussed here. All logos and trade names are the property of their respective owners.