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