We don't know whether GM should stay in Detroit. But we do know that the location of a company's headquarters is one of those decisions typically not made by people who are busy not running the company.Think of the myriad of such decisions that the people not running GM, i.e. government officials, will now be making.
This entire effort is doomed to failure. David Brooks has a good summary today of all the reasons why the government will end up worsening, not addressing, the deep, underlying problems that made GM go belly up in the first place.
First, the Obama plan will reduce the influence of commercial outsiders. The best place for fresh thinking could come from outside private investors. But the Obama plan rides roughshod over the current private investors and so discourages future investors. G.M. is now a pariah on Wall Street. Say farewell to a potentially powerful source of external commercial pressure.Does any of this sound like an opportunity to cut out the deadwood and for GM to come back as a profitable company that people will want to invest in?
Second, the Obama plan entrenches the ancien régime. The old C.E.O. is gone, but he’s been replaced by a veteran insider and similar executive coterie. Meanwhile, the U.A.W. has been given a bigger leadership role. This is the union that fought for job banks, where employees get paid for doing nothing. This is the organization that championed retirement with full benefits at around age 50. This is not an organization that represents fundamental cultural change.
Third, the Obama approach reduces the fear that impels change. The U.S. government will own most of G.M. It would be politically suicidal for the Democrats, or whoever is in power, to pull the plug on the company — now or ever. Therefore, the current managers can rest assured that they never need to fear liquidation again. There will always be federal subsidies for their own mediocrity.
Fourth, the Obama plan dilutes the company’s focus. Instead of thinking obsessively about profitability and quality, G.M. will also have to meet the administration’s environmental goals. There is no evidence G.M. is good at building the sort of small cars the administration demands. There is no evidence that there is a large American market for these cars. But G.M. now has to serve two masters, the market and the administration’s policy goals.
Fifth, G.M.’s executives and unions now have an incentive to see Washington as a prime revenue center. Already, the union has successfully lobbied to move production centers back from overseas. Already, the company has successfully sought to restrict the import of cars that might compete with G.M. brands. In the years ahead, G.M.’s management will have a strong incentive to spend time in Washington, urging the company’s owner, the federal government, to issue laws to help it against Ford and Honda.
As National Review editorializes today, GM is being set up to be run as the kind of lovely public-private enterprise that has made Fannie Mae the success that it is today.
All three Detroit automakers now share the same GSE structure (public mission, private ownership) that failed Fannie and Freddie. Going forward, the automakers’ missions are A) to provide health care, benefits, and high-wage employment to the United Auto Workers union, and B) to build the little green cars that President Obama and the Democrats want them to make, and the American people do not want to buy (at least not from Detroit while Japan makes them better for less). In exchange, the Big Three will continue to enjoy implicit and explicit taxpayer support.....It used to be that those arguing against government takeover of an industry such as the health industry would ask if you wanted the people at the Post Office or DMV to be running your health care. Now they can ask if you want the same people who had such a success running mortgage companies like Fannie and Freddie running your health care system. In a few more years, we'll be able to add in GM to the metaphor mix on that question.
The administration has emphasized that it will not use its ownership stake to micromanage GM. But we know from watching Fannie and Freddie that the government doesn’t need an ownership stake to push a GSE in the direction it wants it to go. Just ask House Financial Services Committee chairman Barney Frank, who repeatedly made it clear to Fannie and Freddie that their government charters (which exempted them from state taxes, among other things) depended on their willingness serve government ends, i.e., “to make housing more affordable.” Fannie and Freddie proceeded to underwrite America’s adventures in trash mortgages to the tune of $1 trillion. They did what Frank asked them to do. Now we’re on the hook for hundreds of billions, and Frank still has his job.
So when you hear that Obama is not really running GM, remember that we used to pretend that the government wasn't running Fannie and Freddie either.
33 comments:
perhaps you could quantify your belief that government management will invariably be poor management. for example, what is different about the military that makes it possible for that to be well run?
as for the post office, it has been a whipping boy for ages, but if you think you typical american entrepreneurs can do better, there is a great business opportunity for you to start a competing business that promises to deliver any letter to any part of the country within two business days, for under 50 cents
and make a profit
please, go ahead and show us how easy it is!
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Easy, the first in that the goal of the military is to kill the other guy and the second is e-mail.
If you have no desire to run a company, you probably shouldn't fire the CEO, design the product, and mediate bankruptcy hearings...'cause that sounds an awful lot like running a company
and the second is e-mail
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has been around since the early 90s and yet there is still regular mail
the goal of the military is to kill the other guy
and how is this an explanation of anything?
Uh....Tac. Vol., in case you hadn't noticed, the military doesn't MAKE anything. It blows up a lot of things and kills a lot of people but as far as I know, no modern army is expected to make a profit. Somehow, I don't think even you'd approve of that concept. Trying to compare managing the military to managing a business is ludicrous.
Oh, and by the way, at 50 cents per letter, the U.S. Postal Service is losing money. Of course, there's NO WAY some private business could be better managed than the Postal Service. Well, I mean with the exception of Fed Ex and UPS and Yahoo, and MicroSoft and Apple and..........
By law, FedEx, UPS and everyone else is prohibited from putting anything into or on a mail box. (Heck, just try to put a mail box somewhere USPS doesn't want you to put it! Doing so might throw off their "time studies!") Remove that monopolistic regulation and see how quickly FedEx, UPS and or someone else takes up TC's challenge.
"the President is eager to tell us at every opportunity that he has "no interest" in running an auto company"
This is the difference between socialism/Marxism on the one hand, and economic fascism on the other. The socialists were eager to get their hands on the factories, farms, and steel mills: they actually thought they could do a better job of running them than their capitalist owners.
The Hitlers and Mussolinis, on the other hand, tended to consider economic matters as beneath them..they were entirely willing to leave productive assets in private hands, as long as they could interfere as they wished in all matters of their operation.
Tac. Vol., in case you hadn't noticed, the military doesn't MAKE anything
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this is what is commonly called "providing a service", like lawyers, psychiatrists, private security services, etc, etc, etc.
the proposition that the right wing assumes is that the government is really bad at running things - that was what the question was about. my challenge to prove why this should be so
as for the post office vs fed ex and ups, the "shipping sidekick" website tells me that to ship a six ounce package from new york to california by the end of the next day would cost $4.95 thru the post office, $20.15 thru ups, and $18.53 thru fed ex
And now they are trying to putsh through gov. run health care--with very little discussion --
turning everything upside down --no way to pay for it except higher taxes for everyone.
Apparently Obama and his Democrats want to do this the same way they shoved the porculous bill down our throats. What a didastor this will be.
Not sure what you mean by "they" are trying to push through government run health care.
Opinion polls consistently show about 70% of Americans favor increasing the federal government's influence over the health care system to lower costs and provide health care coverage to more Americans.
Why are you objecting to something that 70% of Americans want? I think most people would be happy with a nationalized organized system, like every other western nation has. I will be too.
"website tells me that to ship a six ounce package from new york to California by the end of the next day would cost $4.95 thru the post office, $20.15 thru ups, and $18.53 thru fed ex"
$4.95 thru the post office is priority mail they might charge you 4.95 for 2 day service but don't bet the farm on it, I used to send items that way to Iowa, most of the time it took 4 or 5 days usually wasn't the way to do it.
Betsy could you delete my previous post and take this sentence out of this one.
Bill B finds one poll, CNN/Opinion Research, that supports some kind of government involvement in healthcare and then ignores that when asked in other polls, Pew and Gallup that they don't want any change that effects there coverage and are usually horrified at some of the solutions proposed. Healthcare reform over the last 5-6years has consistently been at the bottom of the list of issues that concern Americans and during this recession it has almost fallen off the radar.
Plus one would think that after the last time Bill got caught plagarizing he would have either stopped or at least credited the source of what he has again tried to pass off as his own work.
http://tinyurl.com/ch5mvb
A troll is a troll and should be treated as such, do not feed the trolls.
Ron K-there should be a trash can icon at the bottom of your comment. Click on that and then delete the one or any comment you wish.
Why are you objecting to something that 70% of Americans want?
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you don't understand how these guys think, bill. a friend of mine put it this way: if hillary clinton made a public statement saying that doggie doodoo was not good to eat, the next day every rush limbaugh listener would be scarfing it up and loudly declaring it tasted just like ice cream
Amazing. TV and BB are actually asserting that the government will be an effective and efficient provider of a service. What faith they have! Remarkable.
I've been following these left-right discussions for years and never heard any lefties make such claims before, relying instead on the "fairness" argument for socialization. I guess Obama does inspire (and delude).
History and experience lead me to a very different conclusion. I'd like to hear TV's and BB's positive experiences with government bureaucracy. Tell me about your personal experiences with the DMV, IRS, INS, OSHA, USPS, and EPA. Compare and contrast with the service you get from AT&T, UPS, H&M, and KFC.
TV, the DoD is reknown for inefficiency. That's not to condemn those who provide our national security, but the waste and bureaucracy is a necessary evil (and I wish reform were possible). Bad model, TV.
BB, "70% of Americans favor increasing the federal government's influence over the health care" doesn't mean much, and I suspect you're blowing smoke again. One day you'll learn that citing poll numbers (sans link)is a poor way to win an argument.
Anyway, I'm enjoying the spectacle of the opposition here making such spectacular claims. Keep it up guys!
your personal experiences with the DMV, IRS, INS, OSHA, USPS, and EPA. Compare and contrast with the service you get from AT&T, UPS, H&M, and KFC.
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government bureaucracies and corporate bureaucracies are essentially the same animals. anybody who learns to treat the individuals in them that you deal with directly with respect can usually get treated well and relatively efficiently in return
that's what my experience has been
also, you'll notice that the EPA has a brief which includes keeping poisons away from your children, but KFC sells fried chicken
i still don't hear an explanation for the contention that government bureaucracies are necessarily less efficient than a corporate bureaucracy, just insults for the military now since it is part of government
TV-equitus did not insult the military but made a specific reference to the DOD. Which even a minor check would show to be a civilian run agency that the military reports to and which in turn reports to the president.
p.s.
if you think corporations always give you better customer service than government agencies, try calling up Microsoft to get an answer about a software problem! compare and contrast that to calling up the DMV about a problem!!!
what is different about the military that makes it possible for that to be well run?
The military benefits from a focus and approach that allows for much greater efficiency than other enterprises. It is allowed a degree of discipline and authoritarianism that isn't tolerated in other settings. Orders are given; orders are followed. The chain of command is rigid and clear, accountability paramount, dissension dealt with severely.
as for the post office, it has been a whipping boy for ages, but if you think you typical american entrepreneurs can do better, there is a great business opportunity for you to start a competing business that promises to deliver any letter to any part of the country within two business days, for under 50 cents
and make a profit
That last part is key. The USPS is highly subsidized, costing taxpayers about $2 billion each year. In spite of this, and other advantages, UPS, FedEx, and other private enterprises compete with them quite effectively, and make hansom profits while doing so.
i still don't hear an explanation for the contention that government bureaucracies are necessarily less efficient than a corporate bureaucracy
Private enterprises are more efficient because they are motivated by profit. The more efficient they are, the more money they make. This incentive for efficiency is largely lacking in government, where perception rules the day. A program need not demonstrate efficiency or success as long as people are convinced that a need is being addressed. It's a lot easier to create the appearance of progress than it is to actually achieve it--and so that's how the game is played.
Government bureaucracies typically have very little accountability, compared to corporate bureaucracies. For example, it's difficult to get fired from civil-service jobs for ineptitude (or for any other reason), and there's little incentive for superior performance (don't make waves). Heads of government bureaucracies are very often selected on a political basis and not as often on merit. Admittedly, this can happen in corporations, but the impetus on performance, and ultimately profit, tends to elevate those who can do their job well vs. those with seniority or connections (I've been there!)
Also, the success of a government bureaucracy is determined by how well they are able to spend the funding they receive each year from the legislature, so that they can justify a percentage increase for the following year. The success of a corporation is measured by the income generated by the service/good they provide. If there are fewer buyers, then the corporation is failing and will eventually go out of business. This is something you'll never see happen to a government bureaucracy.
I'll say it again: I'm amazed to hear the likes of TV and BB assert that the feds are effective and efficient - something you'd never hear pre-Obama. I'd like to see studies that demonstrate this counter-intuitive claim.
equitus - for the second time, I have to remind you not to invent something and attribute it to me.
Not only are you quite wrong in what you imagine, but it makes you look careless and ill-schooled.
I am not making any arguments one way or the other about the efficiency of government (I'm not even sure how you'd measure that in the large).
I'm simply telling you that about 70% of Americans want the government to play a bigger part in organizing our health care.
Most Americans aren't stupid. They know that about 2/3rds of personal bankruptcies are caused by medical bills. Google "medical bankrupcty" if you don't believe me.
They don't have "medical bankrupcty" in Europe. They don't have "preexisting condition" in Europe. We deserve better in America, and since the market hasn't provided it, government must step up.
Wow! So many targets, so little time. ^_^
I hope everyone forgives me if I just go ahead and quote Tacitus without designating time before I make my reply as well as forgive the occasional typo. ^_~
"perhaps you could quantify your belief that government management will invariably be poor management."
50+ years of British history from the post WWII years unto the present! Now you have your quantification. Enjoy the number! ^o^
Note also that we do not say that the government cannot do anything well but merely that the government cannot run a *business* well. There is a difference.
"what is different about the military that makes it possible for that to be well run?"
Actually, that is less a request for quantification than a "Why are apples not oranges?" type question. However the reason that the military is well run in ways that Chicago-style patronage operations are not is that the military rewards technical competence while political jobs prefer to reward social skills instead. Hence the reason that New Orleans got more screwed over by Katrina it needed to be thanks to the Louisiana Dummycrats. ^_^
"as for the post office, it has been a whipping boy for ages, but if you think you typical american entrepreneurs can do better,..."
Already been done, Dude! ^_^
http://www.legendsofamerica.com/we-wellsfargo.html
Although the link I provide does not say so it is noteworthy that Wells Fargo and several other contemporary companies were ultimately driven out of the mail business because the Post Office went and whined to Congress to save them from the nasty competition. Some things never change. :P
"if you think corporations always give you better customer service than government agencies, try calling up Microsoft to get an answer about a software problem!"
Ah! Where would we be without the Microsoft Derangement Syndrome of the Left? Senile Apple programmers will never forgive Bill Gates for the fact that he had a better product. ^o^
That said, I will trust Microsoft over the Post Office for software any day of the week! Corporations may not *always* give better service than the government but as long as civil service employees are insulated from customer wrath that will still be the way to bet. ^_~
Obama voters do not mind the government controlling every aspect of their lives. That is apparent and no surprise.
Banks,cars -healthcare. They will then have to take over the grocery stors-(affects health care).
Chavez said that he and Castro could be to the right of comrad(his word) Obama.
I notice that Bill B has not addressed the serious charge I made that he again plagarized someone else's work and what he did use was not cited. How can anyone respond to logically and factually to the dishonest?
Plus there simply can't be any comparison between the US and Europe concerning bankruptcy laws as they are from two different traditions. We simply don't know how many people in Europe are bankrupt because of medical expenses which they do have to cover if that amount is above the amount allowed by the state. In some countries the possibility of personal bankruptcy range from never to hardly ever.
And since even the UN and WHO admit that most of the European nations that are comparable to the US fudge their infant mortality rates we simply don't know if there truly is a gap. And even then the gap is small enough to wonder if it is worth spending billions of dollars for improvement in life expectancy that we may already have.
BTW, if I have an unanswered question to Microsoft I can always contact Geek Squad but good luck trying to get a question answered by the DMV unless of course you use the Auto Club.
Private enterprises are more efficient because they are motivated by profit
you were doing pretty well until you got to this point.
i should never have mentioned making a profit in connection with the post office. the fact is, that it is a government run operation that can deliver a package for about one fourth the price of UPS and Fed Ex. it is still the go-to organization for sending letters - you'd be an idiot to consider sending an ordinary letter through the private carriers. and part of the reason that they charge so much is that they must make a profit. therefore, there is at least one federal government operation that provides a much needed service efficiently and much more cheaply than the private competitors - this has been your counter example
Ah! Where would we be without the Microsoft Derangement Syndrome of the Left? Senile Apple programmers will never forgive Bill Gates for the fact that he had a better product
i've never been an apple pgmr - not enough business in that market. your last sentence, however, will make an excellent amusement to all of us software engineers here in silicon valley
noteworthy that Wells Fargo and several other contemporary companies were ultimately driven out of the mail business because the Post Office went and whined to Congress to save them from the nasty competition
not true at all. wells fargo's pony express never made a profit, and was mercifully run out of business by the appearance of the railroads, which could get a letter across the country alot more cheaply than a pony or a stagecoach
I'll say it again: I'm amazed to hear the likes of TV and BB assert that the feds are effective and efficient
i certainly did not say that! only that it is not proved that the feds are always inefficient and ineffective, and private businesses are not always efficient and effective
could the great British expert be more specific about what he imagines the failures of British governments have been?
I suppose you could say that the biggest failure was not stiffening the weak spine of Bush jnr, the way M. Thatcher stiffened the weak spine of Reagan.
Private enterprises are more efficient because they are motivated by profit. The more efficient they are, the more money they make
now, the theory that the profit motive makes companies better than government agencies is tempting, but it has two major flaws: 1) 98% of the people in a corporation never think about the profitability of the company except to worry about their jobs if it seems to be going south, and - much more importantly - 2) making a profit is not nearly the same thing as doing good things for the customer - in many cases it's the opposite. if you don't know that very well, you must not know very much about corporations and corporate history.
no, corporate bureaucracies are not necessarily more efficient than government bureaucracies, and they are not necessarily more responsive to customers. they are responsive to money.
what is the primary obligation of a corporation to its stockholders? is it to make their customers happy and make the best products possible? no - it is to make money. will making the best products possible and being very responsive to customers always be the best way to make lots of money? no - often, making the best product possible and being responsive to customers are too expensive and not really necessary to the success and profitability of a company
and if you don't believe me, try calling up microsoft and getting a live human on the phone to discuss a software problem
about 70% of Americans want the government to play a bigger part in organizing our health care.
I guess we'll just have to take your word for it, eh BB?
Pat already provided the link to the poll I was referring to, equitus.
Here it is again http://tinyurl.com/ch5mvb
good luck trying to get a question answered by the DMV unless of course you use the Auto Club
my personal experience was that i got an answer, an apology, and a refund check from the berkeley DMV in three minutes flat
good debate, guys!
Bill doesn't also mention the part he plagarized or the Pew and Gallup polls which show that there is indeed concern about healthcare but outright hostility to government managed or universal healthcare. As well as the fact, again, that over the last ten years the public has consistently stated that healthcare is not one of their big concerns.
TV simply couldn't tell an anecdotal story about his good treatment from the CA DMV but had to embellish. Individual DMV offices do not give out refunds but they do have the proper form ADM 399. And unlike the Auto Club which can and does refund money at their office a DMV refund takes two to three weeks.
BTW-According to the California DMV the Berkeley office where TV claims to have gotten his refund is in Oakland, or Concord or San Francisco.
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