Having entered bankruptcy court (even a so-called ‘structural’ bankruptcy), General Motors (GM) is making history. It was once the titanic behemoth of American business, making more money than any other business.
In 2006, GM reported revenues of $207 billion dollars — yet profits were negative (-$1.9 billion).
As we know, even a titanic can sink.
Three years ago, GM was the third largest U.S. corporation in revenues; but today it has been de-listed from the Dow Jones Industrial Average, as its stock price fell below a dollar a share.
Now, the U.S. government is loaning new billions to GM, totaling almost $50 billion in taxpayer dollars, without any assurance that it’ll be repaid.
GM was the nation’s largest automaker, manufacturing Chevrolet, Pontiac, Cadillac, Buick, Saab and Saturn. Some models are being discontinued, while others will be sold. They also made the Hummer, a gas-guzzling SUV that has reportedly been sold to a Chinese manufacturer.
Critics in Congress and in the corporate media have blamed GM’s problems on their payroll and so-called "legacy" costs, meaning benefits for retirees.
Even after the crumbling of the business model, the anti-union animus of such critics remains a central concern of the political and propaganda elites, many of whom praised NAFTA’s (North American Free Trade Agreement) passage as ‘good for business’, and therefore ‘good for America’.
But only a numbskull believes those on the assembly line designed or decided which kind of cars would be built or sold.
GM suffered from managerial myopia, which could not adapt to changing market conditions.
Thirty years ago, when the U.S. faced an oil crisis, small cars began to appear on the roads. As oil prices stabilized, U.S. car makers built fleets of SUV’s, which sold quite well to Americans who wanted the civilian equivalent of a tank in their garage.
But the gas crisis of 2007 put an end to that idea.
U.S. automakers couldn’t give these things away.
In the meantime, car makers in Korea and Japan, which built safe, affordable cars with extended warranties and polite customer services to Americans, are GM’s lunch. Other Asian companies are joining the club. India’s Tata Motors, makers of the cheapest car in the world (the $2,000 Nano) has just acquired Jaguar and Land Rover.
Being ‘too big to fail’ is a political judgment, not an economic one.
In classic capitalist theory, a business survives if it sells products, and makes a profit.
We are beyond that point now.
Politics may disguise the problem; but it can’t solve it.
Note: Mr. Jamals’ newest book is: Jailhouse Lawyers: Prisoners vs. the U.S.A. (San Fran.:City Lights Books, 2009) It uncovers the practice of often self-trained JLs, who fight for change in prisons across America. It features a stirring forward by activist/scholar and prison abolitionist, Dr. Angela, Y. Davis. EMI: contact: www.citylights.com or write: City Lights Publishers, 241 Columbus Ave., San Francisco, CA 94133