WS on GM [updated]
Our roving and irregular correspondent Willie Seabrook comments on the news the Washington Post found fit to print:
UPDATE: Alex Epstein reckons that "even as taxpayers are forced to pay $50 billion to bail out the massive corporate failure that is GM,' reporters and analysts are still struggling to "accurately break down the series of events that brought us here."
‘‘Washington Post’: “As part of a drive to become a sustainable business - as congress instructed, GM is trying to close 1,323 dealerships. But congress actually wants GM to be profitable, yet also keep unprofitable dealerships open.
"I don't understand how they're costing you money," Rep. Mike Doyle (D-Pa.), who invited a Pittsburgh dealer to testify, told the automakers. "I think they're a revenue stream for you guys."
WS: Of course the shithead doesn't understand – he’s not involved in the business, he doesn’t understand this business, and like most of his colleagues he hasn’t got any serious experience in any real business anyway. Which makes he and his colleagues the perfect people to oversee the bankrupt company, right?
‘Washington Post’: "In addition, a bipartisan group of House lawmakers has introduced legislation that would halt the closings and restore protections under state franchise laws, and the Senate is considering similar measures. "
WS: So they introduce legislation to try to make GM profitable business, and a month later introduce legislation to try to make GM an unprofitable charity. This is surely leadership you can believe in.
Unfortunately, the recent GM retrospectives in top newspapers evade the elephant in the room — which in this case is joined by a donkey. The biggest player in the GM breakdown (and in the broader failure of the US auto industry) is the United States government, following both Republican and Democrat policies. The stories all focus on the failed policies of GM’s management — but conveniently omit how the government was instrumental in forcing these policies on them.Sadly even the Wall Street Journal is guilty.
None of GM’s management decisions can be understood without understanding two fundamental truths. 1) GM’s success, like all businesses, was/is determined by whether it can make a profit — whether it can sell its products for more than it costs to produce them. 2) Through union laws and fuel economy laws (CAFE), government policy forced American automakers to pay higher costs for every vehicle produced — placing them at a crippling disadvantage.Read The elephant — and the donkey — in the room (part 1) and The elephant — and the donkey — in the room (part 2) to put yourself ahead of most of the analysts and journalists in your understanding of the disaster - and to find out about the one "great source of consistently outstanding reporting and commentary on the auto industry" that's worth reading regularly.
And yet the Wall Street Journal story does not even mention the unions or CAFE. The New York Times story does worse [just as you'd expect]; it dismisses the regulations without evidence, and treats the union concessions as voluntary.