Monday, March 09, 2009

It's Time To Impound GM

If you view a laid-off employee as the top of their very own food chain, as the Los Angeles Times posits today, then their activities, or lack thereof, would ripple down to the butcher, the baker and the candlestick maker.

In a story today, the Times used the example of a Southern California man whose software deal fell through, which then forced him to lay off his employees. In other sections of the article lay-offs meant consumers put off haircuts and skimped here and there to stretch their budgets.

Of course, there's an unquestioned rationale to this phenomenon, but isn't this the case General Motors and the United Auto Workers are trying to pass as reason for the government to keep it afloat? The GM question is indicative of many of the financial dilemmas facing the Obama administration. How can a company and, by extension, an industry so steeped in the American culture like the automotive business be allowed to flounder? Yet, when does continually propping up GM as a practical long-term policy become a lost cause?

CBS News today wondered what bankruptcy would likely mean to workers. The decision would likely trickle down to the closing of part makers and the shuddering of car dealerships around the country. That means, thousands of factory workers, mechanics and car salesmen added to the unemployment rolls. On the other hand is it wise to give another $15 billion or so to GM just to keep the lights on when it is likely another $20-$30 billion may be needed a few months from now.

President Obama ran on a platform preparing Americans to tighten their belts and begin making the tough decisions. He has yet to make those decisions. Although, maybe we should give him some time since according to a well-researched article in the New York Review of Books that chronicles his first month in office, Obama has spent an inordinate amount of time simply turning back many of President Bush's horrendous policies. Yet, on the economy, the Treasury Department has done little to force the banks and the entire financial system to concede one point similar to the circumstances around GM.

Instead of holding these auto-related industries in place while they lie precariously on the edge to oblivion, how about pulling the plug on them while there is time for the government to restructure the work force in an orderly manner. The New York Times ran a chilling front page article last Friday that reinforced this notion that the workforce is in many cases, obsolete. A chief economist at Wachovia Bank said, "These jobs aren’t coming back.” Isn't that what the foreman in the Bruce Springsteen song "My Hometown" said?

"Foreman says these jobs are going boys and they ain't coming back to your hometown," sang The Boss. Ironically, those lyrics were written during the equally disastrous 1981-82 recession.

There would be repercussion other than in employment. Sure, innovation would suffer. Plans for the vaunted Chevy Volt would gather dust, but who would be able to afford a $35,000 green car without a job or reliable financing available. We can take the hit now and hope for the recovery to not just get us back on our collective feet, but in far better position to dominate the marketplace for the next 30 years.

San Francisco Mayor Gavin Newsom said last week, the voters showed that the last 30 years of conservatism was a failure, yet the decisions this president is making on behalf of liberalism will define the next 30 years either positively or negatively for another generation of American political thought. Now is not the time for short-term thinking.

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