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Monday, June 29, 2009
Two cheers from the grave punctuate the nationalization of GM
By NORIKO HAMA
The automaker General Motors filed for bankruptcy earlier this month, and there are surely two people rejoicing in their graves at the news. One of them is John DeLorean. The other is Clement Attlee.
DeLorean will be known to many as the maverick car designer whose numerous battles and foibles as a GM executive and founder of the DeLorean Motor Company made such colorful press in the 1970s. Sci-Fi film lovers will have fond memories of the DeLorean DMC-12, the super car that featured large in the Hollywood blockbuster "Back to the Future."
The book "On a Clear Day You Can See General Motors," which tracks DeLorean's adventures within GM's Byzantine corridors of power, became an instant best seller when it was published in 1979.
Clement Attlee, the British Labour Party leader, served as prime minister from 1945 to 1951. It was under his regime that the National Health System was created, major industries were nationalized, and the British welfare state was born.
Attlee snatched victory from the pugnacious jaws of Winston Churchill in the 1945 election. It was actually the great war hero himself who coined the memorable phrase "from the cradle to the grave," only to have the words requisitioned by the Labour Party as a key slogan for developing the welfare system after the war.
The flamboyant car designer of 1970s America and the astute politician of 1940s Britain would seem to have very little in common. That is indeed the case. Both have good grounds for cheering GM's fate from wherever they are beyond the grave, but not for the same reasons.
DeLorean would be pleased because his hated enemy has been struck down. He would feel justified in gloating and "I told you so" would be his message. While "On a Clear Day . . . " may not be the last word on GM's shortcomings, the 1979 book does go a long way in showing that the company's troubles did not begin yesterday.
The rigidity, the compartmentalization, the complacency and the lack of creativity that led to GM's predicament today were all there 30 years ago. Were DeLorean to appear before us in "Back to the Future" style and point out that GM should have seen the writing on the wall all those years ago, he would essentially be correct.
Clement Attlee also might feel inclined to gloat at how things turned out for GM. Not so much for anything he finds objectionable with the company itself, but because it is now 60 percent owned by the U.S. government.
That General Motors has become Government Motors would be greatly pleasing to a man who preached nationalization as the best antidote for giant monopolies.
His contention was that, left to their own devices, market forces only lead to the concentration of power, social unfairness and economic inefficiency. There's nothing like government-controlled companies for bringing out quality and efficiency in a national economy.
This firm belief led Attlee to bring some 20 percent of the British economy under state control during his term in office. For such a man, there would surely be supreme satisfaction in knowing that 21st century America saw it fit to nationalize its largest and most illustrious car manufacturer.
Unlike John DeLorean, President Barack Obama does not want to sign GM's death certificate. And like Clement Attlee, he does not extol the virtues of nationalization.
How embarrassed he would be if those two were to return to give him praise. Yet being the American president in these strange times probably means that being praised by the wrong people for the wrong reasons is the order of the day. He had better get used to the idea.
Noriko Hama is an economist and a professor at Doshisha University Graduate School of Business.