Sunday, May 31, 2009

The Sad and Tragic End of General Motors

Tomorrow, June 1, it is expected that we will witness the tragic end to a remarkable story – the 100+ year run of iconic General Motors as a private company. The story of storied entrepreneurs William C. Durant, Pierre S. du Pont, Walter P. Chrysler, Louis Chevrolet, among others, and, most notably, Alfred P. Sloan, who, along with legendary engineer Charles F. Kettering, made GM what it once was -- the leading industrial company in the world.

Years of incompetent management and many more years of destructive union hegemony spelled the end. General Motors has long needed a restructuring bankruptcy, but one conducted under the rule of law that would have shrunk, streamlined, and legally rejuvenated the company to allow it to survive and prosper. But we’re not going to get that. A powerful Obama who, using the pretense of a national financial crisis to bend people to his will and disdainful of the legal rights of holders of capital, has something different in store.

Tomorrow General Motors is expected to file for restructuring bankruptcy. In the “pre-packaged” restructuring plan, Democrat Obama is laundering even more taxpayer money to unions, and has extorted from bondholders (e.g., retirees’ pension plans, mutual fund investors) and from emasculated TARP-ensnared creditor banks a much larger piece of what’s left of the company for the automakers’ union than the Democrat union would otherwise get in a bankruptcy proceeding that followed the rule of law and far, far more than it deserves. Democrat union members up, while taxpayers and creditor banks and pension plans down.

Of course, the taxpayer is the biggest loser, other than the rule of law, which seemingly now is of concern only to some behind-the-times Republicans. The federal government (that is to say, Democrat politicians) will own over 70% of the rump GM, and the Democrat union a big chunk of what’s left after that. Larry Kudlow, on his CNBC show Friday May 29, said that the “taxpayers are by far the biggest losers in this deal,” which he said is “an assault on free market capitalism.” Obama has now parlayed the financial crisis and the public panic into taking control over our largest insurer, some of our largest banks, and now our largest automaker, all the while saying, to fool the foolable, that he has no interest in doing any of this.

When I first began working for a big company years ago, I endeavored to read some books about business. I was not interested in books on the latest fads in management theory but rather books that told the stories of successful companies. And one the very first that I read, and the best I ever did read, was “My Years With General Motors” by its legendary long-time head Alfred P. Sloan, a staunch believer in free markets for free men. The dust jacket blurb of my Doubleday paperback edition exclaims “Even today, Bill Gates praises ‘My Years With General Motors’ as the best book to read on business, and Business Week has named it the number one choice for its ‘bookshelf of indispensable reading.' Draft your own blueprint for organizational success by using the tools found in this book. Learn the valuable lessons only Sloan could teach.” Lessons never learned or even appreciated by later management feckless and irresponsible, a union solipsistic and corrosive, and Obama Democrats dissembling and lawless.

JM Greco