Journalist Says U.S. Should Nationalize GM

Gmflags

Dan Neil, one of the most well-known automotive writers in the country, wrote a column in today’s L.A. Times suggesting the U.S. government should buy GM outright, in its current shaky position. At first, his proposed $30 billion-$45 billion for GM sounds outrageous, but he raises a few good points that most have missed in the bailout discussion.

One, the Japanese competition are basically subsidized by their governments because of state-run health care and retirement benefits. Obviously, a U.S. company paying those wages themselves would be at a disadvantage. Two, only the government could hold the necessary long-term view — forgoing short-term profits — to develop fleets of green vehicles. That’s an intriguing thought; if new vehicles require a new infrastructure, wouldn’t they indeed need to be backed by the government in some form, as would the rest of the infrastructure?

It’s an interesting read; Neil says the U.S. should buy all three companies, and that Chrysler wouldn’t have a big impact if it failed — and the whole thing is clearly labeled “opinion.”

Nationalize GM (LA Times)

By David Thomas | December 4, 2008 | Comments (27)
Tags: In The News

Comments 

JM

Waste of tax dollars. After the whole Fannie/Freddie and AIG mess I wouldn't want to think what would happen if the government bought the big 3.

Jules

Kill the Big 3. They should all die. Greedy execs could use that money to help poor people! At least the Japanese have people employed in America!!

Tony

End of the capitalism as we know it.

Raiden8816

Ha! We live in a semi-capitalist society. If we were true captialists, we wouldn't have social security or unemployment. Your claim of "End of the capitalism as we know it." is clearly irrelevant.

Joe

Dumb. Nationalization is horribly inefficient and does not work. Those autoworkers already have it cushy... make them government employees and watch out!

Seriously one of the worst ideas I've ever heard. Let those car companies fail, as any business as badly run as they have been should fail, and let those workers put their skills to better use in healthier companies (such as the Japanese car companies with plants in the US).

silver

Give the whole capitalist, socialist, communist arguments a break. Those terms are being thrown out there by people who don't even know what they really mean. Nobody has or wants total absolutes, and the way our markets are with everyone's corp board in everyone elses corp board's pockets we don't have capitalism, or socialism or whatever else. I think something like this would be fine in a short term, as long as it was specifically set out that way. No trying to take the profits and feed them elsewhere and no employing your sister's brother's cousin. And would be a good start to getting a company that would make only a specific - hopefully environmentally friendly - kind of car.

Joe,
The transplants are already idling their factories they have now because of the economy. They can't take on any more employees as it is.

The oil companies should be bailing them out.

Jay

The OPEC companies should be bailing everyone out of this mess. Wake me up when someone goes to trial for all of this...

Joe

Arguments about socialism/communism/capitalism DO matter, because it's been proven over and over that the more capitalistic a country's economy, the better. So let's not toss aside that side of the debate so blithely.

As for foreign manufacturers idling their plants, yes, everyone is being hurt in this current downturn. However, if we let the market operate and not be tempted to choose winners and losers, then the Big 3 will go out of business and stop making cars, since they're obviously so bad at it. In will step the foreign, well-run auto companies to take up that slack in the supply chain, thus creating more demand for workers, many of whom will be former employees of the Big 3.

Really, capitalism works because it only favors the companies that make a profit. It does not suffer from nepotism or supposed morality or any of the things that government professes to do with its intervention, the market is all about: does this make money. And that is good because when companies make money, workers make money and pay taxes and everybody wins.

We need to stop the hand-holding and let these sick companies survive or fail on their own.

Joe,
You're assuming foreign government won't bail out their companies. Which they are currently planning in Germany and are doing to a small extent in Asia. Expect more of it as those countries have always supported their industries.

Silver

Joe, you make my point pretty clearly. Quit talking about capitalism like it exists in a textbook. What studies are you talking about? Please provide something of this. Absolute Capitalism may be some great thing in an Ann Rand novel, but it doesn't work that way in the real world.

Why would anyone of those overseas corp hire an american worker? Because they did so well with their previous company? If the only thing that matters is making money that is what you will get - more Enron, MCI, Adelphia, and the financial markets the way they are now. Is that what you want? It is not what I want.

Troy S.

Would GM then be called (G)overnment (M)otors?

J

Great, the UAW is already not helping the company. What is gonna happen when the government takes over who is known for housing not working people.

DodgeFan

Seems like the government is starting to get these companies to put words into actions. Even more important the union realizes it do or die time. It is sad the GM retirees will get screwed. But they join a long list of retirees that have been (Enron, WorldComm, local indiana company Conseco when going thru bankrupty.)

James

Silver,

I think you're making a very ignorant and uninformed comment about foreign companies hiring American workers (yes, American is capitalized).

How many foreign car companies have plants here in the US that hire American workers? Mercedes, BMW, Toyota, Honda, Nissan, etc, etc. Those are top-tier manufacturers and they produce products that are among the best. The key difference is that these companies provide something known as training. If someone was making cars before, how hard can it be to make a different brand of car with some retraining?

I'm not sure what country you come from but don't smack people with your wide brush of biased opinions.

James

To everyone else that agrees with letting the supposed "big 3" fail, I concur. These companies were too greedy building SUV's and not developing "real" alternatives. The reaction to hybrids (a gimmicky, non-proven technology) was too slow. Ethanol hasn't taken off like people expected it to. While each of these companies has made quality products at some point, it didn't take long for people to flock to other brands. The reality is that all car brands have problems. When you could get leather seats in a Nissan Altima (which started off as a $11k car) and the price slowly crept up to Mercedes prices, what changed? The answer is that it grew in size and number of features but the brand has image problems like GM. Look at resale values of cars to see how people really perceive the quality.

If you were to take 1000 random car-buying adults in the US and ask them whether they thought that GM quality was on par with Toyota, how many would say no? Even better, how many would start laughing? Perception is everything and it doesn't help with truly horrible products (anyone remember the GM Quad 4?).

How many people in the US scoffed at buying Honda's or Toyota's? In more recent history, how many people remember people making fun of Hyundai's or Kia's? Look at these brands today. Competition forced these companies to make products that people wanted. Americans slowly grew weary of buying GM or Ford in spite of the whole "buy American" theme. These companies took advantage of that and rode it all the way to the bank for years. It was an excuse to make some bad products while foreign car companies rushed in with new products that were better in a number of ways.

GM and Ford tried to stem the tide of Asian cars and I think Ford was hugely successful with the Taurus. But then they became lazy and it showed in the later versions of the car with the same name. Then the Accord and Camry started outselling it and things never changed... because everyone wanted an F-150 or Explorer to commute to work with.

Adrian

Joe,
I agree with you up to the point where you write about former Big 3 employees possibly coming on board with one of the Japanese 3. As a employee of one of the Japanese 3, I would welcome them if only if they did not bring the UAW culture with them. This is one of the reasons why the Japanese, Germans, and Koreans have located their facilities in the south. I have witnessed this culture up close and personal with a former supervisor who came from one of the Big 3. I can tell you some stories about this guy that will make your hair stand up. If everyone else at this particular manufacturer is anything like this guy I can fully understand why they're in so much trouble. But, like Dave T. said, we can't take them on anyway considering the current economic climate.

Silver

James, you can go piss on it. My point had nothing to do with American workers. It was about capitalism. But now, why would a foreign manufacturer hire someone who carried a badge of the UAW? They don't want unions or the possibility of them. You don't think those guys working at GM or otherwise go training? They got training everyday, that is why their not making it. They got trained instead of doing the work. I used to know a lot of guys working on Ford's lines and all they would tell me is how they had safety training every other day, and then diversity training, and then training for how to punch in and out.

You sit there and try to stand up for an American worker and then you say let GM and the rest fail? Could you be more hypocritical?

SouthTX

Does somebody REALLY think that Japanese, Korean, European companies really compete in a free market? Come on guys, most of the Made in Japan cars could not sell anywhere outside Japan, but the Japanese Goverment spend a lot of money keeping the yen artificially low, so they can sell to the USA and South Asia. If the yen would circulate freely and any Soros could work with it, most of the Japanese cars and other products would be very expensive. (Same as the Chinese products in our Dollar Stores).

In Europe is the same, all markets are not really free but governments, central, state, regional or even local try to keep the industry.

In Spain the Goverment is givin 800 million euros to automakers, scared that they could close their factories there and the useless president Zapatero could face more unemployment. And local and regional goverments are giving away more cash.
In Germany the goverment are going to help the automakers too.

GM/Ford/Chrysler are in a big trouble, but Honda or Toyota are not going to be in a better shape in some months if their sales fall as much as the rest. In fact, the Tundra plant in San Antonio is basically idle.

And by the way, the automaker make cars: but they buy steel, cloth, electronics, seats, to other companies which would have to close.
It is said that one guy working in the auto factory has five guys working for other companies which depend on the automaker. The domino effect could be huge. Because then you have a lot of shops, retail, constructions, enterteinment... look at what Detroit or Pontiac used to be and what they are now.

This is the reason the different local or central goverments hel help these companies: they are scared of the domino effect.

Joe

They Japanese yen does trade freely. I think you're thinking of the Chinese yuan. But car imports from China are not the problem (yet).

The fact is, the foreign car companies make better products on a quality basis, than the Big 3 do. This has been demonstrated in survey after survey. I think it's a bad idea for the US taxpayer to loan money to companies which have proven that they cannot compete. With their track record, it's a good bet those "loans" would never get repaid.

We should not be in the business of rescuing failed private enterprises. If we do this, then we reward mediocrity and if you reward mediocrity, then you're going to continue to get mediocrity.

Let the Big 3 die, or dig out of this on their own. The US taxpayer should not be giving one penny to these retarded businesses (or to any businesses).

Bloke

Joe, do you think business should not get tax deductions then? Or exemptions?

Buzz

"They Japanese yen does trade freely. I think you're thinking of the Chinese yuan. But car imports from China are not the problem (yet)."

Joe, the "free trade" of the yen is the biggest joke in the currency market.

J

Buzz,

If you seriously think that they control the yen on purpose, then what do you think that will do to its citizens? Everything will be so expensive in Japan then.

Arguments about socialism/communism/capitalism DO matter, because it's been proven over and over that the more capitalistic a country's economy, the better.

HAHAHA! I guess no need for that New Deal after all?!?!

J,
I'm pretty sure everything is ridiculously expensive in Japan.

Hybrit

Dan Neil is not qualified to run a car company or do anything more complicated than ordering take-out food.

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