Saturday, November 8, 2008

Why GM matters

The world's youngest cranky old man is at it again:

Answer: The government has already done everything that it needs to in order to help G.M. The government established bankruptcy courts so that a company like G.M. can go through a Chapter 11 reorganization. During the Chapter 11 process, a judge has the power to adjust the company’s obligations so that they can be paid from the company’s likely future revenue. Chapter 11 was designed specifically so that employees can keep their jobs, albeit possibly at lower salaries, while shareholders and creditors suffer and/or are wiped out.

The stockholders, creditors, and employees of G.M. do not deserve to be spared the pain of the recession. The rest of America will be taking pay cuts, losing jobs, giving discounts to customers, etc. What is special about G.M. that they should be able to live as though 2008 never happened?

GM is a flagship of industrial America. If it files bankruptcy -- even "just" 11 -- the effects on the already bruised national psyche could be irrevocable. We're fighting like hell to avoid a new Depression, and we've got the fringe libertarian crowd out to use this as an opportunity to crush unions further (which is at least partially what's behind Mr. Greenspun's eagerness to watch GM collapse -- unions are an inevitable victim of an 11 filing).

That he would compare GM to Google ... well, GM directly employs 250,000+ people, and God only knows how many hundreds of thousands more indirectly. Google employs 20,000 - not even 10% of GM's total. Of course, when you don't work for a living yourself, some details become unimportant.

There are certainly problems in the domestic auto industry that are going to have to be resolved, and the industry will almost certainly further shrink in the near future. But to let it play out now, with all the rest of the problems we have, is simply ideologically driven recklessness. We could easily be seeing the U.S. government become an "employer of last resort" again, like it became in the 1930s. If that comes to be, saving some of those 250,000 jobs now would end up being much cheaper than letting those people go out of work, and then hiring them to sweep streets and build roads few people can afford to drive cars over any more.

I've been reading Greenspun for years now. In that time he's become increasingly cranky, increasingly willing to spout off on topics he shouldn't, increasingly unreadable. I suppose enough is enough.