What's good for General Motors may actually be bad for America, according to James Pethokoukis, columnist and blogger for the
American Enterprise Institute.
Pethokoukis said Vice President Joe Biden’s boast in the 2012 campaign that “Osama bin Laden is dead and General Motors is alive” was probably good politics.
“But that ‘General Motors is alive’ claim is looking like less of a major achievement these days,” he blogged, as GM CEO Mary Barra was fending off Congressional questions about the GM recall of its cars for faulty ignition switches blamed for numerous deaths.
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“Bailing out a failing company is a lot easier than turning around a troubled company so it once again makes a quality product,” Pethokoukis said.
He referenced a new
Harvard Business School paper that notes GM’s share of the U.S. auto market fell from 62.6 to 19.8 percent between 1980 and 2009, leading to the company’s ultimate 2009 bankruptcy. The paper asserts GM’s past success led to an “extended period of denial” as the industry changed.
Has much changed since then, as evidenced by the massive recall under Barra?
The Harvard Business School paper concludes the conventional explanation for GM’s decline, “namely high legacy labor and health care costs is seriously incomplete, and GM's share collapsed for many of the same reasons that many of the other highly successful American firms of the '50s, '60s, and '70s were forced from the market, including a failure to understand the nature of the competition they faced and an inability to respond effectively once they did.”
Pethokoukis wrote: “Last December, the Treasury Department sold the last bit of its GM stake. Government Motors, no more. GM was back. But not really.”
As explanatory reading, he recommends a piece from
The Guardian’s Heidi Moore.
According to Moore, “After the recalls and the estimates of driver deaths, all of that talk, of the reborn American automaker, of bets paid and dollars won, seems like a hollow spectacle."
Pethokoukis concludes “there is not much a $50 billion government check can do about a dysfunctional corporate culture except temporarily paper over it.
“Being pro-business is not the same as being pro-market, pro-consumer, or pro-worker. Bailouts and barriers to entry, crony capitalism, saps an economy of its vigor. What’s good for Big Business is sometimes really bad for America.”
The Fiscal Times predicted GM could definitely lose business because of the massive recall. The Times noted Ford sales fell 16 percent following its high-profile Explorer SUV recalls in 2000 that grew out of deadly vehicle rollovers.
“While it is too soon to know just how big a reputational hit GM will take from the scandal, it seems likely to be significant, at least in the near term,” the Times said.
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