Sharoma Thoughts on the new GM

Thoughts on the new GM

I'm obviously not an economist, but historical precedent alone is enough to convince me the new GM will also fail. There's so many reasons. It's hard to even think this when even the BBC is being so positive about it. Where to start?

  1. It is 61% owned by the US Government. Ignoring the fact that nationalised industry is supposed to be a "commie evil" which Americans loathe (and most Americans are against the bailouts anyway), the fact is, no government is equipped to guide a car company from massive losses to even minimal profit. That's not really what government is for anyway; even it was full of auto industry experts I'd actually be worried. If GM's own executives, for generations now, have failed to adapt to market changes, how can Obama's fancy taskforce, likewise made up of, err, white, upper middle class nobodies...? The drain of GM on the US economy may even bring down Obama in the end, although I'd also argue that events of a larger nature will overtake the US long before then.
  2. The market, despite rosey predictions, will never pick up to where it was. And we can assume that if it does reach previous levels, customers of Toyota, Nissan, Honda, VW, Hyundai, Kia and the now-kicking-ass Ford are hardly likely to flock to buy a GM (or a Chrysler - oh wait, they only sell trucks and minivans). Only the French and Italians support their domestic manufacturers with blind loyalty. Not even the British bought Leyland to the same level after it was nationalised to prevent collapse.
  3. Can we compare this to BL? I think so. BL, like GM, was a massive operation employing thousands of people across many inefficient and antiquated factories, selling too many brands and failing to adapt as fast as the next wave of successful companies. It was simply unthinkable to "let them fail" so they were propped up year after year with public money. Brands were shed, leaders replaced, new guys brought in, mergers attempted, parts sold off. All it does is slow the decline whilst costing everyone a lot more in the long run (and what about the damage to other companies, especially Ford, by keeping two subsidized players in the game?). The new GM will not magically sell enough cars now to be profitable. They didn't sell them last year, why would they now? They have fewer dealers and fewer incentives. They've also reduced their capacity to build new cars, so even if they do want to ramp up in response to the market, they can't. Also, doesn't it strike you as unfair that a company can screw it up for so long, file for Chapter 11, sell the best bits to the same guys, shed the worst bits with half the debt, and then try again, all the while being funded by the public of two countries?

Update: as of July, 2010, China owns 20.8% of US Treasury Securities (Japan is 20.2%). So, is GM, based on actual hidden ownership of its assets or market growth, actually more Chinese than American?:

  1. GM's only growth market appears to be China, where skyrocketing domestic demand represents a good market for them.
  2. GM has partnerships with Chinese auto firms and is already in the process of transferring manufacturing facilities to Asia.
  3. GM is still 61% owned by the US Government. The US Government itself is at least half owned by the Chinese and Japanese, amongst others.

July 2013 Update

General Motors' First Billion

...a peak never reached by any business enterprise.

I first read these statistics three years ago, in the above issue of MOTOR magazine. I found myself lost in analyzing the rise and fall of what I think has always been at the heart of the society I was born into: the car market, its propaganda and its role in genocide. American trucks carried Soviet soldiers, Ford and IBM technology was used within Nazi Germany. There are many examples, even at consumer level. Staring at the cover, I wondered why there are no 'great building projects' occurring anymore. I remember cooling towers being destroyed, but I do not remember any being built. I remember highways and bridges being repaired or closed or sold to companies with the muscle to charge tolls, but I don't remember seeing any new ones being built.

You can sum up the text of the GM profit boast with five single syllable words: Post World War Two Boom. Effectively General Motors and their upstream sponsors mined from the Earth more minerals, and exploited the labour of more workers, than anyone else that year or in the history of the world, and boy did they make a killing! $1,000,000,000 in 1955 terms is a staggering amount of net capital to accumulate. Although back then, the real value of the workers' wages would certainly make you wonder whether they were being "exploited" or whether they were just slaves within a fairly efficient system, with fairly benign masters. Naturally this GM billion would trickle down, and naturally the powers that be and are ordained by God would assume it would turn into tens of billions by 1965. Every service surrounding this sector of the economy would thrive and inflate. Consider also that this was a market with a smaller population but a better developed service network: many more filling stations, independent refineries and dealerships. The workers powering all this were at least given roads for them to drive their cars on. The value of their pay cheques wasn't destroyed through hidden inflation, bank service fees, payroll deductions, and the like. There were deductions, but not on the scale we see now.

Today the Fortune 500 aren't spending their earnings domestically, and even official government statistics show a decline in the value of wages since this period. There's declines in labour force participation and declines in productivity. Declines in building projects and declines in education standards. There are declines in everything, except suicide and the prescribing of antidepressants. The unions are being destroyed, and like them or not, once they are gone, there is no apparent way for a country to mobilise or organize a general strike. It's up to each person to figure that out for themselves.

MOTOR Magazine {figures} MOTOR Magazine {billion}

The report pointed out that these gains were registered despite a sharp decline in defense business.

But 1955? What of it? It was not a golden age. Personally, it represents the birth of the generation preceding mine (my Mother was born in this year). It was around this time that the UK, for a very brief period in its history, appeared to have full employment and was a net exporter of vehicles, largely because the Empire and Commonwealth markets were still available, but probably also because a manufacturing base was still necessary to maintain what were much larger conventional forces than the country possesses today. Yet there was chemical warfare testing of British civilians and troops, continuation of war rationing, and a planned increase in television broadcasts. Fluoride was added to the drinking water. Nuclear testing was accelerated and all the planners were working out the cheapest way to kill the most people.

By the mid '60s most people had a TV, and this was the start of the decadent age. People became complacent. Civic virtue disappeared. The decline in UK technical ability, already demonstrated when its navy was denied an easy victory in the First World War or by the rise of Germany (who was already out-producing the UK prior to WW1), is highlighted by the railway booms of the 19th century in contrast to the line closures in the 1960s and the debacle that was the construction of a single line to the Channel Tunnel in 1994.

Japan and Germany were still rebuilding back then, helped of course by British expertise and American money, but within a generation would already be importing into North America and Europe. This model of organized destruction reaps vast profits for two sectors of the economy: the companies which manufacture weapons and the companies which rebuild what those weapons have destroyed. Now there are no borders, with GM earning and spending as much, or more, in other countries. They can select the cheapest workers, minerals and networks in the world. They can preach fuel economy and clean air in one market, whilst fitting less-efficient engines in countries with more lax regulations. They can also forgo their obligation to support infrastructure by moving wealth offshore. The interstate system which Eisenhower's administration constructed isn't their problem! Any capitalist will tell you that. But the profits of selling the vehicles which drive on it are theirs to take and spend elsewhere. Korean and Japanese factories exist within America, and trade tariffs are a thing of the past. But now that the Fortune 500 controls 99.9% of perceivable economic activity, who is there to stand up for the worker beside himself? Only by peaceful non-compliance.

Yet I speak as a filthy fucking hypocrite; I've owned Fords and Chrysler. I've burned thousands of gallons of gasoline, yet I don't posses the technical skills to extract or refine it myself. I despise the oil cartels for ripping up Alberta and holding us all to ransom every time they increase the price. But I cannot manage without my fix. After all, life is movement. I've never driven GM, but if you do you're inheriting something big. A long and complex history of labour battles, technical warfare and bloodshed. The whole sorry state of industrial economy. The motor industry sits next to the military-industrial complex like a helpless creature. It cannot fight, but it can harness a lot of power. The Renaissance Center in Detroit gleams as it did during the 1985 Detroit Grand Prix, but is there anyone in there anymore? Apparently it's empty - a worthy metaphor for this age, but perhaps a good thing. It is necessary to move away from large, centralized manufacturing facilities. If the worker could only design and make his own car, he would be free once more. The software and the robots which would enable this are not his to use, however. It's all private and locked away. His labour paid for it. The slaves of Africa bled and died for it. But they cannot have it. The modern worker has little to do besides switch off, log on and grind down. His ancestors weren't very good at fighting the Fortune 500. For a long time they refused to acknowledge that oligarchs even existed. They spent the '60s, '70s and '80s watching TV or listening to music, while their masters privatized and flogged the public services, exported the manufacturing facilities and undermined education. Now that they've acquired everything, and own all land, all water, all sky, all frequencies, all vehicles and all manpower? The dreaded question. What would you do if your father blessed you with trillions in real estate, stock, science and technology, and you looked down to see seven billion people hopelessly clamouring for their own slice of it?

Release the technology, and hopefully the worker will outsmart the master. After all, it was a few gruff northern men who built the first railway, and they probably stank of horse shit, had never cleaned their teeth and were grateful they weren't dying of cholera in the nearest open-air prisons which made up England's industrial north west. We've inherited the most complex system ever devised, but we have no idea how to dismantle it or what to replace it with. The skills built up over at least three hundred years of sweat, steam and toil have been frittered away. An army of youth roam the streets. They cannot extract minerals from the ground, or forge these into products. They cannot understand the system they live within, nor can they understand why it's not making them affluent. They are confused. They are jealous of the spending which does continue: luxury items continue to be manufactured and distributed to a shrinking section of the population. We want progress. We want to build more of what we need: independent schools, hospitals and research centres. Local factories to produce what is required locally. But there is no capital available, because we do not live in a capitalist society. The central banks will not lend money to producers who want to build things. They won't allow progress and growth, because it terrifies them. Instead they take the bail-out money, or print more of their own, but lend it only amongst themselves. They buy up the real assets, then they flood the markets with inflationary credit default swaps and derivatives. Capital is made available only in parasitical forms. We live in a system of corporate monopoly. The small business owner is endangered. The corporations hide behind legislation which protects them from their crimes. They can lobby the government until they become the government. This happened long before I was born. It's called fascism, and the only defence is to stop complying. I chose this path a few years ago, but it is not easy. It earns you nothing but the disdain of those around you. I should know!

So I ask you, do you pay income tax? Do you serve the military? Does a Fortune 500 company extract your labour and utilise your bodily strength? Do you lodge your pay cheques with one of the six global mega banks? Do you furnish them with interest payments you cannot afford? Do you worship the establishment? Do you cast off your motherly duty because it is more important to study the set texts and labour for the system? If it's yes to any of those questions, your hands are crusted in blood. I'm sorry to say this, but it's your fault, not the fault of your ancestors. They didn't know any better. They didn't have access to hindsight. They couldn't see the grand vision unfolding. Step away from it all and your children will thank you. Continue as you are now, and they will write articles about how ignorant and decadent you were. How you chose to take pictures of yourself instead of standing up for the helpless; how you chose to continue working because you were afraid of losing what little you had gained; how you allowed yourself to become wrapped up in the cult of celebrity instead of embracing your own spiritual power; how you allowed your own society to be taken hostage.

The information is out there. When I connect the dots, I get a sick feeling in the pit of my stomach. But perhaps you do not. Perhaps you are okay with inequality, or constant warfare. Perhaps you yearn for the Brave New World. Perhaps deep down you hate me for spouting this gibberish while you labour for one hour to buy a caramel macchiato. One day I won't be able to. One day this post will be deleted, and all images removed. No one will know how much money GM once made, and nor will they know how many people the governments of the world killed in the 20th century. If they did, they probably wouldn't care. "When's Big Brother on?"

[Originally appeared here.]