It’s not up to us to say whether or not General Motors should keep their plants open, hire more employees, move back to Ohio, or keep making failed electric models like the Volt. GM isn’t in business to be patriotic, to help provide for the social welfare, or to make sure your uncle has a job. They’re in business to make money, and if they aren’t making money, they have every right – nay, every responsibility – to make the necessary adjustments.
Of course, all of that rhetoric would go down a lot more smoothly if the taxpayers didn’t hand GM more than $17 billion.
Obama, Bush, and the Congress made the decision that the auto industry, much like the big banks on Wall Street, was “too big to fail.” And so we delivered these carmakers a sack full of taxpayer money and saved Detroit from its own terrible management. What? Did you expect some kind of loyalty? Surely not. Instead we got promises of “restructuring.” That mostly meant a new emphasis (under Obama’s guiding hang) on electric cars, fuel efficiency, and the like. Which are exactly the – ahem – innovations that Americans rejected.
On Monday, GM announced that it would be closing down two plants in Detroit and laying off 14,700 workers. In many ways, this is the fruit of the bailout, having ripened on the vine. It took quite some time, but it was inevitable. Because the auto industry learned that the federal government would come running if the manufacturers ever got in trouble again, no one felt the need to make the radical changes that were needed. Why bother? Move some operations to Mexico, grab some incentives from the government to make cars that no one actually wants, and just let the chips fall where they may. Workers might get screwed. Consumers might get screwed. But the big boys at the top? They’ll be just fine, because our country is now in the business of subsidizing corporate America.
In remarks to the Washington Post, a Democrat from Ohio named Capri Cafaro said that voters may resent Trump for allowing the new closures to happen.
“That Carrier situation, where he was very outspoken and then even seemed to get a positive result — before he was even president of the United States,” she said. “I think people pointed to that and thought, ‘You know, if we get into this situation, President Trump will do the same thing.’ We have not seen that. They may not blame Trump for it closing specifically, but they will blame him for not saving it.”
Perhaps. But at a time when cities, states, and the federal government are throwing cash at companies in the hopes that it will net a positive benefit, economically, we need to take a step back and reconsider this entire mode of thought. We understand there’s an incentive to compete with other cities, and there are incentives to competing with other countries when it comes to keeping these companies in place and thriving. But at what point is enough enough? At what point do companies like GM (or Amazon, or name your business) just become semi-governmental entities? At what point is the free market just something we talk about in the abstract? Hell, doesn’t the U.S. Treasury Department OWN a good bit of General Motors at this point?
Ultimately, we don’t mind if Trump wants to use the presidential bully pulpit to shame these companies into making decisions that are right for the U.S., and we certainly don’t mind giving them a competitive tax rate. Beyond that, we need to let these companies succeed or fail on their own terms and their own merits. There’s a fine line between incentives and corporate welfare, and it’s time we found it.