GM bailout was  a necessary evil

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1:00 PM Tuesday, August 17, 2010

Activism has characterized the federal government for a couple of years now, not since Barack Obama became president, but since Wall Street collapsed in the fall of 2008.

Consistently, the people in power — whether Republicans or Democrats — have decided that a national emergency must be met with energy and power. The banks had to be saved, via a bailout. The auto industry had to be saved. The economy had to be aggressively stimulated.

As a result, a canard is circulating: that the people who are taking these measures are motivated by the desire to expand government and its control over us. The charge is leveled mainly at Democrats, notwithstanding that the bank and auto bailouts predate their ascendancy, and that Republicans favored a stimulus too, just a smaller one.

Sometimes the previous president, a Republican, gets lumped in with the alleged government lovers.

If the federal government now moves quickly to get rid of its majority holdings in General Motors, that won’t silence the critics, of course. We’re talking politics here.

But it will help make the point to anybody whose mind is open even a little that saving GM wasn’t the seizing of an opportunity, but a recognition of the need to participate in a necessary evil.

General Motors announced last week that it had made a profit for the second consecutive quarter — this time for well more than $1 billion. It is adding factory shifts and boosting exports, bringing in needed foreign money at a time when other industries are bringing in less.

And now “new GM,” the company that emerged from bankruptcy, is readying a stock offering. That would be, among other things, a way for the government to unload its share.

The company says it doesn’t want to be known as “Government Motors.” The government says it has no interest in owning a car company. And, of course, the Obama administration relishes a big, symbolic demonstration of the fact that its decision to save GM wasn’t futile, that it “worked.”

With banks mainly paying back their loans, a certain campaign narrative does emerge.

Accordingly, some people have worried that the stock sale might come too early, before the market is right for the best return.

That’s a welcome concern to have, given the concerns of last year: that the collapse of the auto industry, especially in this part of the country, could turn the sudden and frightening Great Recession into a depression.

The government has certainly had a role in shaping GM’s new direction, in such matters as the Volt, the new hybrid. But the point was never government control. Quite the opposite. The point is the building of an industry that doesn’t have to turn to Washington for a bailout again.

Nobody knows whether the new GM’s thrust will work in the long run. What’s known is that the company’s old ways weren’t working and that the public wasn’t eager to subsidize them into the future.

If GM — and Chrysler, another bailoutee — do become healthy again, that isn’t a happily-ever-after story. Too many jobs have been lost, too many pensions and health care plans impacted, too many communities devastated by the problems of the Detroit-based auto industry during the last few decades. And what’s emerging is a shadow of former American strength.

But nobody ever said that the government bailout could turn back three decades of history. The point was to deal with a crisis and to shape a plan for future success, a plan that made a lot of sense to people in the business world, not just politicians and bureaucrats.

Cox News Service

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